The Trump administration should ignore the vibes at its own peril, as a deep enough plunge in the stock market could lead to real economic pain later.
President Donald Trump might be making a mistake that cost Democrats the election last year.
Similar to how President Joe Biden’s insistence that the economy was strong glossed over the pain of high inflation for many Americans, the Trump administration may now be ignoring darkening economic vibes.
While inflation became a sticking point for voters, the Biden administration was criticized for rarely acknowledging it. Whether Biden and the Democrats were responsible for the bulk of the inflation during his term, voters saw a disconnect between the messaging of a strong economy and dwindling affordability for everyday items.
In its first few months, the Trump administration has been plagued by a declining stock market, a plunge in sentiment among consumers, businesses, and investors, and growing concerns about a recession — and yet, there’s been little acknowledgment or outright dismissal of some of the pain stemming from the uncertainty created by Trump’s policies.
«Clearly sentiment is on its back heels», Mark Zandi, chief economist at Moody’s, told Business Insider. «You can see that in business surveys, in consumer surveys, and, of course, the stock market.»
The S&P 500 entered a correction last week, falling 10% from its February 19 peak. It’s the first correction for the stock market since October 2023.
The administration has tried to downplay the situation. Treasury Secretary Scott Bessent has said corrections are «healthy» and that the administration will stomach market volatility while it pursues its goals.
Meanwhile, Trump has continued to insist tariffs are an economic windfall even as markets and consumers fret over their impact.
But a declining stock market could serve as an overhang for the economy if it doesn’t rebound soon — and it highlights a big difference between the downbeat mood during the Biden administration versus the early days of Trump’s term.
