Ask Lemmy

The tariffs alone would be enough to cause a recession. It's not just that they're large (even 10% is large by modern standards) it's mostly that they're so chaotic. I've read that most businesses are avoiding hiring, avoiding any expenditures they can, and just waiting to see what happens. Seeing what happens means keeping cash on hand, which means a drop in GDP. The numbers might have been juiced a bit by people making big orders and trying to get them done before the tariffs come into full effect, but once that's done the pain is going to be much more visible.

In addition to the tariffs, there's the firing of federal workers. There are about 3 million in the US, and even if only a fraction have been fired so far, I would bet the rest are cutting back on unnecessary expenses and building up a cash reserve in case they get canned. This will ripple through the economy too.

And then there's the ICE stuff. People with green cards getting deported for exercising their first amendment rights, scientists being refused entry for a post they made on social media in their home countries, Canadian, German and British people being thrown in an ICE detention facility because of a minor paperwork mix-up. This is going to make tourists and business visitors much less willing to take a chance and visit the US, but this won't hit until later. Big tourist season is the summer, and so the lack of business won't show up yet. And some conferences were too close to cancel, but conferences for later in the year might be moved or cancelled.

And there's the invasion threats against Canada and Greenland, and the tariff wars against Canada and Mexico, and the refusal to help Ukraine defend itself against Russia. The biggest visitors to the US were Canadians, Mexicans and Europeans, and all of them are going to be avoiding the country now. And, not just avoiding the country. People are trying to avoid buying US goods and services.

In addition, there are treasuries. Many are held by Japan and China. Even just acting purely rationally, they see the chaos in the US and know the US might not be able to pay its bills, or it might choose not to pay them. The risk has gone up. If they aren't being purely rational and self-interested, they also know that they can hurt the US by dumping treasuries, so they're doing that.

And then there are the scientists leaving the US, or choosing not to come. And there are potential international students who see how risky it is for anybody who isn't white, male and christian. This sort of thing might take decades, but it's going to hurt the US the most. So many of the world's most talented people have come to the US and started businesses, but that is definitely going to slow down now.

Even if Trump were impeached and removed, and all his changes were undone with apologies, there has been some permanent damage done to the US by the MAGA majority. But, since it is a majority, since the MAGAs control the supreme court, the senate, the house and the presidency, there's going to be a lot more damage done before there's even a hint of a stabilization, let alone a recovery.

I think any rational investor is going to get their money out of the US, and the slight recovery the S&P 500 has seen in the last week is going to be dwarfed by the crash over the next few years.