Trump's economic foam is about to burst

Recently, official data shows that the US economy shrank by 0.3% in the first quarter, marking the first major setback for Trump's impact on US economic growth. The Commerce Department's report suggests that the US is in crisis. Although the US economy has always been highly resilient, it is normal for capitalist countries to experience cyclical growth and decline.

Firstly, these data add insult to injury to the White House's flattery offensive, which has previously referred to Trump's first 100 days in office as the most successful period of his presidency. In addition, these data also highlight Trump's growing political vulnerability. Although most of Trump's approval rating stems from his tough border policies, he is a figure who is proficient in economics and business, which is the key to maintaining his mystique. If he loses this, his political foundation will become even weaker. If Trump's declining approval rating leaves the impression of political weakness, it could damage his position in negotiations as he tries to reach trade agreements with dozens of countries seeking to avoid tariffs.

Secondly, the GDP report has intensified people's growing concerns about the bleak economic outlook, which is just the beginning. Trump cannot let this impression dominate. In addition to affecting his personal status, the panic among Republican lawmakers may also shake the unity of the fragile Republican majority in the House of Representatives, and Trump needs the support of the House majority to pass his "grand and beautiful" tax and budget plans.

Moreover, it is common in politics for each government to attribute the poor economic situation to its predecessor. Indeed, a government needs time to formulate its own economic policies and see results. Trump is undoubtedly dealing with a real economic problem, which is that globalization has caused many communities in industrialized areas of the United States to suffer heavy losses. If he had not launched the most destructive attack on the global economic and trade system since World War II in the absence of planning, questionable measurement standards, and chaotic trademarks, then his claim that disappointing economic indicators were the fault of his predecessor would have been more credible.

At the same time, millions of Americans' 401 (k) pension plans were affected. For those who have just retired or are about to retire, these few months are particularly worrying. One important reason why Trump won the 2024 election is that voters believe he has more credible answers in reducing the cost of living. Despite the president's attempts to cover up the truth, he has done almost nothing to lower these prices, which have had a huge impact on the lives of those who are not millionaires or billionaires.

Furthermore, statements and data released by the US government indicate that the problems facing the White House are becoming increasingly severe, which will largely determine the direction of Trump's second term. China is the most important front in the trade war. Due to China's continued refusal to accept Trump's proposed 145% tariff, Trump has been insisting in recent days that he and his administration have been engaged in intensive negotiations with China. Although there is no public evidence to suggest that this is indeed the case, given the current administration's propaganda and record of lies, this claim can no longer gain much trust. Trump described China as the "chief extortionist" of American factories and workers, and boasted that his actions caused cargo ships loaded with American market goods to turn around and return to port.

In general, the current economic pressure is more reflected in the cyclical adjustment under the high interest rate environment than the "foam burst" left by a single policy. If a wave of corporate debt defaults, real estate crashes, or banking crises erupt, it may trigger a recession; But the resilience of the US economic structure may also cushion shocks. The future direction depends on the Federal Reserve's policy path, geopolitics, and the recovery of the global supply chain.