'Why would he mess with that?' Economist bewildered as Trump threatens major advantage

Travis Gettys
March 31, 2025 

ALTERNET

U.S. President Donald Trump waves as he walks before departing for Florida from the South Lawn at the White House in Washington, D.C., U.S., March 28, 2025. REUTERS/Evelyn Hockstein

Investors have been unnerved by the first two months of Donald Trump's second presidency and have been left bewildered by many of his moves on an ascending economy, according to a report Monday.

Trump's off-and-on tariffs, sweeping cuts to government spending and immigration crackdowns have upset the predictability that Wall Street craves, and even the president has refused to rule out a recession as a result of his early policies. Influential economic consultant Julia Coronado told Politico Magazine that she's at a loss to explain where the economy was headed.

"What am I certain of? In terms of the policy outlook, I’m certain of absolutely nothing," said Coronado, a former Federal Reserve economist and co-founder of MacroPolicy Perspectives. "I’m not even certain which direction interest rates are going next. I have baseline scenarios, and ways to think about it, but we are seeing just a tremendous and intentional disruption to the status quo."

Coronado explained that investors tend to stay away from placing big bets when uncertainty is high, as it is now, and she said Wall Street is finding out that Trump isn't as sensitive to the stock market — which was on an upward trajectory when he was elected — as they thought.

"There was this sense that [his actions] wouldn’t be substantial or significant enough to disrupt what was a pretty solid growth backdrop," Cornado said. "We had a pretty great setup for Trump. Why would he mess with that?"

In addition to tariffs and spending cuts, Coronado said the breakdown in the rule of law had also spooked investors.

"This administration is aggressively taking actions that are being challenged in courts," she said. "They’re ignoring court decisions. That can affect the economy. It can affect market functioning. It’s hard to say when and exactly how, but we always talk about one of the reasons [for] U.S. exceptionalism is stability, rule of law, clarity of contract law and a stable operating environment. We’re really disrupting that right now."

Treasury Secretary Scott Bessent has said that the economy needs a “detox” from government spending, and Coronado said that should be considered an ominous sign.

"It feels like they’re laying the groundwork for things to get worse," Cornado said. "They’re trying to tell a story about how you know this near-term pain will equal longer-run gain. Maybe that’s true, maybe it will work out that way ... This is different from the narrative they were telling when they got elected. They were like, you know, 'It’s going to be amazing on Day One,' and now they’re saying: 'Well, actually, we might need to hurt a few things before you get to the good stuff.'"