President Donald Trump’s reelection ignited expectations for strong growth but with more inflation.

Promises for leaner government, less regulation and lower taxes, assumed U.S. leadership in Artificial Intelligence helped continue an equities rally.

From November 5 to February 18, the S&P 500 jumped 6% in a market coming off two stellar years of advances and sporting frothy valuations.

In 2016, Donald Trump inherited an economy that had grown only an average of 1.9% annually during the Bush and Obama presidencies and unemployment at 4.7%.

His tax cuts and a lighter hand on regulation lowered unemployment to 4.1% just before the COVID shutdowns.

President Joe Biden’s lenient border and asylum policies boosted the civilian labor force. His Infrastructure program and industrial policies added yet more stimulus.

The federal deficit jumped from 3.1% of GDP in 2016 to 6.4% last year and the Trump–Biden economy scored 2.5% average annual GDP growth.

With the fiscal impulse having run its course and Mr. Trump promising stricter immigration policies, the pace of growth was bound to slow. But a recession appeared only a remote possibility as of January.

Even with the prospects of aggressive tariffs on China and milder taxes on other imports, as Mr. Trump promised campaigning, the January Wall Street Journal survey of economic forecasters pegged growth at 2% for 2025 and 2026.

In March, Wells Fargo’s economists estimated such a moderate tariff scenario with proportionate retaliation from targeted nations would subtract about half a percentage point from growth over the next two years—about the difference between the Trump-Biden 2016-2024 pace and the WSJ panels’ forecast.

However, Trump’s tariffs are far more aggressive than anticipated and inviting significant retaliation. Economists at Nomura Securities International Inc. and Barclays PLC are forecasting 2005 GDP growth of 0.6% and -0.1%.

Those make sense in an economy where goods imports are only 11% of GDP.

So, why the fear of economic calamity?

A president and his aides must appear steady, confident and disciplined.

Trump brandishing incoherent, on again and off again, tariff threats, abandoning WTO norms to impose terribly aggressive reciprocal tariffs, ruminating about annexing the Panama Canal, Canada and Greenland, pursuing a devil’s bargain with Russia to obtain Ukrainian minerals and attacking judicial independence are anything but that.

Telling us we may have to endure some pain to get to his Golden Age and he can’t rule out a recession is reckless in a market economy where expectations are paramount. No small wonder moods have turned dour.

Also, what are the objectives with tariffs? Foreign policy and security concessions, better market access or additional revenue to pay for tax cuts? Where’s he taking us and what’s the shape of the new international order he seeks?

His advisors are hardly comforting.

Treasury Secretary Scott Bessent and White House advisor Peter Navarro tells us tariffs won’t be inflationary, and Bessent predicts inflation will quickly hit the Federal Reserve’s 2% target.

Surely he’s seen the Consumer Price Index report, which shows service sector inflation clipping along at 4%, and Institute for Supply Chain Management surveys showing, even before Mr. Trump’s reciprocal tariffs, intensified cost pressures from rising material and component prices on manufacturers and service providers.

More fundamentally, disruptions to trend growth tend to lay bare structural weaknesses.

American competitive advantages are narrowing as China gains technological parity or leadership in more industries, and the woes of businesses like Boeing and Intel are a national emergency.

Enough about China’s subsidies and protected large market in autos.

Korea’s Hyundai can make an electric sedan at a profit but GM and Ford can’t. Detroit can’t even make gas powered sedans at a profit—that’s why it’s mostly quit that business.

Neither Trump’s tariffs nor Biden’s industrial policies adequately address the fundamentals keeping American industries down—shortages of qualified workers, regulatory costs and so forth.

Trump can boost growth again by calming his demeanor, articulating a much more reasonable tariff policy, cutting taxes and boosting the federal deficit even further. But the latter risks higher inflation and interest rates and the dollar’s status as the reserve currency.

Overall, the probability for a recession is 60% and much greater for having two consecutive quarters that average less than one percent growth. Stocks will continue their slide.

Federal Reserve Chairman Powell is correct to expect slower growth and more inflation. Stock prices will continue to trend down—a sustained bear market is likely.

Later this year or next, U.S. growth and stocks will start climbing back but those won’t be posting the kinds of outsized gains as before the madness of Trump 2.0.

Europe’s announced defense buildup is getting attention and if it follows through, growth and stock market gains will be less heavily slanted in favor of the United States.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.