Fears of stagnation besiege the American economy and the dollar in danger

The prospects for the American economy have witnessed a remarkable decline in recent months. After defeating his international counterparts in 2024, economic indicators began to oscillate in a dark economic scene. This comes in light of expert warnings that the volatile policies of US President Donald Trump may harm the world’s largest economy, according to the British newspaper The Guardian.

Fears of stagnation besiege America

Fears of the American economy are escalating in a recession during the year 2025, due to the uncertainty caused by Trump’s economic policies. This comes amid a sharp decrease in the confidence of companies and consumers, while the president threatens to impose tight customs duties on both the United States and its opponents alike.
Also read: Do Chinese stocks outperform their American counterpart in 2025?
Although most economists believe that the recession – which is defined as the contraction of the gross domestic product of forty consecutive – is still possible to avoid it, the current indicators reflect the increasing pressure during the early days of the Trump administration.

Decreased economic growth

US GDP has always outweighed major economies in recent years, especially after the Kofid-19 pandemic, thanks to the incentive policies approved by the Biden Administration, such as the Law of inflation, which pumped hundreds of billions into the economy.
Also read:
However, the voters did not give the former president sufficiently, as consumers’ confidence was negatively affected as a result of the high inflation ignited by the pandemic and war in Ukraine.
Currently, the Federal GDP in Atlanta indicates that the American economy will shrink at an annual -2% in the first quarter of 2025. But this indicator, despite its extensive follow -up, may be volatile, especially as it is affected by the American trade deficit, which increased sharply in January.

The breadth of the trade deficit

The deficit in the American commodity trade rose to $ 153.3 billion in January, as a result of an unprecedented jump in the volume of imports, which increased by 36.2 billion dollars, to a total of 329.5 billion dollars. This is attributed to American companies ’rushing to import their shipments before imposing any new customs duties that may be decided by the Trump administration.

American gold imports record a jump

Among the most prominent factors that contributed to the high imports, the large flow of precious minerals, especially gold bars, as investors resorted to storing them as a hedge against potential inflation and strict trade policies.
The widening trade deficit usually contributes to pressure on the gross domestic product, which may weaken economic growth.

Economic inflation exceeds expectations

President Donald Trump promised to reduce prices quickly, pledging to reduce energy costs of half in 12 months of taking office.
But the official data indicates that inflation is still high, as it reached 2.8% in February, after its unexpected increase to 3% in January, compared to 2.9% in December.
In this context, the Organization for Economic Cooperation and Development warned that Trump’s commercial policies may exacerbate inflation, and raised its expectations for the inflation rate in the United States for 2025 to 2.8%, compared to its previous estimates at 2.1% in December.

American labor market: stability despite pressure

The American labor market has witnessed a strong growth in recent years, as the unemployment rate decreased to 3.5% in early 2023, the lowest level since the first person landed on the moon in 1969.
But the rate has started to rise in recent months, to 4.1% currently, although it is still at low levels historically, thanks to the continued creation of new jobs at an accelerated pace.

Disorders in the stock market

Financial markets have suffered from turmoil during the first 100 days of Trump’s presidency, as stock indicators fluctuated amid fears of its volatile economic policies, especially with regard to customs duties that may disrupt economic growth and exacerbation of inflation.

The US dollar between climbing and fluctuations

The US dollar has increased significantly against other major currencies, backed by investors’ confidence in the power of the American economy, but in return, experts fear that Trump’s commercial policies will increase inflation, which may cause the Federal Reserve to retract interest reduction plans.
If the economy slows down sharply, the US Central Bank may have to reduce borrowing costs, which has already led to the decline in the dollar in recent weeks.
Washington has always adopted the policy of the “strong dollar”, as it supports the purchasing power of American consumers and contributes to prices. The dollar is also widely used in global trade, which gives it great strategic importance.
However, Trump believes that the weakness of the dollar may be beneficial to the American industry, as it makes exports cheaper for foreign buyers, which enhances the competitiveness of American products in global markets.

US economy expectations

It seems that the American economy faces an accurate stage during the first year of Trump’s presidency, as challenges increase for growth, in light of the escalation of trade tensions, the expansion of trade deficit, and high inflation.
The question remains: Will the Trump administration be successful in avoiding stagnation, or will the economic policies follow will lead to a severe crisis? The coming days alone will reveal the answer.