Trump Policies Brewing Perfect Storm For Recession

As small businesses brace for the impact of persistent tariffs and consumers feel the pinch of rising prices, the broader question remains whether voters will connect this downturn to its political origins—and hold those responsible to account in 2026

Alex Jacquez from the progressive think tank Groundwork Collaborative issued a stark warning to the US public in response to a statement from the Federal Reserve committee that sets interest rates.

The new statement from the Federal Open Market Committee (FOMC) "provides further evidence that a perfect storm for a recession is brewing" under US President Donald Trump, said Jacquez, Groundwork's chief of policy and advocacy. "Barely 100 days into Trump's second term, working families are already being crushed by sticky inflation and slowing growth."

"A Trump-engineered recession will devastate working families, but the president refuses to stand down on his failed trade war, no matter the cost," added Jacquez, who previously advised former President Barack Obama and Sen. Bernie Sanders (I-Vt.).

The FOMC said Wednesday that "the risks of higher unemployment and higher inflation have risen," and opted to keep the federal funds rate at 4.25-4.5 per cent. The committee has maintained the rate for the past three meetings, following a series of cuts last year.

Trump on Sunday pushed for a rate cut, and though he has backed off a threat to try to oust Fed Chair Jerome Powell, the president "could reconsider if the economy stumbles in the coming months," The Associated Press reported.

According to the AP: Asked at the press conference whether Trump's calls for lower rates [have] any influence on the Fed, Powell said, "[It] doesn’t affect doing our job at all. We're always going to consider only the economic data, the outlook, the balance of risks, and that's it." If the Fed were to cut rates, it could lower other borrowing costs, such as for mortgages, auto loans, and credit cards, though that is not guaranteed.

Addressing Trump's evolving tariff policy, Powell said Wednesday that "if the large increases in tariffs that have been announced are sustained, they're likely to generate a rise in inflation, a slowdown in economic growth, and a rise in unemployment."

Sharing a video of his remarks on social media, Sen. Elizabeth Warren (D-Mass.) stressed that Trump's tariffs mean higher prices. In a Wednesday blog post, former Labor Secretary Robert Reich wrote: "Recall that last November, the single biggest reason voters gave in exit polls for choosing Trump was that he'd bring prices down... Although Trump has scaled back some tariffs and paused others as he seeks trade deals with foreign nations, his tariffs are already eating into household budgets."

Reich highlighted comments about price hikes from companies whose products include everything from baby supplies and laundry detergent to paper towels and tools. He also emphasized that "tariffs will particularly hurt small businesses."

"This bodes ill for American workers, since 80 per cent of US employment comes from small businesses with fewer than 500 workers. The likely result: higher unemployment," he explained, projecting price hikes and job losses this month. "But here's the question: Will consumers and workers realize Trump is the cause? And if they do, will they remember this by the November 2026 midterm elections?"