Trump's economic illusion is in danger of bursting

Trump's economic illusion is in danger of bursting

In just a few hours, Donald Trump went from praising America's new "golden age" to warning that parents could buy fewer toys for their children, and at higher prices.

Trump's rapid change of perspective

This sudden change in the president's mood highlights the hype surrounding his promise to make America prosperous again and the pain that may be required to get there.

The reality of the economy

Trump's pessimistic tone during a Cabinet dispute was a rare admission that his Trade war with China will lead to fewer goods and higher prices. On a day when reality repeatedly threatened to penetrate the White House bubble, the president struggled to negative moods to disperse after official data showed that the economy contracted by 0.3% in the first quarter — the first major regression measuring Trump's impact on U.S. growth.

Political implications of economic figures

The Commerce Department report is less an immediate crisis report than an indication of the political and symbolic implications for Trump himself. The president cannot afford for the warning signals to be accepted as conventional wisdom.

First of all, the data hit the White House advertising offensive, which Trump's first 100 days as the greatest presidential actions. This indicated growing political vulnerability. Although much of Trump's support comes from his tough border policies, the idea that he is a master entrepreneur who can steer the economy is crucial to his political image. If this image collapses, its political foundation will become weaker.

Sign of a recession?

Additionally, the GDP report reinforces the growing sense that bleak economic days lie ahead and that this is just the beginning. Trump cannot allow such an impression to take hold. Beyond the impact on his personal status, panic among GOP lawmakers could shake the fragile unity of the GOP majority in the House — which Trump needs to maintain his "big, beautiful" Tax and budget plans to enforce.

What's particularly important is that, with early signs that consumers are already saving, evidence that smoky times lie ahead could be a self-fulfilling prophecy. History shows that a country talks itself into a recession.

The global perspective

The world is watching too. If Trumps declining approval ratings create any impression of political weakness, this could undermine his negotiating position while he tried trade agreement to deal with dozens of countries that want to avoid its tariffs. If foreign leaders believe he is desperate, why should they make him good offers?

Trump's responsibility and the blame game

As usual, Trump's reaction tells the story. After the GDP report was released, Trump made a panicked post on Truth Social, saying, "This is Biden's stock market, not Trump's." He added: “This will take a while, has NOTHING TO DO WITH CUSTOMS.” Throughout the day, the president criticized his predecessor in an attempt to deflect blame for the economic numbers. Later he looked at future dates. “This is Biden, and you could even say the next quarter is kind of Biden because it doesn't just happen on a daily or hourly basis,” said Trump.

The challenges for Trump

Each government blames its predecessor for poor economic news — that's fair game in politics. And it is true that it takes time for a government to establish its own economic policies and see the results. Trump is undeniably responding to a real economic problem — the disruption of many communities in industrialized parts of America as a result of globalization.

But his claim that disappointing economic indicators were his predecessor's fault would have more credibility had he not launched the most disruptive attack on the global economic and trading system since World War II without planning, questionable metrics and characteristic chaos.

The day Trump strutted into the White House Rose Garden with his scoreboard showing each country's tariff rates, he took responsibility for the economic situation. Many of the shocks and uncertainties weighing on investors and consumers are directly attributable to the “ Liberation Day “ attributed.

Millions of Americans, however, have experienced the impact on their 401(k) retirement plans. These months have been particularly worrying for those who have just retired or are planning to do so soon.

Public perception and the state of the economy

One of the important reasons Trump won the 2024 election is that voters found him more credible in reducing the cost of living, such as groceries. Despite the president's efforts to obscure the truth, he has done little to mitigate these prices, which have an enormous impact on the lives of those who — unlike most of his Cabinet members — have none Millionaires or trillionaires are.

Public perception is also being shaped by a flood of evidence that the economy is heading south.

