Some economists have speculated that President Donald Trump is purposely slowing the economy through trade measures and market disruption to put pressure on the Federal Reserve to decrease interest rates, a tactic known as a “J-curve” reset. The relationship between falling treasury yields and stock market behavior supports the J-curve concept. Analysts describe a potential scenario where the economy faces short-term challenges for the sake of long-term recovery.
While Trump has openly denied purposely tanking the market, his social media activities and administration rhetoric have fuelled speculation about whether short-term economic hardship is part of a larger strategy for long-term gain.
Since President Donald Trump took office in January, stock market performance has fallen rapidly due to his tariff plan. That debate has shifted to whether the White House is deliberately slowing economic growth.
Many initially disregarded this as a conspiracy: this is a president who cherishes the stock market’s opinion of him, who is an entrepreneur himself, and who campaigned on promises of a strong economy for Americans.
PRESIDENT DONALD TRUMP JUST REPOSTED THIS VIDEO TO TRUTH SOCIAL SAYING HE CRASHED THE STOCK MARKET BY 20% ON PURPOSE pic.twitter.com/WPbQNGGKrQ
— Cam (@CryptoNews_eth) April 4, 2025
However, as stocks continue to collapse and President Trump’s administration appears to be satisfied with the situation, observers are beginning to wonder if the ‘hard reset’ notion is correct.
President Trump has even hinted at the notion himself. Over the weekend, Trump reposted a video on his social media platform Truth Social titled “Trump is purposefully CRASHING the market” without adding any further comment.
The video, which was first broadcast on Elon Musk’s platform X, suggests Trump is attempting to manufacture a cash push into treasuries, which might put pressure on the Fed to cut interest rates as the economy slows.
To some extent, data supports the theory presented in the video. Treasury yields (interest on treasuries) have fallen as prices have risen, owing to rising demand. Furthermore, Trump has made no attempt to hide his desire for interest rates to fall, even claiming that Fed Chairman Jerome Powell’s position would be jeopardised if he did not do so.
It’s worth emphasising that the President doesn’t have the authority to fire the Federal Reserve chairman, and Powell and the Federal Open Market Committee (FOMC) are lawfully authorised to work independently of the government.
Some economists are warming up to the idea that President Trump may be attempting to arrange an economic downturn in order to rebuild it through lower interest rates and inflation. Some economists refer to this as a J-curve, which is a period of short-term slowness followed by a large takeoff.
“I don’t think the administration is aiming for a bear market or a sharp economic recession,” Kevin Ford, FX and macro strategist at Convera, told Fortune last week.
“But if deflating financial asset bubbles is the price to pay, it seems like they’re willing to take the heat. Their rhetoric feels unified—Trump, Lutnick, Bessent—they’re all aligned on the message of short-term pain. If the goal is a J-curve economic trajectory, where a hard reset shocks the system to cool down the economy, it doesn’t look like a recession is the endgame.”
Trump reposted this video that starts with “Trump is purposely CRASHING the Market”
It’s safe to assume things are getting out of control. More volatility incoming.pic.twitter.com/d8ixN9Bqyt pic.twitter.com/ZwR38Cc3QZ
— Trade Whisperer (@TradexWhisperer) April 6, 2025
However, UBS’s top economist, Paul Donovan, sees no sign of a master plan in action. He stated in a note on Monday: “Over the weekend, U.S. administration officials gave contradictory statements on trade taxes, causing investors to question the existence of a masterplan.
“Attempts to justify attacks on the Heard Island penguins only emphasized the peculiarity of the tariff formula. U.S. President Trump took time from their golf weekend to twice post that equity declines were ‘on purpose’.”
Trump also told the journalists onboard Air Force One this weekend that the idea of him attempting to manufacture a market slowdown is “so stupid,” adding: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
