President Donald Trump said his first day in office marked the start of a "golden age" for the U.S. He and his advisors now say it could take months or longer to arrive.
Two months into Trump's term, administration officials are rejecting the notion Trump has already taken ownership of an economy on which he vowed to work a "miracle." They have celebrated positive data and blamed signs of weakness on Trump's predecessor, Joe Biden, all while warning his plans won't bear fruit overnight.
Trump said in a February Fox News Radio interview it will take "six months to a year" for the economy to become his because "Biden really screwed up our country." Treasury Secretary Scott Bessent recently said the country is "still living through this Bidenflation" and echoed Trump's timeline. Commerce Secretary Howard Lutnick has said the fourth quarter, for sure, is Trump's and maybe shades of the third.
Presidents have long rushed to take credit for booms and distanced themselves from busts. But Trump's situation is unusual. The risks to the U.S. economy — potentially including stagflation or even recession — are closely linked to his own flagship initiative: a new tariff bonanza due in just over two weeks.
Many economists say Trump's erratic tariff plans, or perceptions of them, are one of the biggest drags on the economy. The president has pledged reciprocal duties on nations starting on April 2, his biggest swing yet at a global trading system he has long accused of "ripping off" the U.S.
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Yet promising a turnaround by the start of the new year could leave Trump vulnerable to political attacks. Federal Reserve officials this week downgraded their forecasts for economic growth and boosted estimates of inflation as the president's tariffs inject uncertainty into their projections. That followed predictions of a worldwide economic slowdown by the OECD.
If those estimates hold true, Americans could blame Trump — seemingly already evident in deteriorating consumer sentiment readings and a recent $5 trillion stock wipeout. Majorities of registered voters already disapprove of his handling of the economy and the cost of living, according to an NBC News poll, potential fodder for Democrats heading into next year's midterm elections.
"The Trump administration owns this economy from the moment they started doing all these tariff threats," said Kimberly Clausing, a senior Biden Treasury Department official now at the Peterson Institute for International Economics. "This sharp decline in consumer confidence, this sharp increase in investor uncertainty and stock market responses happen really synchronously with tariff announcements."
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Late Thursday, Trump hailed dropping prices for eggs and gasoline and repeated his call for the Federal Reserve to cut interest rates.
"Egg prices are WAY DOWN from the Biden-inspired prices if just a few weeks ago. 'Groceries' and Gasoline are down, also," he posted on his Truth Social platform. "Now, if the Fed would do the right thing and lower interest rates, that would be great!!!"
Trump and his allies — presiding over government firings and planning what's likely to be hundreds of billions or more in new import taxes — say any short-term pain is worth it to wean the country off cheap imports, revive domestic manufacturing and curb government employment and budget deficits. They also say his agenda's success hinges on key measures including tax cuts being negotiated by congressional Republicans.
"We won't see an economy that is driven by the totality of the president's policies until the totality of the president's policies are implemented," Stephen Miran, chair of Trump's Council of Economic Advisers, said in an interview. "I think it should be measured more in terms of policy enactment than in calendar time."
Tariff uncertainty
Taken together, the remarks show the difficulty Trump faces in setting economic expectations after promising "extraordinary" boom times during the campaign.
Trump has conceded there could be a "disturbance" before Americans feel positive effects from his policies. He has wavered from refusing to rule out a recession to denying there will be one.
Fed Chair Jerome Powell had a similar view of hard economic data but added that sentiment has taken a dive, driven in part by price-hike fears. Trump this week pressured Powell to lower rates after the central bank left them unchanged.
It's also true that "everyone always overstates how much presidents matter for the economy," said Jason Furman, Council of Economic Advisers chair under President Barack Obama. Trump's tariffs and migration crackdown could choke off growth, but other moves such as deregulation might offset them, he said. There are also market factors that are out of the president's hands.
The Trump administration has so far seen a mixed bag of economic data. Consumer spending has been sluggish at best so far this year, judging by retail sales data and inflation-adjusted figures from the Commerce Department. The recent Wall Street selloff, fueled in part by Trump's tariff threats, has wiped trillions of dollars from the equities market.
Meanwhile, inflation eased in February and U.S. factory output came in higher than expected. White House National Economic Council Director Kevin Hassett on Wednesday said that's evidence of the US "onshoring activity with our trade policy," but economists largely said the data was indicative of manufacturers ramping up production to get ahead of tariffs.
Powell said tariffs could hamper the fight against inflation in the near future.
"Inflation has started to move up, we think partly in response to tariffs," Powell said Wednesday. "And there may be a delay in further progress over the course of this year."
Looming tax cuts
Trump administration officials are banking on tax cuts to help soften the blow from the tariffs. Members of the president's team have pushed Congress to speed up work on the proposal in a bid to push more cash to consumers.
During the campaign, Trump promised to extend his first-term tax cuts for households and eliminate taxes on tips, overtime earnings and Social Security payments. A recent Congressional Budget Office report found that the individual tax cuts are less pro-growth than the business tax cuts.
"It appears what they're doing is they are taking a lot of the economic pain now and then trying to get that out of the way, and then they can pave the way to focus a little bit more on some of the tax policy, which on net isn't that stimulant," said Stephanie Roth, chief economist at Wolfe Research. "The problem is the tariffs are a pretty significant stagflation risk for the economy."
Peter Navarro, White House senior counselor for trade and manufacturing, has downplayed worries that tariffs drive inflation. Hassett told reporters Wednesday that if there was a tariff effect, it would be transitory, and Powell said so, too — using a word that backfired on the Fed after officials repeatedly used it to describe inflation induced by the COVID-19 pandemic.
Economist and former Trump advisor Arthur Laffer said tariffs would only be inflationary if they were put in place for a long time, but that Trump merely "uses them to negotiate."
As for which president gets to claim credit for the current economy, Laffer said it's just politics.
"It's just what politicians do," he said. "Every politician is going to say anything that goes wrong is Biden's fault, and anything that goes right is our credit."
