Recession Watch Issued By UCLA Anderson Based On Trump Policy Concerns

The UCLA Anderson Forecast released its first-ever “recession watch,” citing potential economic risks stemming from Trump administration policies.

What To Know: The forecast, titled “Trump Policies, If Fully Enacted, Promise a Recession,” highlights concerns over tariffs, immigration policies and reductions in the federal workforce, which could collectively lead to an economic downturn.

As 2025 unfolds, the report highlights how the U.S. economy remains stable, with steady job growth and low unemployment. But, economist Clement Bohr of the UCLA Anderson Forecast warns that proposed policies by the Trump administration could trigger a recession if fully enacted.

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He highlights key risks, including aggressive tariff policies reminiscent of the Great Depression, mass deportations that could cripple labor-dependent industries such as construction and agriculture, and unprecedented government layoffs. These simultaneous contractions could spill over into other sectors, deepening the downturn.

Bohr also points to concerning financial trends, with inflated asset prices and speculative investments mirroring past market bubbles. Additionally, the administration's fiscal approach — tax cuts without spending reductions and weakened tax enforcement — could worsen the national debt.

Inflationary pressures from tariffs and labor shortages may force the Federal Reserve into restrictive policies, increasing the likelihood of stagflation. While a recession is not inevitable, Bohr stresses these policies could be its catalyst, urging economic caution.

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Despite no immediate signs of recession, the report warns simultaneous contractions in multiple sectors — such as labor shortages due to immigration restrictions, higher prices from tariffs affecting manufacturing and employment reductions in the federal sector — could create recessionary conditions.

What Else: Meanwhile, the CNBC Fed Survey for March places the probability of a recession in the next year at 36%, up from 23% the prior month, yet still below past post-pandemic levels.

UCLA Anderson Forecast also suggests a downturn could emerge within one to two years, potentially resulting in “stagflationary” conditions.

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