Recessions Are Bad, Actually

“Mass Job Losses, Closed Businesses, and Financial Ruin”

Amid high consumer uncertainty surrounding inconsistent tariff policy, widespread government layoffs, and cuts to social programs, the Trump administration has openly acknowledged the likelihood of imminent economic downturn, positing the idea that temporary hardship will eventually give way to a “Golden Age.”

“But that’s not how economies work,” writes Alí R. Bustamante, director of Roosevelt’s worker power and economic security program. “Recessions don’t set the stage for prosperity; they cause long-term damage that even a decade of growth can’t fully undo.”

As we saw firsthand during the 2008 financial crisis and in the years that followed, recessions and their ripple effects cause real harm to all areas of people’s lives:

• Small businesses collapse while the biggest corporations consolidate power.
• Unemployment soars, forcing workers to take worse jobs for lower pay.
• Public institutions—like schools, health care, and infrastructure—that enable long-term economic growth are weakened.

At the same time, the current policy trajectory will only exacerbate the harm to everyday people:

• The Trump administration’s whiplash-inducing tariff agenda would raise prices for consumers and manufacturers alike, increasing inflation while slowing down economic activity.
• Mass layoffs of government workers would gut essential public services, hurting businesses that rely on those workers’ paychecks.
• Cutting Medicaid and Social Security would push millions into poverty, reduce consumer spending, and force older Americans to stay in the workforce longer, crowding out younger workers.

“The Trump administration’s vision is clear: force a recession, break the public sector, and weaken social protections, all hoping that something better will emerge on the other side,” Bustamante concludes. “But history has shown us what actually happens—higher inequality, lower wages, and an economy rigged even further in favor of the ultrawealthy. Economic downturns don’t just disappear once the pain subsides; they leave behind long-term damage.”

Read more: “Recessions Don’t Build Golden Ages—They Destroy Lives and Futures”

Join Us for the Roosevelt Institute Book Talk Series on April 2

Why is democracy so broken, and how might it be fixed? In our April installment of the Roosevelt Institute Book Club, we will welcome Michael A. McCarthy—author, scholar, and former Roosevelt fellow—to discuss his recently released book, The Master’s Tools: How Finance Wrecked Democracy (And a Radical Plan to Rebuild It).

McCarthy lays the blame for the destruction of democracy on our undemocratic systems of finance and credit, where decisions that constrain our entire society are made by a powerful few. To counter this dangerous concentration of power and influence, he offers a new vision—inspired by ancient Athens, where small groups chosen by lottery made key political decisions—to show how new forms of financial governance can strengthen our political system and build working-class power. Our conversation will explore how democratizing financial institutions can fund a just green transition, better social housing, and other public goods—offering a vision for a whole new kind of people-centered economy.

What We’re Talking About

What We’re Reading

• Mike Konczal, senior director of policy and research at the Economic Security Project and a former Roosevelter, reviewed Abundance by Ezra Klein and Derek Thompson and Why Nothing Works by Marc J. Dunkelman.
  • “The books want to emphasize recent failures of federal projects and programs for good reason. But there are also recent successes that we can learn from,” Konczal writes, citing the Affordable Care Act and the Consumer Financial Protection Bureau.
• Roosevelt Principal Felicia Wong discussed the “Abundance Agenda” and economic populism with Steve Teles and Marshall Kosloff on The Realignment podcast.
  • “None of us have the ability to get anything done without the others. So the question is how we take the best insights of populism—which is that the balance of power in our society is way out of whack—and make sure that we can turn that around so that we deliver more for people,” Wong says.