Trump Really Wants an Economic Recession in the US and Here's Why

The economic policies and public statements of President Donald Trump suggest that he may view economic recession in the United States as a strategic tool to achieve three main objectives: lower interest rates, reduced inflation, and cheaper energy prices. With outstanding debts amounting to 9.2 trillion dollars by mid-2025, increasing inflation and a more unstable market, experts are analyzing whether Trump is willing to accept - or even create conditions for - a recession to force the Federal Reserve to act and achieve its economic objectives. Recapitalizing $9.2 trillion: Why Interest Rates Need to Be Reduced

The U.S. national debt crisis has reached a critical stage, with $9.2 trillion in debt needing to be refinanced by June 2025, including 70% in the first half of the year. The U.S. currently leads the OECD in public debt interest payments as a percentage of GDP. The average interest rate of US Treasury bonds has increased to 3.2%, the highest level since 2010. In the 2024 fiscal year, the United States spent $7.8 trillion while only earning $5.0 trillion in revenue, meaning the country spent $1.56 for every $1 earned. What is Trump's best strategy to alleviate this burden? A recession. According to history, every recession in the United States since the 1980s has forced the Federal Reserve to cut interest rates. Lower interest rates will significantly ease the burden of massive debt restructuring.

Currently, the market is expecting interest rates to decrease due to increasing recession risks: The 10-year Treasury bond yield has dropped 60 basis points in two months, indicating expectations of lower interest rates. Economist Timothy Peterson warns that the Federal Reserve's delay in cutting interest rates could lead to a market downturn, a scenario consistent with Trump's willingness to accept short-term market declines to stabilize the economy in the long term. A controlled recession could force the Fed to cut interest rates aggressively, providing Trump with the capital restructuring conditions he desires. Trump's trade war and inflation: Using recession to reset prices

President Trump has repeatedly supported lowering interest rates and energy prices to combat inflation. In a statement on January 25, 2025 at the World Economic Forum and in an interview with Fox News, he urged OPEC to lower oil prices and called on the Federal Reserve to cut interest rates. However, U.S. inflation expectations have risen to 6.0% in the next 12 months, the highest level since May 2023. In addition to economic pressure, Trump's new trade war policies have increased instability:

In February 2025, Trump imposed a 25% tariff on all imports from Mexico and Canada, including a 10% tariff on Canadian oil. He also expanded restrictions on Chinese goods, escalating trade tensions. Despite these actions, oil prices have dropped by 20% in just two months, mainly due to concerns about recession and decreasing global demand. Due to economic downturn, the demand for goods and consumer goods may decrease, so recession could be the fastest way to reduce inflation and stabilize prices. Trump's policies show that he views nationalism, economy, and inflation control as important elements in his broader strategy, even if they have to be traded off for temporary economic downturns. The Fed's Compulsion to Act: The Role of Recession in Policy Change What is Trump's biggest challenge in cutting interest rates? Federal Reserve.

Fed Chairman Jerome Powell has warned of early interest rate cuts, citing inflation risks and economic instability. Economist Timothy Peterson believes that delayed rate cuts could lead to a downward market, making economic conditions even tighter. Investor David Roche predicts that the market will drop in 2025 due to a slowing economy, a weaker than expected rate cut, and an overvalued AI sector. However, Trump seems to be playing a longer game : On March 6, 2025, he declared that he "does not follow the stock market," a significant change from the focus in his first term on the stock market performance. Analysts understand this as a signal that he accepts market decline if it helps advance his broader economic policy agenda. According to tradition, a recession occurs after the Fed Funds Rate peaks, often prompting strong monetary easing. If a recession forces the Fed to lower interest rates sooner than expected, Trump may declare victory in achieving a more favorable economic environment for his government's policies. The risks in Trump's strategy of recession Although recession can help Trump achieve lower interest rates, reduced inflation, and cheaper energy prices, it also brings significant risks: Job loss and economic recession - Economic recession will increase the unemployment rate and shrink the economic output, which can lead to public dissatisfaction. Stock market decline - The market has had negative reactions: S&P 500 index dropped 2.7%. Dow Jones index fell 890 points. Nasdaq Composite index declined 4%. Political consequences - Economic recession may reduce public confidence, potentially affecting Trump's political position.

The GDP forecast for the first quarter of 2025 by the Atlanta Federal Reserve has decreased from +3.9% to -2.8%, signaling the imminent risk of recession. Despite these risks, Trump's recent statements indicate that he views the economic instability as a "transition period" to restore the wealth of the American people, showing that he has prepared a strategy to endure short-term economic pain to achieve long-term policy benefits. Conclusion: Is economic recession a resetting of politics and economics? While the debate over Trump's economic policy approach continues, evidence suggests he may be willing to tolerate a recession in the United States if it helps achieve: Reduced interest rates to refinance debt at affordable prices. Reduced inflation due to slowing consumer demand and falling commodity prices. Cheaper energy supports industrial growth. If the Federal Reserve remains hesitant to cut interest rates, Trump may see market downturn as the necessary event to force them to act. Whether this strategy will succeed without causing serious economic consequences remains to be seen. However, one thing is clear: Trump is playing a long game with the US economy, and a recession may be part of the plan.