this post was submitted on 21 Feb 2025
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And, look, I'm not a hedge analyst or an economist, but even I can see that the comedown from the tariffs is going to have a huge negative impact on the stock market.
So, genuine question here, if this recession comes along with the stock market dip, will that cause a spiral that leads to another great depression?
That depends on a bunch of factors.
Here's my take on what "caused" the Great Depression (over simplification, obviously):
This time around, spending is pretty healthy, we're not in a deflationary environment (just coming off an inflationary environment), etc. Tariffs will likely cause a demand shock due to higher prices though, so I think recession is likely as spending falls off (assuming the tariffs stick). I doubt we'll see a depression unless Trump increases tariffs again in response like Hoover did.
Everything depends on how the US gov handles the reaction to tariffs and how other countries react as well.
Also the wave of unemployment that is about to cone might push us into a recession
It's not going to be from cutting federal workers, at least not in the short term, those impacts are more long-term. I'm much more worried about tariffs destroying consumer spending, and that might end up with a wave of unemployment.