Stocks fall with economic forecasts as Trump swaps imported labor for tariffs
(Originally published March 19 in “What in the World“) Slow down. You move too fast.
The benchmark index of U.S. stocks, the S&P500, fell 1% Tuesday, and has lost 6.4% since U.S. President Donald Trump was inaugurated for his second term. The tech-heavy Nasdaq fell 1.7%, capping a nearly 11% decline since Trump’s inauguration. Bank of America said a survey this month of 171 fund managers overseeing $477 billion in assets revealed that investors had cut equity allocations by the largest proportion ever: from 17% overweight in February to 23% underweight in March.
Wouldn’t you? The Organization for Economic Cooperation and Development now forecasts that Trump’s trade war will likely brake global economic growth to 3.1% this year from 3.2% in last year, and to 3% next year. U.S. economic growth, it said in its latest forecast, would likely suffer even worse, dropping to 2.2% in 2025 from 2.8% last year, and fall to 1.6% in 2026.
U.S. President Donald Trump’s government layoffs are already resulting in reduced services. His administration, led by multi-billionaire campaign donor Elon Musk’s “Dept. of Government Efficiency,” has been laying off tens of thousands of employees at the country’s largest employer as part of a plan to reduce an estimated 200,000 federal workers and cut federal spending by 15%, or $1 trillion. After voluntary, but unfunded, buyouts and layoffs of newly hired employees still on probation, there are still plans to fire many thousands more.
The cuts have been indiscriminate, resulting in comical moves to re-hire essential workers. But services are already suffering, including reduced launches of weather balloons that the National Weather Service uses to predict and track potentially deadly storms. Layoffs at the Department of Veterans Affairs is likewise hampering treatment of disabled veterans and efforts to help homeless vets. The Consumer Financial Protection Bureau’s response team has been called back to work to churn through the 16,000 complaints that piled up following the bureau’s closure last month. And officials at the Social Security Administration also warn that plans to as many as 12% of its 57,000 employees could threaten benefits to the 73 million American who rely on them. Musk has reportedly installed his close adviser, the private equity investor Antonio Gracias, at Social Security to help oversee its overhaul.
Trump has also targeted roughly 730,000 foreign workers, more than 200,000 of them Ukrainian refugees, allowed into the U.S. under former President Joe Biden’s “humanitarian parole” program. The program, whose other beneficiaries included people from Cuba, Haiti, Nicaragua, and Venezuela, gave legal entry to asylum seekers who could find an American to sponsor them financially. Perhaps fired federal workers will be able to fill the jobs these asylum seekers lose when they’re deported.
As disturbing as news for Americans is, the planet’s outlook isn’t much better. The World Meteorological Organization’s latest “State of the Climate” report found that CO2 levels in Earth’s atmosphere have climbed to their highest in at least 800,000 years, or roughly 150% what they were before the industrial revolution in the mid-18th century. Methane levels are even higher: 265% of pre-industrial levels. The world’s glaciers lost more mass in 2021-2024 than ever before. Sea levels are rising at double the rate they were 20 years ago.
All is definitely not groovy.