America faces a Trumpian economic slowdown

Subscribe to enjoy similar stories. “The golden age of America begins right now." So declared Donald Trump on January 20th in his inaugural address. In the six weeks since that chilly day, investors and economists have started to grapple with a less upbeat possibility: that his arrival in the White House is both causing and coinciding with a period of weakness for America’s economy.

For now, such worries are apparent in surveys about the economy rather than hard data itself, which still exhibits momentum from last year. Ordinary Americans have turned gloomy. A closely watched consumer-sentiment index published by the University of Michigan plunged in February, dipping to its lowest since 2023.

A separate gauge of consumers’ expectations published by the Conference Board, a business-research group, showed a similarly precipitous drop in February, hitting a level that suggests a coming contraction. Looming large in the public concerns is the potential for a rebound in inflation, stemming from Mr Trump’s appetite for tariffs. He has vowed to implement his latest tranche on March 4th, with 25% levies on imports from Canada and Mexico and another 10% on Chinese goods.

Such concerns may already be spilling into actual behaviour. Retail sales in January were unexpectedly weak, with consumer spending down 0.5% in real terms from a month earlier, the biggest decline in nearly four years. There are also slight cracks in the labour market: initial claims for unemployment insurance last week rose to 242,000, matching their highest since October.

Investors are catching the gloomy mood. Stocks rose strongly after Mr Trump’s election victory as they anticipated his deregulatory and tax-cutting agenda. More recently, though, the market