The News
As US President Donald Trump charges ahead with his tariff plans and aggressive cost-cutting mission in Washington, signs of pessimism are quietly arising among economists, global investors, and US consumers.
Stocks in the US and Asia fell Tuesday after Trump vowed to go ahead with tariffs against Mexico and Canada next week, while bitcoin, seen as a favorable “Trump trade,” also fell after months of historic gains.
SIGNALS
‘Chaos’ back after rosy first month
Experts had warned that Trump’s tariff agenda could raise prices for American consumers — but his first month in office was largely well-received by Wall Street. Now, some analysts are sounding the alarm that the market is overvalued. “Whisper it, but signs are starting to emerge… that the weight of Donald Trump’s multi-pronged policy agenda is becoming a bit too much to bear,” Bloomberg’s Markets Daily newsletter wrote. Beyond stocks, consumers worried about inflation also grew more pessimistic about the economic outlook this month, according to a leading consumer confidence index, which recorded its largest monthly decline since 2021. “For good or bad, depending on your politics, we’re back to the chaos presidency,” a prominent hedge fund manager told Politico.
DOGE cuts hold risk — but won’t singlehandly devastate economy
Donald Trump’s effort to axe government spending through the Elon Musk-led Department of Government Efficiency could have spiraling economic ramifications, analysts warned. The mass firings or buyouts of federal workers may amount to the largest job cut in US history, experts told CNBC. “The economic consequences of layoffs are like a domino effect that spread across local economies to businesses that seem to have no connection whatsoever to the federal government,” a Yale University Budget Lab official said. But while the DOGE cuts could upend livelihoods and local communities, many economists are confident they won’t devastate the national economy, CNN reported. “It’s not going to tip the economy into recession by itself,” one expert said.
Crypto now more aligned with traditional markets
Trump’s embrace of cryptocurrency helped supercharge the digital tokens to new highs after his victory. “Holding bitcoin is cool again,” the Financial Times declared just two weeks ago; the currency surpassed $100,000 in January. But bitcoin has been falling over the last few days, amid a crypto market decline. Broader economic concerns around tariffs’ impact sparked the de-risking selloff, Coin Central wrote, showing an alignment between digital assets and stock markets: “The days when cryptocurrency moved independently from mainstream financial assets appear to be fading.” A major hack at Dubai-based crypto exchange Bybit also dented investor confidence.