Vawn Himmelsbach
Wed, Apr 9, 2025, 2:31 AM 6 min read
Economists, traders and industry leaders are worried about the impact of President Donald Trump’s policies. So it’s no wonder the average American is worried as well.
A stock market correction — like the one happening now — might be good for billionaires who see it as a buying opportunity. But for the average American? Not so great, as they watch their 401(k)s decline in value.
Tariffs, trade wars, and cuts to government programs have many Americans worried about what Trump’s policies will do to their finances — and their retirement savings. Only 4 in 10 voters view his handling of trade and the economy favorably, according to an AP-NORC poll.
Consumers’ expectations for the future fell for a fourth consecutive month, reaching a 12-year low of 65.2, according to the most recent Conference Board Consumer Confidence Survey. That’s “well below the threshold of 80 that usually signals a recession ahead.”
These findings suggest that “worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” said Stephanie Guichard, senior economist of global indicators at The Conference Board.
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These fears may be justified, given some of Trump’s proposals. One such proposal, reiterated by U.S. Commerce Secretary Howard Lutnick to Fox News, is to replace income taxes with tariffs.
Although it’s difficult to accurately quantify the effects of Trump’s tariffs at this point, research has shown that his 2018 tariffs resulted in price increases for goods subject to the tariffs, hurt U.S. GDP, cost jobs and reduced real income by about $674 per household.
Analysis by the Peterson Institute for International Economics (PIIE), an independent and non-partisan research group, also shows that price increases from tariffs will hurt middle- and lower income Americans the most. And, if used to replace income taxes, the middle quintile of income earners — defined as those earning on average $74,730 — would see a reduction in net after-tax income while top earners would see an increase.
And In their most recent Summary of Economic Projections (SEP), Federal Open Market Committee (FOMC) participants downgraded their expectations for GDP and increased their forecast for inflation. There’s “already at least a whiff of stagflation right now” in the U.S., Richard Clarida, global economic advisor at Pacific Investment Management (Pimco), told Bloomberg Surveillance.
