According to the most recent Polymarket odds, 39% of betters believe recession is on the table during 2025, which is an uptick of 18% over the last week. However, many hold the view that the economy has already been in recession during the Biden admin, which has been masked in multiple ways.
In this light, recession could be viewed as the case of, ‘If a tree falls in a forest and no one is around to hear it, does it make a sound?’
Let’s review what recession actually means and how it could manifest during the Trump admin.
Key Recession Indicators
The official body that calls out recession is the National Bureau of Economic Research (NBER). When there are grayed out areas on economic charts, marking recession periods, NBER is responsible for determining them. In such charts, NBER tends to tag rising unemployment rate as the key correlatory to recession.
Outside of the unemployment rate, other key indicators cover consumption spending, shift in personal income levels, retail sales, industrial production and gross domestic product (GDP) growth. Stock market decline is also indicative, as a 20% drop from its peak.
In ideal conditions, these indicators would point to a recession. However, one has to account for the reality on the ground.
Potential Masking of Recession
The DOGE-powered revelations on USAID spending not only revealed gross corruption, fraud and waste but the tone in which institutions operate. This tone can be summed up as monolithic coordination to pursue agendas, injecting conflicts of interest and overriding fact-based discernment along the way.
Given this institutional tone, it is then likely that USAID is just the tip of the iceberg of wider institutional deception. This comports with highly anomalous Biden admin in key ways related to recession:
- Drastically revised unemployment numbers, downward year-over-year by 589,000 for March 2024
- Record-breaking, multi-trillion deficit spending. For 2024 alone, the Congressional Budget Office (CBO) marked the deficit at $1.8 trillion. Of course, this is then added to GDP “growth”.
In addition to spending money that doesn’t exist, which is offloaded to taxation and currency devaluation via the Federal Reserve, the Biden admin surged government employment.
Government employment went up from 21.7 million in January 2021 to 23.6 million in January 2025. At the same time, the labor force participation rate remained suppressed since the Great Recession of 2008. At that time, it held at 66%, and now it is at 62.6%.
It is also telling that most jobs went to immigrants. From 2019 to May 2024, immigrants received 3.2 million jobs vs 971,000 jobs for US-born workers, per CIS data. Combined with the suppressed labor participation rate, this reflects poorly on the labor market as a recession indicator.
Altogether, unprecedented government spending above means points to an artificially inflated economy, reflected in dubious GDP figures, which renders recession as a moot point. In fact, the new Commerce Secretary Howard Lutnick, wants to remove government spending from GDP entirely.
“You know that governments historically have messed with GDP,”
Howard Lutnick on Sunday Morning Futures
Most recently, the GDP figure suffered a steep drop under the Trump admin. The Atlanta Fed’s GDPNow model estimates negative 2.8% real GDP growth for Q1 2025 vs positive 3.9% a month ago.
Alongside Lutnick, new Treasury Secretary Scott Bessent is also of the view that the Biden admin systemically fudged the numbers. Most recently at the Australian Embassy in Washington, D.C., he noted that “The private sector has been in recession.”
But if institutional deception can be paused or intercepted, the perception of recession (as official) has its own weight to disrupt markets. But how likely is it?
The Potential for Tariff Disruption
Despite Elon Musk’s DOGE efforts, it is yet to be determined if deficit spending will be reduced in a meaningful way. What is clear is that President Trump is turning to tariffs as an economic booster. By making foreign goods more expensive, the idea is that consumers would spur the growth of domestic industries, which would keep the money within the US economy.
At the same time, this could lead to reduced purchasing power in the short run, which is another recession indicator as the economy slows down as a result. It could also be the case that tariffs will cause supply chain disruptions, disrupting domestic businesses.
In other words, the shift to tariffs causes uncertainty, which is itself disruptive for business planning. As of Tuesday, Trump’s tariffs will affect Canada and Mexico to a great extent, at 25% each.
“They’re going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,”
President Trump at White House press conference
Goldman Sachs (NYSE:GS) CEO David Solomon views President Trump’s plan as “leveling the playing field” when it comes to trade balance. However, the uncertainty factor is now in play.
“How things stay in place, how far it goes … is some of the uncertainty that I’m talking about,”
Goldman Sachs at the Australian Financial Review Business Summit on Tuesday
It is also unclear if DOGE efforts will lead to substantial job losses for federal employees. Combined, these factors will likely show up as an economic slowdown. On the other hand, this could be alleviated by significantly removing regulatory burdens on businesses.
Moreover, if the Trump admin is serious about “mass deportations”, numerous unseen costs of millions of illegals could also be alleviated. In 2023, the Federation for American Immigration Reform (FAIR) tallied such net cost to at least $150.7 billion.
In the short term, this may cause recessionary pains, but it sets up a fertile ground for long-term economic growth.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.