Economic Outlook Darkens as Politics Infiltrates Wall Street
Recession concerns are mounting as President Donald Trump’s trade policies continue to rattle markets, while an unprecedented political battle has simultaneously erupted over Tesla’s stock price. These dual developments mark a significant shift in both America’s economic outlook and the traditionally apolitical nature of stock recommendations.
Major financial institutions have recently raised their recession probability estimates, with JPMorgan Chase now putting the risk of a 2025 economic downturn at 40 percent, up from 30 percent at the start of the year. Goldman Sachs has similarly increased its recession probability from 15 percent to 20 percent, according to Vox.
Tariffs at the Center of Economic Concerns
Analysts point to Trump’s trade policies as the primary driver of these darkening forecasts. The president has implemented substantial tariffs on Chinese goods, steel and aluminum from all countries, and many Mexican and Canadian imports, triggering retaliatory measures from America’s trade partners.
These tariffs function as taxes on foreign-made goods paid by importers, who typically pass increased costs to consumers. The Peterson Institute estimates that if Trump’s tariffs on China, Mexico, and Canada were fully implemented and maintained, they would cost the typical American household approximately $1,200 annually, effectively reducing purchasing power across the economy.
Adding to the economic uncertainty is the administration’s inconsistent approach. Trump has frequently paused tariffs or added temporary exemptions for certain goods, creating an unpredictable business environment that hampers investment decisions.
“Economic uncertainty is bad for investment,” notes Vox. “If no one can be sure that Trump won’t roll back those tariffs tomorrow then investing in such factories would be perilous. Uncertainty therefore leads many investors and companies to delay investment until long-term economic conditions become clear.”
TRUMP ON THE STOCK MARKET'S PAIN
— amit (@amitisinvesting) March 6, 2025
"There will always be some short term interruptions." pic.twitter.com/jKZ0w64fCy
Political Battle Over Tesla Stock
Amid these economic concerns, an extraordinary political fight has erupted over Tesla’s stock, with Commerce Secretary Howard Lutnick openly encouraging Americans to purchase shares of the electric vehicle manufacturer during a Fox News appearance.
“Buy Tesla — it’s unbelievable that this guy’s stock is this cheap. It’ll never be this cheap again,” Lutnick said on Jesse Watters’s show, according to MarketWatch. The comment came as Tesla’s stock price has plunged amid consumer backlash over CEO Elon Musk’s deepening involvement in U.S. politics and government through his role in the Department of Government Efficiency (DOGE).
In response, Minnesota Governor Tim Walz mocked Tesla’s share price decline, turning the company’s stock performance into a partisan battleground. The political sparring over a publicly traded company’s stock value represents an unprecedented development in American politics.
“Traditionally, we see administrations looking to prop up American industry, and they will often focus on a handful of businesses as an example,” explained Jordan Libowitz, spokesperson for government watchdog organization CREW. “It seems like they are going all-in on propping up Tesla’s stock. It’s highly unusual when the owner or primary shareholder is a member of the administration.”
Administration Stance on Economic Pain
For months, analysts had assumed that sustained market declines would force Trump to roll back his most economically damaging policies. However, the president and his advisers have recently signaled a willingness to accept short-term economic pain in pursuit of broader ideological goals.
When asked about recession prospects, Trump told Fox News that “there is a period of transition because what we’re doing is very big… And there are always periods of, it takes a little time.” This statement has further eroded investor confidence, which was already suffering from six months of market gains being erased in just three weeks.
The January 2025 economy that Trump inherited was broadly considered strong but had underlying vulnerabilities. Years of inflation had eroded Americans’ savings, leading to increased credit card delinquencies and late auto loan payments. The labor market has also shown signs of weakening, with more Americans reporting they can only find part-time work.
Legal and Ethical Questions
The Campaign Legal Center, another government watchdog organization, has filed a complaint with the U.S. Office of Government Ethics and Commerce Department ethics officials over Lutnick’s Tesla comments. The unprecedented nature of a cabinet member directly encouraging stock purchases has raised significant ethical concerns.
While President Trump has not specifically promoted Tesla’s stock, he did recently participate in a White House photo opportunity featuring Tesla vehicles where he praised them as “a great product, as good as it gets” and vowed to purchase a red Tesla sedan himself.
As recession fears grow and the stock market becomes increasingly politicized, both economic analysts and ethics watchdogs find themselves in uncharted territory, monitoring developments that have few historical precedents in American governance or financial markets.
