They Are Accusing Trump of “Manufacturing” a Recession, but What Is Really Going On?

(The Economic Collapse Blog)—Is it just a coincidence that a large number of talking heads in the corporate media have all suddenly decided to start blaming Donald Trump for causing a “recession”?  During the four years of the Biden administration those same voices insisted that there was no “recession” on the horizon even though homelessness was setting record high after record high, demand at food banks surged to levels never seen before, inflation was out of control, home sales plunged to extremely depressed levels, stores and restaurants were closing all over the nation and debt levels were breaking records.  Let’s be real.  The U.S. economy has been on a downward trajectory for a long time, and that downward trajectory got even steeper in the final stages of the Biden administration.  But now we are being told that the economic problems that we are experiencing are happening because  Donald Trump is “manufacturing” a recession…

CNBC host Jim Cramer went off on President Donald Trump for fueling recession fears and cratering the stock market, noting competitor markets are “crushing us” and accusing Trump of potentially “manufacturing” a recession — or worse.

Really?

Trump has been in office less than 60 days.  He simply has not had much of an opportunity to have much of an impact on the economy yet.

But following more than 1,400 days of Joe Biden, U.S. households were absolutely drowning in debt.  In fact, we just learned that the average credit card debt load during the fourth quarter of last year was the highest that we have seen since the Great Recession…

For one, Americans’ inflation-adjusted debt burdens are starting to grow further beyond prepandemic levels on a per-household basis. As of the fourth quarter of 2024, the average household’s credit-card debt surpassed $10,000, adjusted for inflation, for the first time since 2009, according to data compiled by consumer-finance website WalletHub.

Donald Trump was not president during the fourth quarter of 2024.

Joe Biden was.

We also just learned that missed payments on auto loans were at “the highest level in three decades” in January…

Missed payments on auto loans by American car owners rose to the highest level in three decades earlier this year.

The percentage of borrowers with subprime car loans who are at least 60 days past due on their loans increased to 6.56% in January, which was the highest level since data collection began in 1994, according to Fitch Ratings.

The share of 60 days past due subprime auto loan borrowers has remained above 6% since August 2024 after breaking the 6% threshold for the first time early last year. It previously approached the 6% mark in 1996, 2019 and 2023.

Donald Trump did not become president until January 20th. So don’t try to put that on Trump.

During the final stages of the Biden administration, even many Americans that earn at least $150,000 per year were falling behind on their debts…

From January 2023 to January 2025, the rate at which people earning $150,000 or more a year are 60-to-89 days behind on their overall debts has more than doubled, according to CreditGauge, which is produced by VantageScore, an independent joint venture of the three major credit bureaus.

Should we be concerned about where the economy is heading?

Yes! But trying to blame Donald Trump for four years of failed policies just doesn’t make any sense.

It isn’t Trump’s fault that airlines are “cutting their first-quarter profit and sales estimates”…

Airlines are cutting their first-quarter profit and sales estimates, warning that a weaker economic backdrop is weighing on travel demand.

Ahead of a JPMorgan industry conference, American Airlines on Tuesday said it expects to lose between 60 cents a share and 80 cents a share in the first three months of the year, a wider loss than the 20 cents to 40 cents a share it previously forecast.

And it isn’t Trump’s fault that retail sales have been falling all over the nation.  For example, Kohl’s is projecting “a sales decline between 5 percent to 7 percent”…

Kohl’s, the Wisconsin-based store with over 1,100 locations, has lowered its sales expectations for 2025, citing shifting consumer spending patterns.

In its latest forecast, the retailer revised expectations to a sales decline between 5 percent to 7 percent.

The news sent the company’s stock plummeting by over 26 percent on Tuesday.

For months, I have been documenting the enormous economic mess that we are facing.

Now that President Trump is in the White House, he is going to have an opportunity to try to fix things.

But it won’t be easy.

At this point, the NFIB’s uncertainty index has risen to the second highest level ever…

The National Federation of Independent Business reported that its small-business optimism index fell 2.1 points in February to a reading of 100.7.

The NFIB’s uncertainty index rose 4 points to 104, the second-highest reading ever, which in its current monthly form dates back to 1986.

If the U.S. economy is able to avoid a major recession, it will be an all-time economic miracle.

During a recent interview with Maria Bartiromo, President Trump openly acknowledged that we are facing “a period of transition”…

So far, the president appears to be trying to lower expectations. In an interview that aired Sunday on Fox News, Mr. Trump demurred when asked by Maria Bartiromo if he expected a recession this year.

“I hate to predict things like that,” he said. “There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”

If anyone thinks that it is all going to be smooth sailing ahead, they are just being delusional.

Of course the decisions that President Trump is making now will have an impact on the economy moving forward, and I have to admit that I am not keen on the trade wars that have erupted.  On Tuesday, President Trump doubled tariffs on steel and aluminum imports from Canada…

U.S. President Donald Trump on Tuesday ramped up a burgeoning trade war with Canada, saying he will double tariffs set to take effect within hours on all imported steel and aluminum products from Canada to 50%, amplifying a focus on tariff increases that has sent financial markets reeling and business leaders ringing alarm bells about weakening consumer demand.

Trump’s latest salvo was in response to the premier of Ontario’s announcement that he would place a 25% surcharge on the electricity Canada’s most populous province supplies to 1.5 million U.S. homes unless Trump drops all of his tariff threats against the northern U.S. neighbor.

If we try to fight trade wars with Canada, Mexico, China and the EU simultaneously, that is going to create an enormous amount of economic pain.

So hopefully our trade disputes will be settled quickly.

If not, those at the low end of the economic spectrum will be hit the hardest…

With views of current finances among the poorest Americans already near the lowest in 14 years, tariffs are set to add more pressure by making many everyday items even pricier.

Low-income households, who spend a larger share of their budgets on goods than the wealthy and tend to favor cheaper imports, will bear the brunt of the hit. Economists from Bank of America and BNP Paribas expect the February consumer price index report due Wednesday to show early signs of the impact from tariffs — in particular the additional levies on items like furnishings, clothes and electronics coming from China.

The economic problems that we are currently witnessing all over the world are just one element of “the perfect storm” that we are now experiencing.

Hopefully President Trump and his team will make wise decisions during the days ahead.

And it would greatly help if the Federal Reserve would lower interest rates.

Unfortunately, a very serious economic downturn has already begun, and there are many voices that are absolutely determined to blame whatever happens next on Donald Trump.

Michael’s blockbuster entitled “Why” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.