"This was probably the least successful first 100 days of a presidency in the economic history of the last century," former Treasury Secretary Larry Summers told CNN's Kate Bolduan. "We've seen the stock market fall more than ever before. We've seen the dollar fall more than ever before. We've seen projected unemployment rise sharply. Inflation forecasts rise. The likelihood of a recession increases. We've seen a dramatic decline in consumer confidence. Companies have withdrawn all of their previous profit expectations."

The analyzes in the cabinet

Senior government officials dismissed such dire predictions. "This was the best negative GDP report I've ever seen in my life. This should be really positive news for America," Trump trade adviser Peter Navarro told reporters. Trump, on the other hand, claimed credit for an increase in investment in the report — raising the question of why that indicator is attributed to him while more negative readings are attributed to Biden.

Other officials argued the Commerce Department figures were affected by a sudden surge in imports that suppressed the growth calculation. This, they claimed, gave a false reading of the economy's health. But the import surge came as companies stockpiled products in anticipation that Trump's tariffs would restrict trade. Therefore, this is more of an indicator of coming economic problems than a sign of current strength.

The tension between reality and Trump's promises

The dueling mix of rhetoric and data coming out of the administration on Wednesday suggests the White House has a growing problem that could significantly impact the course of Trump's second term.

After pushing the U.S. and the world into the economic unknown — based on his own gut instinct — Trump faces an opaque path to a successful outcome.

That's why his comment about the cost of toys was so insightful. The president was referring to the possible impact of his confrontation with China — the main theater in the trade war. As Chinese President Xi Jinping remains unwilling to accept Trump's 145% tariff, the president has claimed for days that he and his administration are in intensive talks with Beijing, although there is no public evidence of this. U.S. observers typically do not believe the Chinese Communist government's statements over those of Washington. But this government's record of propaganda and lying means it doesn't benefit much from a leap of faith these days.

The price of conflict

The president described China as the "primary exploiter" of U.S. factories and workers and boasted that its actions have caused cargo ships loaded with goods for the U.S. market to turn around and head back to port. He presented it all strangely as positive.

"You know someone said, 'Oh, the shelves are going to be empty,'" Trump said. "Well, maybe the kids will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a few dollars more than normal."

The comment may have been flippant, but it was nonetheless insightful and pointed to an impending trap for the president.

There is a strong argument that the United States has relied too heavily on cheap consumer goods from China and that it would be better for the nation's overall health to promote a balanced economy.

But this is an uncomfortable political argument for a billionaire president who moves around wealthy CEOs and members of his Mar-a-Lago club when he tells working parents that they can afford fewer toys for their children.

The impact on consumption

And this goes far beyond dolls. While the trans-Pacific pipeline for goods from China has hurt U.S. domestic production, it has raised living standards for millions of Americans. Almost everyone has benefited from cheaper school supplies, clothing and consumer electronics like flat-screen televisions. Every parent knows how quickly children grow out of their shoes. Most of these shoes come from China.

If that suddenly goes away, there will be real pain.

This was one of the few times he revealed to Americans the likely costs of his trade conflict with Beijing.

The defensive posture of the White House

But the White House continues to try to ignore reality. On Tuesday, press secretary Karoline Leavitt accused Amazon of a “hostile and political” act after a report that has since been denied It emerged that the company wanted to show the actual cost of the tariffs to consumers on its websites.

Much of Trump's day on Wednesday was spent at events where Cabinet members and sympathetic business figures praised him.

"Mr. President, your first 100 days have far exceeded those of any other presidency in this country - ever. We have never seen anything like it. Thank you," Attorney General Pam Bondi said during a cajoling Cabinet event. It wasn't the first time that White House communications efforts served more to boost the president's morale than the country's.

A worrying divergence

Some of these scenes are funny. But they suggest that a president who has set the economy and the world on a risky course is not getting real advice about the consequences.

Therefore, the gap between reality and Trump's world will only widen, what with statements like the ones he made on Tuesday evening in Michigan met, is undermined: “Our Golden Age has only just begun.”