Trump admin running the Reagan/Volcker economic gambit. AIA Weekly Report 3.8.25

During Reagan's term, the FED chairman raised rates to 20% and crushed inflation. This also caused a severe recession. However, this also set the economy up for a huge recovery as inflation fell, rates were cut, and the economy was stimulated.

The Reagan administration also massively deregulated the economy and passed tax cuts through Congress. This caused a boom which propelled Reagan to another four-year term and allowed his VP to have a four-year term. It seems the Trump administration is doing something similar. Not raising rates but cutting fiscal stimulus to the economy.

This will cause a recession, likely leading to lower inflation, rates, and energy prices. Couple this with a promise to deregulate the economy and tax cuts, and we could be looking at taking the pain early and enjoying the gain later.