The Morning: A Trump recession?

Plus, executive power, Volodymyr Zelensky and the MetroCard.

View in browser|nytimes.com March 20, 2025 Good morning. Today you'll hear from the Times's chief economics correspondent, Ben Casselman, who weighs evidence about a possible recession. We're also covering executive power, Volodymyr Zelensky and the MetroCard. On the floor of the New York Stock Exchange. Angela Weiss/Agence France-Presse — Getty Images A Trump recession? By Ben Casselman I cover the economy. Is the U.S. economy headed for a recession? Stocks have plunged. So have measures of consumer and business confidence. Forecasters expect slower growth, higher unemployment and faster inflation than they did just a few months ago — and yesterday, policymakers at the Federal Reserve said they agreed. Source: LSEG Data & Analytics | By The New York Times The administration has announced and then delayed tariffs; it has ended and then restored programs. Even some experts who are sympathetic to President Trump's aims worry that businesses will pull back on hiring and investing in the face of so much uncertainty — a word that the chairman of the Fed used repeatedly in a news conference yesterday. Most forecasters still don't expect a recession. But they say the chances of one have risen sharply — a turnabout from when Trump took office. How likely is a downturn? In today's newsletter, I'll explore three big questions about the Trump economy. 1. Actions versus feelings? So far, the evidence of a slowdown comes mostly from "soft" indicators. These are surveys showing that businesses are more reluctant to hire and invest, and that workers are more worried about losing their jobs. "Hard" indicators — measures of actual activity — haven't shown the same weakness. Job growth was solid in February, for example. Retail sales slumped in January but rebounded last month, although less than forecasters had expected. Attitudes almost always change before actual behavior does. A company that loses a contract today probably won't lay off its staff tomorrow; an employee who hears a rumor of job cuts might not immediately cancel a long-planned vacation. And even when behavior does shift, it takes time to show up clearly in the economic data. Source: University of Michigan | Data is monthly through March 2025; March 2025 data is preliminary. | By The New York Times But it is also possible that falling confidence won't ever translate into real-world decisions. Consumer confidence was low through much of the Biden administration, for example, but actual spending never faltered. And evidence suggests that sentiment measures have become less reliable in an era of extreme partisanship. 2. How determined is Trump? Trump made tariffs a centerpiece of his campaign last year. But many people on Wall Street didn't believe he would follow through — in part because if he did, stocks would fall and Trump would reverse course. So far, that has been a losing bet. In his first term, Trump worried when markets fell and bragged when they rose. But when stocks fell after tariff announcements this month, he disregarded the selloff and refused to back down. "Markets are going to go up and they're going to go down," he told reporters last week. He and members of his administration now suggest that a period of economic pain is necessary to balance the economy. (Hardly any economists agree.) Still, Trump could change tactics if the slump worsened. 3. Is there a cushion? Coming into this year, most forecasters expected economic output to grow about 2 percent, adjusted for inflation. That's slower than the 2.5 percent it grew last year, but it's a long way from a recession. Yet even before Trump took office, some forecasters warned that the economy was not as strong as well-known indicators like the unemployment rate suggested. Hiring was slowing; the housing market was frozen in place; consumers were saving less to maintain their spending. Source: Federal Reserve Bank of St. Louis | Data is a biweekly average through March 19, 2025. | By The New York Times "All of these things were pretty obvious even in December," said Neil Dutta of Renaissance Macro Research, a financial firm. He argues that a slowdown in growth was inevitable this year, regardless of who won the election — which would mean that Trump is operating with less of an economic buffer than most people believe. The economy has repeatedly proved doubters wrong in recent years, and it may do so again. But it doesn't take a recession to cause real hardship. Even a mere slowdown in growth could leave hundreds of thousands out of work — and, if history is any guide, send Trump's approval ratings through the floor. That's the kind of outcome presidents usually do everything in their power to avoid. (Why are economists so bad at forecasting recessions? I tried to answer that question in this piece I wrote a few years ago.) THE LATEST NEWS Government Overhaul President Trump Doug Mills/The New York Times Trump is trying to consolidate control over the courts, over Congress, and, in some ways, over American culture, Times political correspondents write. Trump plans to sign an executive order today instructing the head of the Education Department, Linda McMahon, to begin dismantling the agency. The department cannot be closed without Congress's approval. The administration appointed two officials who helped dismantle U.S.A.I.D. to be the agency's new leaders. What happens after a judge reinstates fired federal employees? Rather than returning to work, many are trapped in limbo. Steve Davis, a longtime Elon Musk loyalist, is effectively the leader of DOGE. Musk has praised Davis's cost-cutting abilities by comparing him to chemotherapy. "A little chemo can save your life; a lot of chemo could kill you," Musk said. Immigration A federal judge granted the Justice Department another day to reveal the details of two deportation flights that may have defied his orders. U.S. officials detained a Georgetown scholar