For all the chaos along the way, President Donald Trump’s first year back in the White House is ending with an economy that looks, by most conventional measures, much like the one he inherited. Unemployment is low, consumer spending is strong and inflation is stubbornly high but gradually improving.
Tariffs, Trump’s signature economic policy, have not set off the manufacturing renaissance he promised, but nor have they caused the surge in inflation that many forecasters feared. The stock market bobbed and weaved its way to a solid if not spectacular 16 per cent gain. Analysts who began 2025 warning of the perils of uncertainty ended it by remarking on the US economy’s surprising resilience.
Yet it would be a mistake to think that Trump’s actions left the economy unscathed.
Much more so than in his first four years in office, Trump has begun his second term with what amounts to an all-out assault on many of the institutions and policy paradigms that have long been seen by leaders of both major political parties as the foundations of American economic strength.
He has sought to undermine the independence of the Federal Reserve, fired the head of the Bureau of Labour Statistics, an agency that collects key economic data, and cut funding to the universities that conduct much of the country’s cutting-edge scientific research. He has intervened in private business deals, taken stakes in private companies and threatened corporate executives who do not adequately embrace his policy priorities. He has sharply restricted immigration, questioned the value of America’s alliances and imposed punishing tariffs on friends as well as adversaries.
Many of those actions are being challenged in the courts, and future Presidents could reverse course on at least some of the current administration’s policies. But economists from across the ideological spectrum warn that Trump is setting the country on a path that will, in the long run, leave the economy less dynamic, the financial system less stable and Americans less prosperous in the decades ahead.
“We’re weakening the special sauce that made America so great,” said Kimberly A. Clausing, an economist at the University of California, Los Angeles, School of Law.
Clausing worked in the treasury department in the Biden administration. But her concerns are shared by many economists on the right, including some who have worked for Trump.
Vance Ginn, who served as chief economist in the office of management and budget during Trump’s first term, praised the administration’s efforts to eliminate regulations and lower corporate taxes. But he said the benefits of those moves are outweighed by the costs of its policies on trade and immigration, its failure to rein in the federal deficit and its intervention in the private sector.
“On net, the policies have been negative for the economy,” Ginn said.
The effects will most likely be subtle, however, showing up as a steady drip of slower growth and higher interest rates that are hard to detect in the moment. A more acute crisis, if one comes at all, might show up years or decades in the future, much too late for voters to hold Trump or his administration accountable.
“We know from a lot of historical experience that the sort of things he’s doing are antithetical to prosperity in the long run,” said Gregory N. Mankiw, a Harvard economist who worked in the White House under President George W. Bush. But, Mankiw added, it is impossible to know exactly when or where those consequences will be felt.
New York Times News Service