Trump's Turbulent Start: Three Signs of Trouble for the Economy

President Trump's second presidential term has kickstarted with a series of actions that are raising concerns among voters and financial markets. Here are three key indicators of the potential risks these policies pose:

1. Small Business Worries

The National Federation of Independent Business's (NFIB) confidence index saw an unexpected drop in January, reversing the positive momentum from Trump's initial policy initiatives. Economist David Rosenberg highlights that the "honeymoon is over" and attributes the decline to "policy-induced chaos coming out of Washington."

Trump's tariffs on Chinese imports, as well as steel and aluminum, have increased costs for businesses. Coupled with consumers' sensitivity to price hikes, this could hinder profitability and dampen investment in expansion.

2. Weakening Voter Approval

Trump's approval ratings on economic issues have declined significantly, according to Morning Consult. Net approval on the economy has dropped from 16 to 5 percentage points, with similar dips in approval on trade and taxes.

Despite Americans still approving his economic plans overall, this rapid erosion in confidence reflects growing concerns over Trump's handling of key issues such as inflation and affordability.

3. Inflation Fears

Americans' perception of Trump's actions as inflationary is driving expectations for higher prices in the future. The University of Michigan's monthly sentiment index shows a sharp increase in expected inflation rates from 2.7% to 4.3% in the coming year.

Tariffs are a primary factor contributing to these inflated expectations. While inflation currently stands at 2.9%, consumers anticipate significant price hikes in the near future.

These three signs underscore the potential risks to the economy from Trump's policies. Small businesses, consumers, and investors are expressing concerns about the impact on costs, profits, and overall economic stability. The long-term effects of these actions remain to be seen, but they undoubtedly present challenges for the nation's economy in the coming months.