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Candidate Donald Trump promised an economic renaissance. President Donald Trump is delivering economic turmoil.
The US stock market, once the only measure of economic performance that the president cared about, has seen a significant selloff amid fears of an impending recession — and the US is underperforming relative to its global peers.
Other indicators look brighter, but there are troubling signs on the horizon. February’s jobs report said the labor market was holding steady, but the report did not yet capture the full extent of Trump’s mass layoffs of federal workers. Inflation came down slightly in February, but price stability is in trouble as Trump’s tariffs touch off a global trade war.
Meanwhile, Treasury Secretary Scott Bessent has said the administration is focused on the “real economy,” tracking Treasury yields as an indicator of its health. Declining Treasury yields could help bring down borrowing costs across the economy, spurring investment and leading to economic growth. But amid the chaos created by Trump’s policies, it’s not clear that strategy will work.
The future looks rocky enough that Trump last weekend refused to rule out a recession.
Trump’s defenders say the pain is temporary and that good times are ahead: “I’d kind of suggest people keep their powder dry and pay attention to a well-thought-out economic plan that will indeed make America great again,” Larry Kudlow, a Fox Business pundit and former Trump adviser, said Monday.
But the American public remains skeptical: A March Reuters/Ipsos poll found that 57 percent of Americans think Trump’s economic policy has been too erratic. Other recent polls similarly show his approval ratings on his handling of the economy tanking.
Here’s what the economy looks like right now, in four charts.
US stocks are underperforming
Investors might have hoped that Trump’s second term would be a boon for the stock market. Trump certainly gave the markets a lot of attention during his first term, when he frequently touted the record highs the stock market reached under his tenure, appearing to view it as a direct reflection of the strength of his economic policies.
In his second term, the markets have instead been roiled by his tariff policies, which threaten to raise prices for Americans and have set off a trade war, Meanwhile, he has dismissed concerns about a potential recession.
“I don’t see it at all,” Trump told reporters on Tuesday when asked if he thinks there will be a recession.
Major US stock indices closed higher on Wednesday following the inflation report. But they are still posting losses this year to date. That has put them behind global stock indices. Some of those that exclude US stocks have even posted gains so far in 2025.
Job growth is steady but precarious
Though hiring has remained strong, there are some signs that the labor market is cooling down. The US added 151,000 jobs in February, but the unemployment rate increased to 4.1 percent from 4 percent.
That uptick might be a sign of a slowdown to come. In February, US employers announced job cuts on par with what was seen during the last two US recessions.
The February jobs numbers also do not fully reflect the impact of cuts underway at the federal government.
On Wednesday alone, the Trump administration slashed more than 1,300 jobs at the Education Department, practically halving its size. Elon Musk’s Department of Government Efficiency has also claimed to have made over $100 billion in spending cuts, but his team has been unreliable in their accounting. Those cuts could also affect jobs at businesses that contract with the federal government.
Trump is eyeing Treasury yields
Trump officials have signaled that they’re closely monitoring a benchmark known as the 10-year Treasury bond yield.
That yield is the interest rate that the federal government pays to Treasury bondholders each year on loans that mature after 10 years. It affects borrowing costs for everything from the $12.6 trillion mortgage market to $5.8 trillion in bank lending. The current yield is about 4.2 percent.
That rate isn’t determined by the government but rather set by market forces. If financial institutions are feeling good about the US’s financial outlook, their bids at these bond auctions may be lower. If they’re predicting economic turbulence, as is currently the case, those bids may be higher.
In the immediate aftermath of Trump’s reelection, the 10-year Treasury rate rose sharply. It’s come down since peaking in January, but rose again amid the uncertainty and fear created by Trump’s tariffs.
Bessent has said that lowering the Treasury yield could bring financial relief to struggling Americans, and Trump heralded a “big, beautiful drop” in Treasury yields during his recent address to Congress.
However, there are some snags in his plans: For one, Germany has triggered a global bond selloff with its recent announcement of major infrastructure and defense spending, causing US Treasury yields to rise. And Trump’s tariffs may actually lead to more inflation, making it difficult for borrowing costs to come down.
Inflation is expected to creep up again
New data from the federal government published Wednesday shows that inflation cooled to 2.6 percent in February, exceeding some analysts’ expectations. But it might be premature to celebrate.
That’s because Trump’s tariffs may have not yet been fully priced into consumer goods. Trump imposed 25 percent tariffs on all aluminum and steel goods on Wednesday, and the European Union and Canada have responded with retaliatory tariffs on a host of US products ranging from bourbon to motorcycles.
Trump has also imposed a 20 percent tariff on Chinese goods and 25 percent tariffs on imports from Canada and New Mexico, though has exempted broad categories of goods including goods imported by US automakers.
If inflation ticks back up again, the concern is that the Federal Reserve might not be able to use the lever of interest rates to respond to a potential recession. The Fed has come closer to its target rate of 2 percent inflation, but might not be willing to introduce further interest rate cuts if that number starts rising again.
