It’s an old political trick. Engineer a recession in your first year and blame it on the previous occupant of the White House. Then take credit for the subsequent recovery.
President Donald Trump and Treasury Secretary Scott Bessent recently rattled the markets with the same message of short-term pain for long-term gain. Bessent began with a CNBC interview outlining the Trump Administration’s intent to shift the source of economic growth from the public to the private sector. He added, “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period.”
In a separate interview, Trump said “a little time” may be needed for his tariff plan to start returning wealth to Americans. He acknowledged that the U.S. economy will undergo some short-term pain and declined to rule out a recession this year: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.” Even more alarming to equity investors, he revealed that he wasn’t as concerned about the stock market as he had been during his first term in office: “Look, what I have to do is build a strong country. You can’t really watch the stock market. If you look at China, they have a 100-year perspective.”
So long to the Trump Put.
Could this “detox period” result in a recession in 2025? This matters because, as Callum Thomas observed, non-recessionary pullbacks tend to be short and shallow, while recessionary bear markets tend to see drawdowns last longer and deeper.
Here is what I am watching.
The full post can be found here.
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