Several economic forecasts for 2025 have been scaled down in recent weeks as a new presidential administration has made many changes in two months.

Measures of business and consumer confidence have decreased under threats of tariffs and large swaths of the federal workforce have faced layoffs. Another concern is the plan for mass deportations, which may affect the labor force.

Some Republican lawmakers have suggested that tariffs would make the U.S. stronger in the long run because American workers are more productive.

Washington, D.C.-based Tax Foundation estimated tariffs from President Donald Trump’s first term (and often retained by former President Joe Biden) reduced GDP by 0.2% and cost 142,000 jobs. However, some industries benefited from those tariffs, with jobs created in the steel industry and manufacturing for washing machines.

Question: Are the first two months of a Trump presidency enough to downgrade economic forecasts?

Economists

Caroline Freund, University of California-San Diego School of Global Policy and Strategy

YES: Policy whiplash is crippling investment and growth. If you don’t know how much your supply chains will cost, you will wait before investing. If you don’t know what reciprocal tariffs are or how they will be implemented, you will wait. If you don’t know if our trade partners will retaliate, you will wait. If you don’t know if there will be federal government workers to support your needs, you will wait. With investors sitting on their hands, growth will slow.

Kelly Cunningham, San Diego Institute for Economic Research

NO: While tariffs may be useful for negotiating better trade relationships, they are not beneficial policy to create or enhance wealth. Abolishing trade barriers, not preserving less efficient industries or generating additional tax revenue, should be the objective. Initially causing some economic turbulence, eliminating disproportionate tariffs on U.S.-made goods and services will be economically advantageous. Lower taxes, less regulation, eliminating bureaucracy and wasteful spending allows business to thrive. Result is greater production, not economic downgrade.

David Ely, San Diego State University

YES: Tariffs and rising trade tensions are already harming the U.S. economy. The uncertainty arising from the chaotic rollout of tariffs will cause businesses to delay investments until the economic environment stabilizes. As tariffs push up prices, U.S. consumers and businesses will become more cautious about spending. Beyond the tariffs, the firings of federal workers and deportations are disrupting labor markets and will lead to slower growth. The probability of a recession has increased.

Ray Major, economist

NO: We should expect short-term volatility as the economy and stock market react to the policies put forth by the new administration. Specifically, uncertainty related to impacts from tariffs, and a possible bump in unemployment caused by layoffs at the federal level may cause the economy to show signs of weakness in the short term. However, a more efficient federal government, reduction in wasteful spending and equity in tariffs will result in a stronger economy in the long term.

Alan Gin, University of San Diego

YES: Inflation will increase with tariffs raising prices and expanded deportations raising labor costs. Higher inflation could affect the Fed’s planned reduction of interest rates. Consumer spending will be hurt by higher prices, declining consumer confidence, layoffs of federal employees and plunging stock prices. Cuts in programs will further reduce income and employment. More jobs will be lost due to retaliatory tariffs and boycotts of U.S. products. Finally, the uncertainty caused by whipsaw policy makes it difficult for businesses to plan.

James Hamilton, UC San Diego

YES: Tariff announcements are arriving at a dizzying on-again, off-again pace. I don’t know which will stick. But what is clear is that the president is quite serious about trying to impose large broad tariffs. When combined with the likely retaliation by other countries these could be quite damaging to the economy. At this point it makes sense to revise forecasts of inflation up and of GDP growth down by a few tenths of 1%.

Executives

Austin Neudecker, Weave Growth

YES: The first two months of Trump’s second term have introduced significant economic uncertainties. Aggressive tariff policies, particularly targeting our largest trade partners like Canada, Mexico and China, have led to market volatility and investor apprehension. While the stock market is reacting negatively, I am substantially more concerned with the realities of inflation and labor shortages on the horizon. Escalating trade wars risk disrupting global supply chains and increasing consumer prices. These developments warrant a cautious reassessment of economic forecasts to account for potential headwinds.

Chris Van Gorder, Scripps Health

YES: While there is always some economic uncertainty, there is more uncertainty after this presidency’s first two months. For the economy overall, on and off tariffs, changes in federal contracts and funding and employment cuts are unsettling. For health care, the halt of NIH grants to universities and hospitals, and concerns about Medicaid reductions, could have significant impacts on hospitals, community clinics, physicians and others. This concern and uncertainty will downgrade economic forecasts and performance.

Bob Rauch, R.A. Rauch & Associates

NO: The early months of any presidency often bring economic uncertainty. Trump’s policies, such as increased tariffs, had a noticeable impact on the stock market, while immigration restrictions and federal workforce cuts marked a significant departure from President Biden’s approach. While the long-term effects of these measures remain uncertain, Trump’s business background and focus on legacy suggest a commitment to shaping his presidency around economic growth, national security and maintaining peace.

Jamie Moraga, Franklin Revere

NO: The past two months have been marked by unpredictability, affecting employment, trade and consumer confidence. While these factors have led to uncertainty, it is too soon to make definitive judgments on economic forecasts. Key indicators are showing mixed signals, and the full impact of policies will take time to materialize. A more measured approach would have reduced volatility, but two months is premature to assess long-term economic outcomes or justify downgrading forecasts.

Phil Blair, Manpower

YES: The current administration’s erratic behavior, both in DOGE attacks on federal agencies and executive orders, have made the business community very nervous. We keep hearing American businesses are “stuck” or “frozen.” When there is no trust in the near future business hunkers down and waits it out, fearing a recession.

Gary London, London Moeder Advisors

YES: It is unclear just what the economic problem is that the administration is out to solve. So far, inflation is ramping up, tariffs are in play, interest rates remain high, entitlements may be impacted, labor shortages are imminent with immigration crackdowns and, most importantly, world insecurity has risen massively. It would have to be quite a cure for all of this not to continue to negatively resonate throughout the economy over the mid- to long term.

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