Tariffs, layoffs, and immigration—the triple threat to economic growth that has Wall Street worrying about the U.S. economy

President Donald Trump’s election victory initially had the stock market in raptures. The S&P 500 surged 6.25% from Nov. 5 to Feb. 19, when the index hit a new record high above the $6,145 mark. The S&P is down more than 3% since, however, as soft economic data and renewed tariff threats from the Trump White House elevate Wall Street’s concern about the state of the U.S. economy.

Markets hate uncertainty, the saying goes, and investors are desperately awaiting clarity on Trump’s plans for taxing imports as the Street debates whether the president’s economic agenda will slow growth, reignite inflation, do both—or result in none of the above. Traders got more bad news on Monday, as the Federal Reserve Bank of Atlanta’s GDPNow tracker signaled a 2.8% contraction for the first quarter of 2025.

To be sure, that data is volatile. As recently as Feb. 26, the tracker pointed to GDP growth of 2.3% before dropping to –1.5% on Friday. Still, Jay Hatfield, CEO of Infrastructure Capital Advisors, highlighted those forecasts last week as he warned the U.S. economy is headed into recession.

Hatfield, whose firm manages ETFs and a series of hedge funds, has said that tariffs are often misunderstood as inflationary, and he expects DOGE’s mass layoffs of federal workers to cause a significant uptick in unemployment. In his eyes, however, the biggest danger to the economy is the Federal Reserve. He believes the central bank has been overly hawkish on monetary policy, particularly after it decided not to cut interest rates at its January meeting.

Discontent about inflation helped Trump return to the White House, but more everyday Americans have become concerned about the economy, cutting spending in January at the fastest pace in four years. Famed consumer sentiment surveys from the Conference Board, a think tank, and the University of Michigan also came in weak.