from India, who is in the U.S. legally on a student visa, and accused him of "spreading Hamas propaganda." The Trump administration wanted to move the deportation case of Mahmoud Khalil, a Columbia graduate and pro-Palestinian protester, to Louisiana. Instead, a judge transferred the case to New Jersey. More on the Trump Administration The administration plans to suspend about $175 million in funding to the University of Pennsylvania, apparently because of the school's past support for a transgender swimmer. Musk donated to members of Congress who support impeaching federal judges who oppose Trump's actions. The Justice Department plans to restore gun rights to some convicts, an issue that became contentious after agency officials sought to reinstate Mel Gibson's firearm access. The Kennedy assassination files that Trump released this week offers little new information about the shooting, but they do reveal some details about C.I.A. spycraft. In the rush to release the files, the administration publicized the personal information, including Social Security numbers, of people who are still alive. War in Ukraine Volodymyr Zelensky agreed to halt attacks on Russian energy infrastructure in a limited cease-fire also backed by the Kremlin. It's not clear when the pause will start. In a phone call with Zelensky, Trump suggested Ukraine hand over control of its energy facilities, including nuclear plants, to the U.S. Putin has offered few concessions to Ukraine. Experts worry that Russia is discussing a cease-fire only to buy time for the U.S.-Ukrainian relationship to collapse. Middle East Israeli ground troops pushed into Gaza and took partial control of a corridor in the center of the territory, reclaiming an area it had held before the cease-fire. Thousands of Israelis gathered outside Parliament to call for a renewed cease-fire. The demonstrations are a sign that national solidarity over the war is fraying. Trump said the Iran-backed Houthis in Yemen would be "completely annihilated" by the U.S. and warned Tehran to stop supplying the militia with equipment. More International News Donald Trump Jr. Haiyun Jiang for The New York Times Donald Trump Jr. visited Serbia to show his support for the country's embattled leader. Belgrade, the Serbian capital, is also the site of a Trump hotel project. Canada is in talks to help Europe's military expansion, a deal that would reduce Canadian dependence on the U.S. China executed four Canadians over drug-related convictions. New York The M.T.A. announced that it would stop selling MetroCards by the end of the year, a move that it said would save at least $20 million a year. Trump officials gave New York until tomorrow to end the city's congestion pricing program. New York's leaders have refused to stop the tolls. Read what could happen next. Other Big Stories A jury in North Dakota ordered Greenpeace to pay more than $660 million for its role in protests against a natural gas pipeline. The group said the penalty would likely force it to close its U.S. operations. Ben & Jerry's accused Unilever, its parent company, of firing its C.E.O. for political reasons. The International Olympic Committee will elect a new leader today. The race has become strange and nasty. Opinions Trump's attempts to threaten Iran into a nuclear deal only drives Tehran away from the negotiating table, W.J. Hennigan writes. Here are columns by Nicholas Kristof on aid for Sudan, and David French on a Democratic tea party. A subscription to match the variety of your interests. News. Games. Recipes. Product reviews. Sports reporting. A New York Times All Access subscription covers all of it and more. Subscribe today. MORNING READS Lila Barth for The New York Times Old money: Take a room-by-room tour of the renovated Frick Collection with a Times art critic. The Kindertransport: Thousands of Jewish children fled the Nazis alone. Newly found papers tell their stories. Social Q's: "My friend is refusing to talk politics with me. Can she do that?" Most clicked yesterday: Pack an emergency travel bag. Lives Lived: K.W. Lee was sometimes called the dean of Asian American journalists. His reporting sought to humanize and unite Asian Americans; it also led to the release of a Korean immigrant on death row. Lee died at 96. SPORTS Men's college basketball: The N.C.A.A. tournament's first round tips off today, starting one of the busiest weekends on the sports calendar. Follow updates here. N.F.L.: The league will consider rule changes this month, including a ban on the "tush push" and a retooling of playoff seeding. Payday: A California high school agreed to a seven-figure multimedia deal, the first of its kind. ARTS AND IDEAS At Emmett's in New York City. Marissa Alper for The New York Times Restaurateurs in New York and other big cities are noticing a surprising shift: Diners are no longer taking home to-go boxes. Emmett Burke, who owns two pizzerias, says the trend is especially acute among people on dates. "I think maybe it's embarrassing, like you don't want to be the equivalent of going to an all-you-can-eat buffet and putting rolls in your dinner jacket," he said, adding, "But I always say, even billionaires like open bars." More on culture Before Bill Cunningham became a legendary Times photographer, he was a milliner. Eight of his one-of-a-kind hats are up for auction. The late-night hosts joked about the release of the J.F.K. files. "There's no evidence of a second gunman, which means Ted Cruz's father is off the hook," Jimmy Kimmel said. THE MORNING RECOMMENDS … Christopher Testani for The New York Times Serve honey garlic shrimp over white rice. Refresh your hair with a dry shampoo. Try these good-looking storage solutions. GAMES Here is today's Spelling Bee. Yesterday's pangram was hyacinth. And here are today's Mini Crossword, Wordle, Connections, Sports Connections and Strands. Thanks for spending part of your morning with The Times. See you tomorrow. 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