LOS ANGELES — The Trump Administration's economic policies possibly leading to a slow-down in the manufacturing sector, reductions in work force because of immigration policy and cuts in federal government employment could create a recipe for a recession, according to an economic analysis issued Tuesday by UCLA.

What You Need To Know

  • A UCLA economic analysis says that Trump's policies could lead the country to a recession

  • From the post-Civil War recession of 1873 to Tuesday, recessions have occurred when multiple economic sectors contract at the same time

  • UCLA Anderson Forecast economist Clement Bohr said that a downturn could result over the coming year or two, and that we should now be on watch for a recession

  • While there are no signs of a recession happening yet, UCLA said it is entirely possible that one could form in the near term

While there are no signs of a recession happening yet, UCLA said it is entirely possible that one could form in the near term. Authored by UCLA Anderson Forecast economist Clement Bohr, the study delineates the factors that led to the business school's recession watch.

From the post-Civil War recession of 1873 to Tuesday, recessions have occurred when multiple economic sectors contract at the same time. The new study notes that:

  • The current reduction in the work force resulting from new immigration policy will create labor shortages in agriculture, health care, leisure and hospitality, and construction;
  • The new tariff policy will engender higher prices for automobiles, apparel, electronics and the inputs to manufacturing; and
  • The downsizing and restructuring of the federal government will reduce employment in government and at government contractors.

Bohr said that if these, and their consequent feedback into the demand for goods and services, occur simultaneously, they create a recipe for a recession. However, if the impact of these policies is sequential, then a 1995- style slowdown might be possible, he said.

As this trifecta of dramatic policy changes has not been experienced before, there is no data to indicate which will happen. Consequently, the Anderson Forecast — one of the most widely watched and often-cited economic predictors — is on recession watch.

"As 2025 begins to unfold, there are no signs of an imminent recession," Bohr wrote. "The U.S. added 151,000 jobs in the month of February, and the unemployment rate and unemployment claims remain low at 4.1% and 220,000, respectively. The future also looks bright due to the promises of Artificial Intelligence, smart deregulation, as well as recent public and private investments in infrastructure and technology."

However, Bohr determined, the stated aim of the Trump Administration is to dramatically transform the U.S. economy in its first 100 days, "and that begs the question: if fully or nearly fully enacted, could these initiatives cause enough sectors of the economy to contract at the same time and trigger a recession?"

The answer appears to be yes, Bohr found, a downturn could result over the coming year or two, and that we should now be on watch for a recession.

"The administration's purportedly desired policies would impose, each in their own way, a significant contraction on different sectors of the economy," according to the report. "Weaknesses are beginning to emerge in households' spending patterns. And the financial sector, with elevated asset valuations and newly introduced areas of risk, is primed to amplify any downturn."