Tariffs, federal spending cuts have some economists worried

Noon Edition

By almost every economic indicator, President Trump inherited a robust economy when he took office in January. The stock market was at record levels, inflation was at 4% and the adjusted GDP for 2024 a solid 2.8%.

And nearly every major economic forecast had those numbers continuing in 2025.

But President Trump’s policies — the on-again, off-again tariffs and the promise of the Department of Government Efficiency to cut a trillion dollars from federal agencies — have caused much uncertainty for consumers and volatility in the markets. There’s also the concern across multiple industries if Trump goes through with the promise of mass deportations of undocumented workers.

Because of those policies, some economic forecasters have said the U.S. could already be entering a recession. Trump acknowledged last week the tariffs will cause “a little disturbance” in the economy and declined to rule out a recession.

The Federal Reserve’s forecast of gross domestic product predicts the U.S. economy may actually contract this quarter. That hasn’t happened since 2022.

At the state level, the Indiana legislature is working on its two-year budget with property tax reform a major priority. While that may provide some relief for individual home owners, local governments and public schools are raising red flags about what the lost revenue will mean to them.

The state also has to make up for a billion-dollar shortfall last year in Medicaid.