Trump’s economic policies make waves in headlines—but barely a ripple in the data (for now)

Trump’s economic policies make waves in headlines

Imagine seeing the world only in terms of economic data, not news headlines or social media. If you did, you may not have known that a significant political change took place in January with the inauguration of US President Donald Trump. Amid sweeping actions on tariffs, immigration, and federal hiring, the economic metrics—jobs, inflation, and spending—look largely the same, the Wall Street Journal said.

A baffling disconnect

Hiring remains solid, with job growth averaging 173,000 over the past two months, nearly unchanged from late 2024. Inflation is steady or slightly lower, and unemployment hovers around 4.2%, just a tenth of a point higher than in the prior six months. Even the Federal Reserve’s preferred measure of core inflation has barely moved. The apparent inertia has prompted confusion, with companies like United Airlines issuing dual economic forecasts: one assuming recession, and one without.

Trump's policies versus economic stagnation

In spite of vows to cut federal spending by trillions, the Trump administration has achieved only $155 billion in reported savings through the Department of Government Efficiency (DOGE). However, federal spending actually rose by $154 billion during Trump's first 80 days of office versus the same time period the previous year. Federal layoffs continue to be modest: a decline of merely 10,100 workers compared to the objective of eliminating as many as 240,000 jobs.

Despite a crackdown on immigration, the foreign-born workforce has expanded modestly—albeit perhaps too early to see the full impact. Tariffs, while raising wholesale costs of steel and aluminium, have yet to influence consumer prices meaningfully. Gross domestic product might slow in the first quarter, but that's more a result of anomalous import behaviour and weather than policy.

Why the economic tranquillity?

Part of the explanation is timing. Some of Trump's most jarring actions—such as tariffs against China, steel, aluminium, and autos—have only just been implemented. Importers preemptively stocked up, dampening short-term consumer effect. Similarly, layoffs and deportation impacts could take months to manifest in numbers. Postponed resignations among federal employees could push back visible effects until toward the end of the year.

Another explanation: the sheer scale and intricacy of the U.S. economy. It is shaped by a thousand forces, and even a disruptive president does not command them all. For instance, current stock market anxiety about tariffs may have been more caused by puncturing hype regarding AI than by the tariffs themselves.

The role of feedback loops

Trump policies also trigger economic and behavioural feedback loops that are capable of subverting their desired consequences. His tariff posturing, for example, has muted worldwide growth expectations, contributing to reducing oil prices—boosted by increased OPEC production. Airfares and petrol prices have fallen, lowering consumer inflation.

On immigration, Trump vowed mass deportations, yet actual rates below 2024 levels. Fewer border crossings and increased prudence among illegal migrants could be keeping enforcement out of sight. Companies are meanwhile holding off on price hikes or shipping adjustments until they can observe how the tariffs play out—particularly because exemptions have been made available on products such as smartphones.

Legal and political pushback

While Trump has used executive authority aggressively, pushback is building. Courts have halted some deportations and firings. While tariffs encounter less legal pushback, their economic effects are causing business pushback, which in turn has caused the administration to back off or delay several actions and initiate trade talks.

No surprise yet—but wait and see

Thus far, Trump's economic policies have not yet created the disruption that some anticipated. But that could change. As deeper implementation begins, delayed effects could start to materialize. Trump's lack of predictability combined with his resolve to drive far-reaching change means the economy might yet suffer the consequences of his policies. The figures are currently serene—but the tempest might yet be brewing.