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By Michael J. Hicks
August 10, 2025

In March, I predicted the U.S. economy would enter recession and in April I explained how Indiana would be especially vulnerable to this downturn. Unfortunately, I was right. A large tranche of data—both public and private—makes that clear.

The tariffs have descended hard upon American businesses and consumers. Estimates of their downstream effects cluster around a $2,400 cost per family by the end of 2025, dropping to $2,000 a year in 2026 and later years as Americans buy fewer goods. This has led economist Justin Wolfers to quip, “Trump has a pronoun problem. He keeps saying he’s imposing tariffs on they/them. But he’s actually imposing them on us.”

Consumer sentiment has dropped by more than 10 percentage points since President Trump’s inauguration day and labor markets have stalled. Help wanted ads nationally dropped by 21% since Trump’s “Liberation Day” tariff announcements and by 27% here in Indiana. The private sector jobs number from ADP shows job growth effectively stopped in April.

These private data tell a rich and consistent story about the economy, but public sector data are more accurate and complete. This requires comment on data integrity and character.

U.S. economic data has been the envy of the world since the Great Depression. It is fast, accurate, nonpartisan and profoundly transparent. It is collected by a group of quiet professionals with input from hundreds of organizations and individuals. These data make the U.S. the most trustworthy and reliable destination for foreign investment.

Trump fired the director of the Bureau of Labor Statistics on Aug. 1 because he didn’t like these data. Trump claimed the data were biased against him. That is false. Trump is afraid of facts and likely to become more fearful as more facts emerge—economic or otherwise. He has good reason to be scared on all counts.

The latest federal jobs report indicated that the U.S. economy stalled shortly after tariffs were announced. Overall job creation dropped to near zero and manufacturing employment declined by 33,000 jobs in just three months. Since the tariffs were announced, Indiana lost 2,600 factory jobs—and that is without the most recent month’s data, which have not been released.

Factory orders have plummeted to levels not seen since COVID and, before that, the Great Recession. On a scale of self-inflicted economic wounds, this is unparalleled.

Formally, recessions are determined by the Business Cycle Dating Committee of the National Bureau of Economic Research, which uses six indicators. Between March and April—when I first said we had walked into a recession—four of these six turned negative. Only employment and industrial production remained (modestly) positive. By the next data release, both of those indicators will be negative.

Trump inherited an economy that grew at 2.4% last year. Job creation has slowed dramatically under Trump—from over 180,000 monthly in 2024 to just 35,000 since the tariffs began.

If the BLS continues to deliver honest job numbers, we should expect no job growth until 2026—if then.

Unlike typical recessions, prices are rising due to tariffs, making it harder for the Federal Reserve to cut interest rates to help the economy. So, as we move into fall, we should expect accumulating job losses, higher prices and a Fed hesitant to cut rates when the problem is solely that of bad tariffs, not monetary policy.

Trump’s criticism of the Fed, like that of the BLS, is at best a transparent effort to deflect blame for the ill effects of his tariff obsession.

Another uncommon aspect of this recession is that it is isolated to the U.S. We did this to ourselves by starting a trade war with the rest of the world. No other countries seem especially interested in crashing their own economies.

This diminishes the attractiveness of the U.S. as a destination for foreign investment. The situation is worsened by the reasonable suspicion that the Trump administration will deliver fictional economic data. Foreign investors may flee, driving up borrowing costs.

So, as the U.S. enters a downturn all alone, with the specter of falsified economic data, we should all expect home mortgages, credit card rates and car loans to be higher in the months and years to come. Capital markets are ruthless towards erratic and bizarre economic policies—and whatever else they might be, Trump’s economic policies are erratic and bizarre.

Michael J. Hicks is professor of economics and the director of the Center for Business and Economic Research at Ball State University. He previously served on the faculty of the Air Force Institute of Technology’s Graduate School of Engineering and Management and at research centers at Marshall University and the University of Tennessee. His research interest is in state and local public finance and the effect of public policy on the location, composition, and size of economic activity. 

The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body. Also, the views and opinions expressed do not necessarily reflect the views of The Indiana Citizen or any other affiliated organization.