No Pain, No Gain? Trump Adopts New Zen-Like Approach to Stock Market Swings

A Shift in Strategy Amid Market Volatility

During his first term, President Donald Trump frequently touted the stock market’s performance as a key indicator of his administration’s economic success. However, as volatility grips the market and investor fears of a recession mount, Trump appears to be adopting a more measured stance—one that prioritizes long-term resilience over immediate gains.

"It takes a little time," Trump stated in a weekend interview with Fox News, addressing the sharp selloff that has rattled Wall Street since his return to office. "We're bringing wealth back to America. That's a big thing."

Despite these reassurances, Wall Street remains skeptical.

Market Swings and Investor Anxiety

Since Trump's inauguration, the stock market has experienced significant turbulence, reacting to a series of unpredictable policy decisions, including tariff fluctuations, federal layoffs, and spending freezes. The Economic Policy Uncertainty Index, which measures instability in government decision-making, surged to 588.83 on March 9—its highest level since the peak of the pandemic.

On Monday, the S&P 500 fell 2.7%, bringing its total decline to nearly 9% from its all-time high, with seven swings of more than 1% in the past eight days. The Dow Jones Industrial Average also dropped 2.1%, while the tech-heavy Nasdaq plummeted 4%. Market instability intensified further on Tuesday morning when the White House announced new tariffs on Canada.

With layoffs in the federal government rising, business confidence declining, and economic forecasts weakening, Trump's new messaging encourages investors to embrace market volatility as part of a broader, long-term strategy.

"I hate to predict things like that. There is a period of transition, because what we're doing is very big," Trump added.

Yet, uncertainty remains, and if there’s one thing investors dislike, it’s unpredictability.

Political Messaging or Economic Shift?

Economists remain divided on whether Trump’s latest stance reflects an actual policy shift or a calculated political maneuver to control the narrative.

Lawrence J. White, an economics professor at NYU's Stern School of Business, interprets Trump’s comments as an attempt to manage investor expectations rather than a fundamental change in economic strategy.

"The stock market has generally viewed Trump's tariffs unfavorably," White explained. "Investors worry that these measures will erode corporate profits, hurt American companies, and provoke retaliatory tariffs from other nations—consequences that Trump has seemingly overlooked."

Historically, Trump has favored immediate, high-impact economic policies, often promising drastic change from "day one." However, facing growing economic concerns, his administration is now advocating patience.

"I don’t believe his recent statements indicate a true change in approach," White continued. "Rather, they serve as an effort to soothe market anxiety and buy time, hoping conditions will improve."

Joe Foudy, another economist at NYU Stern, agrees, suggesting Trump’s rhetoric is designed to preemptively frame economic turbulence in a more favorable light.

"This is a political recognition," Foudy told Newsweek. "If the stock market struggles or if economic data weakens, Trump needs to shape the public narrative. By presenting short-term economic challenges as a necessary step for future prosperity, he is attempting to manage expectations."

The Risk of Market Uncertainty

While Trump’s unpredictability may serve him well in international negotiations, it creates significant challenges for businesses and investors.

"His shifting stance makes it difficult for companies to plan investments and hiring," Foudy noted. "If uncertainty persists, businesses could delay expansion and hiring decisions, potentially triggering an economic slowdown."

One of the biggest sources of instability remains tariffs. The administration’s evolving trade policies, coupled with the potential for foreign retaliation, introduce further unpredictability into an already fragile market.

The End of the Honeymoon Period?

New presidents often benefit from a political "honeymoon period," during which economic struggles are attributed to their predecessors. For instance, former President Obama was not blamed for the financial crisis he inherited in 2009, nor was President Bush held responsible for the bursting of the dot-com bubble before his tenure.

However, inflation and rising consumer costs were central themes in Trump’s 2024 campaign, and voters remain acutely focused on these issues. If economic conditions fail to improve, Trump may find it increasingly difficult to deflect responsibility.

"Typically, the honeymoon period lasts about three to four months," White explained. "By early summer, if prices—particularly for essentials like gas and groceries—haven’t fallen, public patience may wear thin."

Gas prices, in particular, hold significant political weight.

"Every driver sees gas prices daily," White added. "If Trump were to help broker ceasefires in the Middle East or Ukraine, it could stabilize oil markets and lower gas costs. If that happens, he will undoubtedly take credit."

Yet, inflation remains a complex challenge. Supply chain disruptions from tariffs and labor shortages driven by deportation policies are limiting quick fixes. Moreover, consumer sentiment is often shaped by perception rather than macroeconomic data.

"When people see high grocery prices, they blame the administration, regardless of external factors like supply chain disruptions or bird flu," Foudy said.

Interest Rates and the Looming Economic Slowdown

The administration's push to shrink the federal government—led by billionaire Elon Musk’s controversial DOGE initiative—has already resulted in substantial job losses among federal workers and contractors. This, combined with signs of a softening labor market, could trigger a broader economic downturn.

February’s job numbers showed the first signs of contraction, a worrying trend that, if continued, could lead to a negative feedback loop: job losses reduce consumer spending, prompting businesses to cut costs, which leads to more layoffs and further economic slowdown.

Under normal circumstances, the Federal Reserve would step in with interest rate cuts to stimulate growth. However, Trump’s tariffs complicate this strategy.

"If tariffs drive prices higher, the Fed may hesitate to cut rates, fearing that lower borrowing costs could fuel further inflation," White cautioned.

The Verdict: Trump Owns This Economy Now

Economic forecasts are darkening, with some analysts warning that the U.S. economy could contract in the first quarter. Many are revising their growth projections downward, citing tariffs, job losses, and labor market instability as major risks.

White believes a full-scale recession remains unlikely but acknowledges the mounting dangers.

"I don't anticipate a stock market crash on the scale of 1929," he said. "However, we’ve already seen a significant negative reaction."

Foudy echoed these concerns, emphasizing that market unease stems more from policy uncertainty than from fundamental economic collapse.

"Markets are inherently forward-looking," he explained. "Initially, investors were optimistic about Trump's return, expecting deregulation and tax cuts. Now, they are recalibrating as they weigh the unpredictability of his policies."

Ultimately, Trump has staked his political future on economic success. Whether his new Zen-like approach to stock market volatility can reassure investors—or merely add to the uncertainty—remains to be seen.