With Warning Signs Flashing, Trump Doubles Down on Economic Chaos

With Warning Signs Flashing, Trump Doubles Down on Economic Chaos

President Trump’s erratic tariff policy is sowing chaos in our economy. Companies are raising prices in response to the uncertainty, GDP is negative, imports and durable goods orders are down, and an increase in jobless claims this week signals a weaker labor market.

Instead of working to lower prices, Republicans are moving full steam ahead to advance a bill that will increase health care, grocery, energy, and higher education costs, forcing working families to foot the bill for billionaire tax giveaways. Meanwhile, President Trump is celebrating Musk’s land grab as he departs the government and leaves a wake of destruction that has allowed him to enrich himself at the expense of working families.

Groundwork’s Chief of Policy & Advocacy Alex Jacquez released the following statement:

“Warning signs are flashing in the economy as companies start to announce price hikes, and experts say that tariffs will begin to hit economic data and pocketbooks in the weeks to come.

“President Trump and Republicans promised lower costs to the American people. Instead, they are set to increase costs with more erratic policymaking and a tax plan that raises prices to fund billionaire tax giveaways.”

This week in the Trump Slump, new polling and economic indicators continue to show that President Trump’s actions are deeply unpopular and hurting the economy.

Polling:

• A new PwC survey showed that “more than 60% of U.S. corporate executives have been cutting costs, renegotiating with suppliers and making plans to pass tariff impacts onto customers.”
• New research from Navigator found that nearly half of Americans believe that Trump and the Republican party are corrupt, with a majority concerned that Trump is abusing government power to punish his critics and reward his allies. Additionally, 58% of Americans agree that Trump is bringing more corruption to Washington.
• Groundwork Collaborative and Data for Progress have been tracking sentiment toward Musk’s DOGE over the past three months. Since the beginning of March, independents have swung 27 points against DOGE, from (+7) to (-20), saying that they do not believe DOGE will make government work better for them.
• Americans’ views on the economy remains dim, according to new polling from Gallup that shows a majority of Americans (58%) perceive that economic conditions are getting worse.
• New polling from the Detroit Regional Chamber shows that fears of a recession have increased by 11 points since January, 2025 among Michigan voters. The data also showed a surge in fears of worsening inflation and that a majority of voters continue to oppose Trump’s tariff proposals.

Economic Indicators:

• Data from the Department of Labor showed that jobless claims rose with 240,000 people newly filed for unemployment benefits.
• The Commerce Department released new data that showed a 6.3% decrease in new orders for manufactured durable goods in April.
• The Bureau of Economic Analysis released data showing consumer spending slowed from 0.7% in March to 0.2% in April, with consumers pulling back on non-essentials like clothing, cars, and recreation.
• U.S. goods imports fell by nearly 20%, the largest month-over-month drop on record, driven by declines in industrial and consumer goods imports as Trump’s tariffs begin to bite.
• Gross domestic product shrank by 0.2% in the first quarter of 2024, according to data from the Commerce Department.
• Final data from the University of Michigan Survey of Consumers showed that consumer sentiment remained unchanged from its historically low level in April.

Expert Commentary:

• In an op-ed for the Philadelphia Inquirer, Moody’s Chief Economist Mark Zandi wrote about the growing uncertainty around the economy: “In my 35 years as a professional economist, I have rarely been as unsure about the economic outlook as I am now… It is extraordinarily tough to gauge the economic outlook this time due to the unprecedented uncertainty created by the global trade war and economic policy more broadly.”
• Minutes from this month’s Federal Reserve meeting revealed: “that officials discussed the possibility of ‘difficult trade-offs if inflation proves to be more persistent while the outlooks for growth and employment weaken.’ The risk of that outcome had risen, according to the account of the discussion. The Fed’s staff at the time warned that a recession was ‘almost as likely’ as its forecast for subdued growth and higher unemployment. They also raised their forecast for inflation from previous estimates in March. Tariffs, they said, were expected to boost inflation ‘markedly this year’ and continue to bid up price pressures in 2026 before inflation trended back to the 2 percent target by 2027. That combination carries the whiff of stagflation.”
• Volvo Cars CEO Hakan Samuelsson stated that its customers must pay for rising tariffs.
• Chris Rupkey, Chief Economist at Fwdbonds, warned: “The markets are already nervous about trade tariff headlines and now there are new worrying signs the real economy is taking a hit…Just as you’d expect, consumers stayed away from the purchase of durable goods like clothing and cars and instead spent mostly on life’s necessities like housing, health care, and food services. This is a trade war report where the consumer is clearly gun-shy.”
• Omair Sharif, President of Inflation Insights, explained: “If you’re looking for a specific month where I would expect to see a lot more of it come through [in the Consumer Price Index], it’s the June data that comes out in the middle of July.”
• Groundwork Collaborative’s Executive Director Lindsay Owens called out Elon Musk’s self-serving work as he departs DOGE: “Elon Musk got what he came for. In just a few short months, Musk penetrated virtually every government agency, ransacked critical infrastructure, gleaned intelligence and trade secrets on his companies’ competitors, and hoovered up as much of Americans’ personal information as he could find. This wasn’t an effort to clean up government, it was a land grab… If you’ve ever thought that conversations about the problems of money in politics seemed hyperbolic, I hope this dark episode in American history has changed your mind. Billionaires like Musk have no business running our government. Proponents of democratic reforms must start to take economic power seriously. Without taking on extreme concentrations of wealth, our democracy won’t survive.”
• Emily DiVito, Groundwork Collaborative’s Senior Advisor for Economic Policy, reacted to Trump’s flurry of pardons for tax evaders: “Between nominating fraudster Billy Long to lead the IRS, gutting nearly half of its workforce, and pardoning tax-evading crooks, Trump is rolling out the red carpet for tax cheats. Trump’s war on the IRS empowers his wealthy donors to get off scot-free while working families are subject to longer waits for refunds and worse customer service. It’s corruption, plain and simple.”