Steve Hanke Forecasts US Recession and Urges Policy Shift

Former Reagan advisor Steve Hanke warns of an impending US recession, citing regime uncertainty from volatile tariff policies as a key deterrent to investment. The current TRUMP budget bill, Hanke argues, would exacerbate fiscal deficits amid already tepid monetary supply growth and a fragile labor market.

OECD data paints a grim picture, with US GDP growth projected to halve from 2.8% in 2024 to 1.5% by 2026. Hanke contends these figures may prove optimistic, blaming years of compounding economic challenges amplified by inconsistent Trump-era trade policies and inadequate Federal Reserve responses.

The economist singles out erratic tariff implementations—marked by abrupt reversals and shifting stances—as particularly damaging to economic stability. "Policy whiplash creates calculation paralysis," Hanke observes, noting how businesses delay capital allocation amid regulatory uncertainty.