Markets are volatile, and investor sentiment has plunged into “extreme fear.” Consumer confidence has declined sharply, with surveys indicating growing pessimism about Americans’ financial outlook. Economists warn that even optimistic reports may only reflect a temporary calm before more turbulence.
At the core is widespread uncertainty—especially surrounding the economic implications of President Trump’s policy agenda.
Despite the data, Trump consistently blames the Biden administration for handing him what he calls a “catastrophic” and “damaged” economy. But most indicators show Biden left office with a strong economy, and many economists believed it was poised for further growth as 2025 began.
Still, inflation over the past few years weighed heavily on households. That economic anxiety played a significant role in Trump’s return to the White House.
This narrative clash has become a headache for economists and fact-checkers. “The economy was bad under Biden and that was reflected in the polls last year; but inflation and every other economic indicator had more or less stabilized when President Trump took office,” said Jai Kedia, economist and research fellow at the Cato Institute.
Kedia points out that the political blame game is timeless. His view, rooted in a Libertarian perspective, is that political intervention often does more harm than good.
“The Biden administration pushed through massive spending bills that contributed to inflation. Now we’re seeing tariffs and trade restrictions under Trump that are also destabilizing,” Kedia said. “The market responded positively when Trump won, but it’s turned downward recently as the administration moves forward with questionable economic policies.”
Kedia attributes much of the recent market dip to tariff proposals, saying they’ve injected new uncertainty into an otherwise resilient economy.
He cautions advisors not to overreact to short-term economic data. “One month’s numbers don’t tell the whole story,” he said. “Data gets revised, and we often don’t see the real picture until months later.”
He points to job reports as a case in point. President Biden often referenced the 16 million jobs created during his term, but nearly 9.5 million of those were simply restoring jobs lost during the pandemic. Trump, in contrast, recently cited a 10,000-job boost in manufacturing—an early estimate likely influenced by investments initiated under Biden.
“It’s too soon to determine the real impact of new tariffs on manufacturing,” Kedia said. “Markets are already signaling their concerns.”
Those concerns are driving a broader fear of economic slowdown, if not a recession.
“This isn’t a recession shock—yet,” said Joe Brusuelas, chief economist at RSM US. “But it will slow growth.”
RSM recently increased its probability of a U.S. recession from 15% to 20%. If trade-related shocks persist or deepen, that estimate will likely rise further.
“If we do enter a recession, and it’s clearly tied to trade policy, then the responsibility would lie with the current administration,” Brusuelas added. “Of course, politically, the blame might still be shifted elsewhere.”
He advises wealth managers to monitor trade developments closely. Policy changes could impact equity valuations, currency movements, and supply chain dynamics in the coming quarters.
Yet confidence surveys, often cited as signals of downturns, shouldn’t be viewed as definitive, said Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.
“We’re in an unprecedented environment—a thick fog,” Sohn said. “Once visibility improves, so will confidence. But we can’t use sentiment data alone to make investment decisions.”
For RIAs and wealth advisors, the takeaway is clear: Stay focused on fundamentals and help clients see past the headlines. While political narratives are loud, the data remains nuanced. Use market dips as opportunities to revisit asset allocation, hedge exposures to trade-sensitive sectors, and reinforce long-term planning strategies that prioritize resilience in uncertain environments.
Uncertainty isn’t new. But in this environment, it demands sharper thinking and a steadier hand.
