Trump's Actions Spark Economic Concerns and Eroding Approval
President Donald Trump's early actions in his second term have raised concerns among voters and investors, as evidenced by three key indicators:
1. Small Business Apprehensions
The National Federation of Independent Business's confidence index plummeted in January, following a Trump-induced surge the previous month. Economist David Rosenberg attributes this shift to "policy-induced chaos" stemming from Washington. Trump's tariffs on imports from China and elsewhere have increased costs and prices, which businesses attempt to pass on to consumers. However, inflation concerns are prevalent, and firms may face declining profitability if they are unable to shift these price hikes.
2. Diminishing Voter Approval
Recent Morning Consult polls reveal a decline in Trump's net approval on the economy, trade, and taxes. While the majority of Americans still support his economic plans, this erosion in support is significant. Trump's executive orders have failed to address voters' primary concern: rising prices for food, rent, and healthcare.
3. Inflationary Fears
Americans anticipate higher inflation as a result of Trump's actions. The University of Michigan's sentiment index indicates that inflation expectations have risen from 2.7% to 4.3% due to concerns about tariffs. Economists validate these concerns, highlighting the potential for costs to rise without corresponding benefits for the U.S. economy.
These indicators suggest that Trump's actions are having unintended consequences that could ultimately undermine his economic agenda.