American CFOs Believe Tariffs Will Cause Recession – Confidence is Dying

Posted Mar 26, 2025 By Martin Armstrong

American businesses are losing confidence in the US economy under Trump due to the tariff wars. CNBC’s CFO Council quarterly survey for Q1 2025 learned that America’s top CFOs are increasingly pessimistic about the economy due to these “disruptive” and “aggressive” tariff policies.

Around 60% of respondents believe the US will fall into a recession by the second half of this year, with 15% believing the recession will come in 2026. When this survey was conducted last quarter, prior to the tariff wars and trade volatility, only 7% of CFOs believed the nation was heading into a recession. This figure is a glimpse at how heavily trade uncertainty is destroying confidence.

How do corporations plan ahead when trade restrictions are subject to change at a moment’s notice? It’s simply not possible, and what happens is corporations will err on the side of caution and prematurely raise prices regardless of whether the tariffs go into effect. Unsurprisingly, nearly all (95%) of respondents said ever-changing trade policies are impacting their ability to make business decisions. Will tariffs be implemented? When? At what rate? The uncertainty is causing complete chaos in boardrooms across America.

Another 30% cited inflation as the biggest business risk but that is currently directly tied to this tariff ordeal, as is the valid concern of consumer demand (20%) as the people are also losing confidence in the economy and therefore are less likely to spend. Everything is connected. Inflation rises and demand drops as the people are unwilling and/or unable to spend.

Then 90% believe tariffs will create “resurgent inflation,” and half do not believe the Fed will be able to meet the 2% inflation target until the second half of 2026, if not 2027. I explained in an earlier blog post how the Fed cannot control tariff inflation through rates as rates do not offset higher prices set by trade barriers.

I have repeatedly warned that this tariff fiasco could be the nail in the coffin for Trump’s legacy. Those advising Trump are idiots who do not understand how the world economy functions. America will not be “liberated” on April 2 when many of these tariffs are set to go into effect. America cannot have a boom when the rest of the world is contracting. The world economy and peace survive on free trade.

Global recession reducing demand for copper into 2026

 Chile – The Outlook

                                                                Posted Mar 22, 2025 By Martin Armstrong

QUESTION: Dear Mr. Martin Armstrong:

I hope you are well and enjoying your front-beach house, in the Sunshine State. I ask you:

1. What is better for U.S.A., right now?
2. Is a strong U.S. Dollar or is a weak U.S. Dollar?

I look forward to hearing from you as soon as possible.

Sincerely,

Juan
Santiago of Chile.

ANSWER: Potential risks in Chile include a global recession reducing demand for copper into 2026, political instability in Chile, and eventually, a stronger US dollar, making emerging market assets less attractive. While Trump wants a lower dollar to sell more widgets, the problem remains that the push for war in Europe provides an underlying demand for dollars. In addition, the EU is rushing to cancel the paper currency and move to digital as part of the capital controls that have been put on the plate. It does not matter what Trump wants for the dollar; neither he nor any country can alter the fate of the currencies, which are set in motion by many things, especially war.

In Europe, they are not about to suddenly surrender to their Marxist socialist agendas. “A New World Order With European Values” adorned the banners and signs at the World Forum meeting in Berlin. They have declared that the greatest threats facing humanity are the resurgence of populism and free speech. They are advocating silencing anyone who disagrees with them. Just amazing.

The LEFT is losing ground, so this is when they become more authoritarian. They justify themselves by saying that populist movements have victimized the people, so this also leads them to conclude that free speech must end.

This trend is dominant in Canada and Europe, and the countertrend has been Argentina and Trump in the USA. Despite Trump’s idea of a weaker dollar, the lack of common that has engulfed the LEFT, where they refuse to admit that they are ever wrong, will have a profound. impact on the next two years.

Chile’s politics will hinge on the constitutional process, economic management, and societal demands. President Boric faces a critical window to deliver reforms, but polarization and external pressures pose risks. The right could capitalize on setbacks, setting the stage for a contentious 2025 presidential election.

President Gabriel Boric (left-wing coalition Apruebo Dignidad) has been in office since March 2022. His administration focuses on social reforms, environmental policies, and reducing inequality. Challenges include managing economic stagnation, inflation, and public security concerns. The success in Argentina has the potential to become a contagion, and South America could rise as a restored economic land if it finally sheds the LEFTIST agenda that has stagnated the economy overall.

Inflation begin in 2025, rise stronger in 2026, but it will be the 2027-2028 becomes critical

Powell – The Fed- Inflation – Recession

                                                                                    Posted Mar 20, 2025 By Martin Armstrong

Jerome Powell kept rates unchanged as our computer was projecting. However, he did weigh in on the state of the US economy, pointing out that Donald Trump’s policies were one reason why inflation is turning back up. He also reduced the Fed’s 2025 growth projection, noting that uncertainty around the slowing economy is increasing. The Fed is well aware of the Economic Confidence Model. Both Canada and the Fed started to lower rates when the ECM was turned down last May.

