U.S. President Donald Trump claimed that the economy is fine despite the decline in the U.S. stock market and worsening consumer conditions, while foreign media pointed out that Trump could repeat the mistakes of former President Joe Biden. Analysts noted that the situation is similar to when Biden ignored inflation concerns, leading to a disconnect with voters and subsequent political repercussions.
According to Business Insider on the 23rd (local time), the S&P 500 index entered a correction phase, falling 10% from its recent peak in February. This marks the first correction since October 2023. Mark Zandi, chief economist at Moody's, said, "As seen in corporate surveys, consumer surveys, and the stock market, the overall sentiment is retreating."
However, the Trump administration is downplaying the situation. Treasury Secretary Scott Bentsen appeared on CNBC on the 16th and referred to the stock market decline as a "healthy and normal correction," saying, "I am not worried about the market." When asked whether the correction would lead to a recession, he remarked, "We will face a transition, but there will be no crisis."
Trump also still views tariff policies as a boon for the economy, arguing that the positive effects of tariffs will offset any negative impacts.
But Business Insider pointed out that prolonged stock market weakness could harm the overall economy. Zandi told Business Insider, "Since the performance of the stock market can have a substantial impact on the entire economy, the Trump administration should not disregard the signals the stock market sends. Especially the wealthy will reduce expenditure when the stock market shows deficits at some point, which could lead to widespread recession."
Consequently, major institutions like RBC Capital Markets, Yardeni Research, and Goldman Sachs have been consecutively lowering their year-end forecasts for the S&P 500. RBC revised its target from 6,600 to 6,200, while Yardeni adjusted its estimate from 7,000 to 6,400. Goldman Sachs lowered its S&P 500 target from 6,500 to 6,200, raising the probability of a recession from 15% to 20%.
Investors are focused on President Trump's tariffs scheduled for April 2. If these tariffs are implemented, Business Insider predicts U.S. tariff rates will soar to their highest levels since the 1930s. Given the previous trade war during Trump’s first term that impacted manufacturing, there are warnings that this measure could also trigger issues in manufacturing and induce a recession.
Experts pointed out that "the real danger faced by President Trump is a decline in approval ratings after a recession caused by tariff policies." Business Insider noted, "As the Democrats did in the last administration, if a recession occurs, the Republican Party is likely to lose its majority in both the House and Senate in the 2026 midterms. It is dangerous from a political perspective to ignore this atmosphere."