Trump's Actions Undermine Approval and Boost Inflation Worries
President Trump's initial moves into his second term are raising concerns among voters and markets.
1. Small Business Anxiety
The NFIB confidence index for small businesses plunged in January, reversing an earlier post-election surge. Economists attribute the decline to Trump's erratic policymaking, including tariffs on imports. Tariffs increase costs, which businesses may pass on to consumers, leading to inflation and potential profitability loss.
2. Eroding Voter Approval
Trump's approval ratings for economic handling have declined significantly in recent weeks, particularly in areas such as trade and taxes. While a majority still approve of his plans, the erosion is rapid. Voters prioritize price reductions, which Trump's actions have yet to adequately address.
3. Inflation Fears
Americans anticipate Trump's actions will worsen inflation. University of Michigan's sentiment index shows expectations of 4.3% inflation in 12 months, up from 2.7% before the election. Tariffs and other economic uncertainties are cited as primary reasons for these concerns.
Despite the concerns, some investors believe Trump may moderate his actions in response to negative market reactions. However, business owners and consumers are already expressing dissatisfaction with his economic policies. Trump's "honeymoon" with the public is ending, and his actions could further erode his support.