This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Red, ugly charts on our platform are capturing the unease of the moment. But economic growth is also on the chopping block.
In recent interviews, President Trump has expressed a stony, unmoving outlook toward the stock market, as if his goals for the American economy are more important than the whims of Wall Street. He and his economic advisers have advanced a long-term view, acknowledging supposed short-term pains through a variety of euphemisms and metaphors like “detox,” “disturbance,” and “transition.”
But if there is a method to the market madness, we won’t see its fruits for some time. All the while, current measures and forecasts of the “real” economy are getting darker.
Economic teams have lowered their 2025 GDP expectations. Morgan Stanley now predicts 1.5% growth in 2025, down from 1.9%, while Goldman Sachs dropped its expectations from 2.4% to 1.7%.
To a certain extent, Trump’s America First team has a point to make: Why should a select group of investment bankers and money managers dictate a nation’s economic agenda? The stock market, in its worst light, is also a collection of trend chasers and buzzword vultures, a vortex of fickleness and insatiable cravings. (A more holistic reading of the market taking into account regular folks’ retirement accounts is gently brushed to the side here.)
But it also expresses something that neither bully pulpit cajoling nor DOGE threats can touch: If most people actually believed Trump’s decisions would lead to long-term growth, the stock market would move up, not down.
If GDP figures match the increasingly dismal forecasts, the president’s aims may prove to be too ambitious to be worth the effort.
In the initial phase after the inauguration, a sympathetic view among strategists was that in exchange for the negative impacts of tariffs and public sector job losses, the economy overall would benefit from deregulation, lower energy prices, and a more business-favorable tax regime. But the market is catching up to the idea that the painful shocks will come first, while the anticipated benefits may only arrive later.
“The pain is worth the gain down the road … That is the new narrative coming out of Washington,” Mohamed El-Erian, president at Queens College, Cambridge, and former PIMCO CEO, told Yahoo Finance earlier this week.
