Trump Admits Potential for Recession, Seeks to Avoid Depression, Reports WSJ

In efforts to navigate his controversial tariff strategy, President Donald Trump was determined to steer the economy clear of a depression, as reported by The Wall Street Journal.

Behind closed doors, Trump conceded that his comprehensive tariff plans, revealed last week, might push the nation toward a recession. However, he expressed a firm intention to avert a depression, according to insights from individuals privy to these discussions.

Trump shared with his consultants that he was prepared to endure some hardship due to his policy choices, as confirmed to The Journal by an individual who had conversed with him on the matter.

Economists describe a depression as a situation where a recession seriously deepens, marked by climbing unemployment and a prolonged economic slump. The U.S. has managed to avoid such severe downturns since the 1930s' Great Depression, thanks to advancements in economic policy and safety nets like the FDIC insurance.

Although many experts began predicting a recession triggered by Trump's extensive tariffs impacting global commerce, none speculated that it would escalate to a depression.

Just before Trump announced a scale-back on some of his retaliatory tariffs, bond yields surged while stock markets plummeted. This decision brought about a notable rebound in the stock market.

Kevin Hassett, the U.S. National Economic Council director, pointed out on Thursday that the bond market's turbulence played a part in Trump's course reversal. Following rumors that major foreign bondholders like Japan or China might be offloading U.S. bonds, the 10-year Treasury yield surged above 4.5%, inversely affecting bond prices.

"The situation was progressing methodically," Hassett commented on CNBC. "Yet, the movement in the Treasury market added urgency, ultimately prompting a timely decision."

President Trump also considered investor reactions in his statements after modifying the policy on Wednesday.

"I sensed some investors were slightly overreacting," Trump remarked. "They seemed slightly anxious, a bit restless."

The White House has not responded to inquiries from CNBC concerning Trump's concerns about a potential depression.

WSJ reports that a significant factor influencing Trump's shift was the increased involvement of Treasury Secretary Scott Bessent in trade policy advice. Additionally, the engagement of multiple countries in negotiations contributed to Trump's openness to policy changes, per sources who spoke with the president.