Who Gets The Blame For The Upcoming Recession?

"Don’t fall for it when the people who’ve been in power for decades try to spin the next recession as a consequence, yet again, of them not yet having enough power."

By Connor O’Keeffe, Mises Institute

Over the weekend, President Trump made headlines for refusing, on two occasions, to rule out the possibility that the US will experience a recession this year. The comments came days after the Atlanta Fed announced it now projects GDP to fall by nearly three percent in the first quarter of this year.

Those developments, paired with the recent stock market decline set off by the market’s reaction to Trump’s tariff plans, hav many political opponents of the president joining figures in the establishment media to fearmonger about a looming “Trumpcession.”

It is often tempting to look back at the last few decades of government interventions in the economy and characterize the Washington political establishment as subscribing to some school of economic thought. They might be Keynesians or Monetarists, Chicago School neoliberals or budding believers of Modern Monetary Theory.

In truth, the political establishment has no consistent economic philosophy. They have no single coherent explanation for why things like inflation or recessions occur. And by not committing to a coherent explanation for why we’re sometimes hit by these economic disasters, establishment figures are then able to use whatever possible explanation they find to be most useful at the moment things start to fall apart.

The Great Depression is blamed on Herbert Hoover mindlessly trying to balance the budget in the face of a severe downturn. The Great Recession in 2008, we’re told, happened because of a lack of adequate government regulations in the financial sector. And the covid recession in 2020 occurred because Donald Trump did not crack down hard enough on our liberties to stave off the pandemic nor print and spend enough money to keep the economy going as usual.

None of these accounts come even close to explaining how the entire economy retracted at once. But they do all back up the case for giving the government more money and power, so they come to dominate the official narrative.

It is still too early to tell whether the official metrics will say we’re currently in a recession. But the reaction over the weekend to the possibility of one kicking off revealed the narrative that the political establishment clearly intends to push whenever the recession is officially declared.

They’ll say that everything was going great after Biden came in and “empowered” the federal government to rescue the economy from Trump’s terrible first term. They’ll point to the official measures of economic and job growth that were reported under Biden and celebrate the attainment of a “historically strong economy”—even if, as we were told at the time, the people actually living through it were too dumb to understand how good they had it.

Then, Donald Trump returned and unleashed chaos with heartless DOGE cuts and crippling tariffs. And, in a reckless effort to make his rich friends a little richer, he crashed the entire American economy.

This past weekend showed us that the establishment media is ready to aggressively push this narrative whenever the official recession threshold is breached.

The lesson will again be that the economy crashed because some rogue politicians did some specific things the political establishment doesn’t like. But just as with the establishment’s account of previous recessions, this, too, will be nonsense.

Cutting government programs is, by design, a very difficult thing to do without causing some economic chaos. And tariffs really are economically destructive taxes that are bad for just about everybody in the country. But neither of these can generate the kind of all-encompassing economic slowdown experienced across the entire economy that defines a recession.

There is only one thing that can cause that—artificial credit expansion.

When new loanable funds that are not based on actual savings enter the economy, the entire structure of production is warped in a way that spurs new projects that cannot be finished with available resources and that are out of line with what consumers actually want. Production is boosted beyond what can realistically be accomplished, which necessitates an eventual economy-wide correction. That is a recession.

This is done most effectively and extensively by banking cartels—also known as central banks. It’s a process that benefits the big banks, government officials, and politically-connected businesses at the expense of nearly everyone else in the economy. And it’s a cycle that the American political class has been carrying out for decades through their central bank, the Federal Reserve.

Whenever the next recession hits—assuming it hasn’t actually already been here for years—it will be because of the massive amount of credit expansion that took place since the Great Recession under Obama, Trump, and Biden.

That doesn’t fall neatly into the simplistic partisan blame game the establishment prefers us to stay mired in whenever something bad happens in the economy. But it’s the truth.

Don’t fall for it when the people who’ve been in power for decades try to spin the next recession as a consequence, yet again, of them not yet having enough power.

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