The U.S. stock market tumbled on Monday, and for a while, theories about the collapse of the U.S. economy and recession have resurfaced.
So can the U.S. economy fulfill everyone’s wishes this time and really have a crash?
It is unlikely that there will be a crash. But the possibility of the U.S. economy entering a several-year recessionary adjustment period is still there.
This judgment is basically consistent with Trump’s statements on the economy.
Asked whether the U.S. economy will have a recession problem, the lifelong good and strong Trump very rarely played too much, choosing to say vaguely that he hates to predict things .
Trump also emphasized that there will be a transition period and that he is doing a great job of bringing wealth back to the United States, so it will take time.
I hate the prediction thing. There’s going to be a transition period because we’re doing a big thing. We are bringing wealth back to America. It’s a big thing and there are always going to be periods where it takes a little bit of time.
Trump.
The fact that Trump doesn’t want to predict and emphasizes that there is a transition period shows that Trump knows the bottom line of the US economy and knows that the next economic data is bad, and the fact that he doesn’t dare to pack a strong response to the economy being good, which is his strongest strong point, shows that the economy is really not very good.
Trump let everyone focus on the long term, that is to say the immediate economic situation is really not very good.
Something is wrong with the US economy, and it has been corroborated by a number of research organizations.
A model from the Atlanta Fed predicts a precipitous decline in the U.S. economy, with real GDP growth estimated at 2 8 in the first quarter of 2025, sharply lower than the previously forecast growth of 2 3 .
If this forecasting model comes true, it will be the first time the U.S. economy has contracted since the first quarter of 2022.
A contraction of 2 8 is quite a bit of contraction for an economy the size of the United States. It shows that the U.S. economy really has a lot of problems.
Causes
What are the problems with the US economy?
U.S. stocks tumbled on Monday as a direct result of an emotional market reaction to Trump’s indiscriminate tariffs.
In terms of timing, Monday did step on the point where China imposed tariffs on some U.S. agricultural products.
According to information from the Ministry of Commerce, starting March 10, China will impose tariffs of 15 on chicken, wheat and corn imported from the U.S., and 10 on soybeans, pork, beef and fruit.
As a response to the U.S. tariffs on Chinese goods.
For the market, the tariffs will leave the U.S. trade outlook unclear, disrupting the future decisions of U.S. businesses and creating a lot of uncertainty.
It is not uncommon for the reaction to the stock market to cause it to fall.
This is just a superficial phenomenon of the U.S. economy, as well as a very normal market reaction that in itself will not deal a blow to the fundamentals of the U.S. economy.
But if not handled properly, this kind of volatility in the U.S. economy will still implicate several issues that are fundamental to the U.S. economy. And once these few bombs are detonated, the U.S. economy will be in big trouble.
Bombs
Over the past years, the U.S. economy has planted several heavy bombs.
First of all, fundamentally, there was no major mistake in the U.S. economy.
The U.S. economy has basically come out of the crisis since the financial crisis in 2008 and by 2016 when Trump took office. And from 2016 to now, the U.S. economy has not been van fundamentally wrong, it has not been caught in two regional wars as it was before ’08, so it’s hard to have another big crisis like the 2008 financial crisis.
But from 2016 to now, the U.S. economy is still left with a couple of big pitfalls, a couple of big bombs.
The first bomb, hyperinflation
The nature of hyperinflation in the U.S. is really a delay and pass-through of the epidemic crisis.
During the U.S. epidemic around 2020, the U.S. government was handing out tons of money and the economy itself was a mess. These economic events, it comes with its own cost and price. The Biden administration’s spreading of money to all the American people and lending to businesses at the time did get the U.S. through the crisis at the time.
But after all that money, which was not backed by real economic results, was spent, someone had to pay the bill, and that bill, hyperinflation, was for all the people to bear that cost.
This money is easy to spread out, it is very difficult to recover. The Federal Reserve interest rate hike to 5 so long, the United States of America’s inflation problem still has not been fundamentally resolved.
The Federal Reserve interest rate hike, is to take back the excessive money on the market, otherwise these money without actual counterparts, will cause long-term damage to the U.S. economy.
The second bullet dollar return
A Fed rate hike will leave less money in the market, thus potentially crashing the high US stock market.
But the U.S. stock market did not crash during the dollar rate hike because the rate hike allowed global dollars to flow back into the U.S. and into the stock market, allowing the U.S. stock market to weather this crisis once again.
Dollar interest rate hikes dollar return process, the United States would have had to complete a wave of global harvesting, thus giving the U.S. economy a real blood transfusion and replenishment.
However, in this interest rate hike cycle, the United States has failed to complete the harvesting of any one size economy. This is also the most failed rate hike in the history of the Federal Reserve.
So this is the U.S. economy that has a correlation bomb. It’s that the money that was brought in by the return of the dollar, which failed to complete the harvest, is now having a hard time flowing back into the world to buy assets at low prices, and that’s preventing the U.S. from going into a rate-cutting cycle and putting a lot of dollars into the market again.
It’s a huge hidden danger, a bomb, for the U.S. economy.
The third bomb, the tech bubble.
One of the primary reasons that the Fed’s rate hike led to the return of the dollar and the U.S. stock market moved higher, but didn’t crash, is that U.S. tech companies provided a perfect tech narrative at just the right time. That tech narrative is artificial intelligence.
In terms of hardware it is chip companies like Nvidia, which provide AI chips that are unique in the world and form a monopoly.
From the software side, companies such as OpenAI Meta Google in the United States have launched big models of artificial intelligence, and by piling up computing power, they have launched AI products with reasoning ability that amazes people, and they have formed a global technology monopoly.
The United States sees its second wave of technology economy since the Internet technology is about to rise, very well undertake the dollar interest rate hike to introduce a large amount of global capital, thus allowing the United States stock high also can not be afraid of danger.
If this technology bubble is propped up, then it is God bless the United States, the U.S. economy can really prosper a cycle, the U.S. economy, all the problems, can be covered by this bubble.
But unfortunately, China happened to be at this time suddenly killed a deepseek halfway, breaking the model of the United States pile of chip arithmetic, and even more breaking the model of the United States artificial intelligence model closed-source monopoly, not only let China catch up with the United States of America’s pace of artificial intelligence, but also to break the profit-making model of the United States company painstakingly built.
This is fatal to the U.S. economy. It’s like the thin silver needle that burst the bubble.
Looking at the Phenomenon to See the Essence
Let’s look at this stock plunge, Tesla led the way down 15 , which is due in large part to Musk’s personal hatred and unpopularity around the world, and also from an industry perspective, Musk’s electric cars are facing brutal competition from their Chinese counterparts.
In addition, the U.S. has fallen hard for Nvidia, Google, Microsoft, Apple, Meta, Google, and other Internet tech companies. They are falling because their for-profit models are busted.
So this U.S. stock market crash, it’s just a surface phenomenon and also a trigger. It’s certainly not going to detonate the US economy into recession all at once. But it is closely linked to the deep crisis in the US economy. Once they really detonate a few deep bombs in the U.S. economy, then the U.S. economy is bound to fall into a several-year adjustment cycle.
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