The US economy, which was running at full speed while taking over the position of President Donald Trump, is showing signs of tension only a few weeks after his tenure. The trust of consumers is shaken, the stock market is upheaval and the sorting is increasing. Middle class American and rich investors are now feeling pressure.
Buyers are cutting their expenses due to the instability in the market and the trade war launched by Trump, which is increasing concerns about the strength of the world’s largest economy. Trump has refused to rule out the possibility of recession, while the recent damage in the stock market has gradually eliminated the wealth of high-income Americans, which run the US consumer expenses.
Flaws in the market
The huge decline in the stock market in recent weeks is not just a mirror of economic discomfort, this can also be the reason for this. Investors initially welcomed Trump’s return to the White House, but the enthusiasm has reduced due to his administration’s aggressive and unexpected tariff policy. S&P 500, which increased 53 percent in 2023 and 2024, has fallen by 4.1 percent so far this year.
Harvard economist Gabriel Chodoro-Rich estimates that the 20 percent decline in shares in 2025 may reduce the economic growth by one percent and its effect can be seen far beyond Wall Street. The Wall Street Journal quoted Alex Chartress, a fund manager of Rafar, as saying that asset can lead an economy in an economy like America. The decline in the asset market pose a risk of the real economy being weak.
The rising share prices have promoted consumer expenses for many years, especially among the richest Americans. Top 10 percent of the highest benefits have been given to those who are now about half of the total consumption of America. Federal Reserve data shows that by 2022, top 10 percent of the families had an average of $ 2.1 million in shares, which was 32 percent of their total assets, 26 percent in 2010. His spending has increased by 58 percent in the last four years, which is partially gained from the profit of the stock market.
Signs of decline in expenditure
This is not just for ultra rich people. An increase in retail investment means that according to Federal Data, the financial asset of American families was in 43 percent shares at the end of last year. This makes the US economy particularly sensitive to the fall in asset prices. Continuous market declines can lead to significant decline in spending, which is called an economist ‘Wealth Effect’. Deutch bank estimates that if the stock market continued to be stable instead of a boom last year, the increase in consumer spending would have been close to 2 percent instead of 3 percent.
Matthew Luzetti, the chief American economist of Dutash Bank, said that many Americans have a benchmark for their retirement saving. If the falling prices of the stock push them away from their goals, then they can curb the expense. The recession in the markets can also change the process of making corporate decisions. Business leaders often focus at their company’s share price while planning appointment and investment strategies. After losing a third of its value of Nasdaq in 2022, the tech sector cut wide trimming and spending.
Impact on retail sale
The retailers, many of whom had reported strong sales at the end of last year, are now warning of recession. According to Consultancy Retailanext, the number of customers coming to the US stores in early March declined by 4.3 percent year-on-year, which continues the fall in January. According to the Financial Times report, mobile data tracked by Placer AI shows that major retailers, including Walmart, Target and Best Bye, are coming to fewer visitors.
Retail sales declined by 0.9 percent in January, the biggest monthly decline since 2023. However, some economists blamed the unusually cold weather for this. The February data to be released on Monday will indicate more about whether consumer spending is coming down.