Powell said, “Inflation has started to move up,” adding that “there may be a delay in further progress over the course of this year.” The confusion people have is that, as I have pointed out before, government employees are counted TWICE in GDP. First as total government spending and second as total personal income. So, firing government employees will have a large,r more exaggerated impact on GDP going forward.

Investors have reacted negatively to Trump’s global trade war and the mounting retaliation from abroad. What they fail to grasp is that the main reason companies left the USA was over worldwide taxation. American companies were always at a disadvantage when compared to Europeans competing in the world market. The S&P 500 fell nearly 10% from mid-February because of the failure to understand the real trade impact of the high tariffs. Trump, meanwhile, has perhaps promoted recession fears, with the Republican saying the economy faces a “period of transition” and that his tariffs will eventually mean more US jobs.

Socialist academic economists do not look beyond our shores and say that Trump’s tariffs will be a significant loss. They compare this to the Smoot-Hawley tariffs of the 1930s, blaming them for the Great Depression because they are incapable of thinking about two variables simultaneously. The tariffs were primarily on agriculture because the Dust Bowl reduced crops, and Europe offered them cheaper. The economy was 41% employed in agriculture, and that is why unemployment soared to 25%. No legislation could have made it rain.

Powell admitted that recession odds had moved up but weren’t high. He disagreed with the University of Michigan survey, which showed a sharp increase in long-term inflation expectations. We agree. Socrates is showing that volatility in inflation was to begin here in 2025 and rise stronger in 2026, but it will be the 2027-2028 period when it becomes critical that it is correlated with our war models.

Millions of Americans Delinquent on Student Loans

Posted Mar 20, 2025 By Martin Armstrong

Millions of Americans believed that their student loans would be forgiven per the promises made under Biden Administration. Then there was a period of student loan forgiveness that began during the COVID era when countless people found themselves unemployed. Payments have resumed but 9.2 million (43% of federal loan borrowers) have fallen over 90 days behind on payments.

Instead of forgiveness, these delinquencies will remain on these borrower’s credit reports for seven years. Delinquencies show on all three major credit bureaus (TransUnion, Experian, and Equifax) through nationwide credit reporting agencies (NCRAs). The result is an immediate drop in credit scores of up to 250 points.

So over 9 million Americans experienced a massive downturn in their ability to borrow instantaneously. Many may not realize that one missed student loan payment can be counted as up to eight missed payments. Credit scores are calculated and weighted differently depending on where you look. FICO factors in payment history as 35% of one’s overall credit score, while VantageScore factors in missed payments as 40% of creditworthiness.

Student loan payments have not appeared on credit reports for the past five years. Those who are able to meet their loan obligation will see a positive uptick in their score. VantageScore reported that they believe 2.3 million borrowers will see their credit rating fall beneath 600 once these payments reappear on consumer credit files. These people will have an extreme difficulty obtaining new loans.

Thanks to the Clinton Administration repealing Glass Steagall, student loans may not be discharged in the event of bankruptcy. Default and the entire balance is due immediately, with an addition of up to 25% of the loan balance in collection fees. The government may withhold Social Security benefits and tax refunds and will repeal any federal financial aid. Certain professional licenses could be suspended. Defaulting makes it hard for borrowers to access forbearance, deferment, and other repayment options. On top of everything, the government can begin to garnish wages WITHOUT a court order.

Tariffs a One-Time Price Adjustment?

Posted Mar 10, 2025 By Martin Armstrong |  

Treasury Secretary Scott Bessent is wrongly advising this administration by downplaying the role tariffs will have on overall inflation. Bessent told reporters not to be concerned over tariffs as they will simply be a “one-time price adjustment” when that is far from reality. These tariffs come with massive side effects that will ripple across the global economy.

“Look, can tariffs be a one-time price adjustment? Yes… I would hope that the failed team transitory could get back together and think that nothing is more transitory than tariffs if it’s a one-time price adjustment,” Bessent said in reference to Biden administration officials saying that the historic inflation of several years ago was “transitory.” He later added, “The economic program is a whole of government, holistic program, and I think that we could get a one-time price adjustment,” Bessent said, adding that “across the continuum, I’m not worried about inflation.”

Bessent and others who buy into the tariff myths argue that when a tariff is imposed, prices simply adjust once, and the market stabilizes. Instead, the artificially raised cost snowballs. The first hit is the tax on direct goods, the second hit comes when that cost is passed down to businesses who pass it down to consumers.

Take steel tariffs, for example. When tariffs are imposed on imported steel, domestic manufacturers don’t just absorb the cost; rather, they pass it on to maintain a profit. That means everything that uses steel, from cars, appliances, construction materials, etc., becomes more expensive. That price increase does not stop at the initial tariff application. It continues to cascade as higher input costs force further adjustments throughout the supply chain.

When tariffs raise prices, workers naturally demand higher wages to keep up with the rising cost of living. This leads to what economists call a wage-price spiral—higher wages push costs up even further, which forces businesses to raise prices again.

Reduced supply and higher prices can lead to stagnation, which is what we have been experiencing for the past few years. These tariffs will do more harm than good for the people who will be forced to cover the costs.