US economic data has shown serious divergence, sparking a debate over whether the anxiety prompted by Trump's trade policy will push the slowing economy into a severe downturn.

"Soft data", which refers to surveys of household and business confidence, warns that as Trump advances his trade policies and drastically cuts federal spending, the economy will clearly slow down in the future. However, "hard data" from government statistics on employment and manufacturing suggests that concerns about stagflation and even recession may be overblown.

This mixed signal has left both Washington and Wall Street uneasy about America's prospects. Within just a few weeks, the USA has shifted from being the leader of the global economy to the largest source of uncertainty worldwide. Federal Reserve officials scaled back their annual growth predictions this week by the largest margin since 2022, while the OECD indicated that the USA's trade policy would lead to a slowdown in global growth.

Much of the anxiety stems from surveys conducted by the University of Michigan and the Council of the Great Lakes Region on Consumer sentiment, both of which mentioned worries that tariffs will lead to rising prices. Executives from Nike to Delta Air Lines have referenced this trend, resulting in the market losing trillions of dollars in Market Cap over the past month.

"You shouldn't view it as the sole influencing factor on economic trends," said Citigroup's chief US economist Andrew Hollenhorst. "On the other hand, attention should also be paid to these surveys, because if you only look at hard data, you see a month-old picture, sometimes even two months old. Surveys tell you how people perceive the future."

In the University of Michigan survey released in early March, consumers' expectations for their financial situation dropped to the lowest level on record, with inflation expectations for the next 5-10 years reaching the highest level in over 30 years.

Federal Reserve Chairman Jerome Powell sought to quell concerns over these inflation expectations on Wednesday, repeatedly describing the figure as an outlier. He also stated that the relationship between soft data and hard data "is not very close" and that it is reasonable for policymakers to remain inactive until they better understand Trump's policies.

So far, the Trump administration has taken almost no measures to alleviate these concerns. He and his advisors now indicate that the so-called USA "Golden Age" may take a few more months, or even longer, to arrive. As more tariffs will be implemented on April 2, economists are preparing to cope with another wave of market sentiment being hit.

"We and the market underestimated the order and pain threshold of Trump's policies this year," said Wolfe Research's chief economist Stephanie Roth. "The market initially expected that business-friendly policies would drive growth before the tariffs were implemented, and the scale of the tariffs is much larger than we imagined."

Then there are the hard data - which indicates that the economy is cooling down but is far from falling into recession. Employment growth slowed in February, and the unemployment rate rose, but the data still indicates a robust labor market. Additionally, the CPI in February recorded the slowest growth in four months.

Other data also shows positive signs, but not without warning signals. February's manufacturing output in the USA exceeded expectations, and economists generally believe this is because manufacturers ramped up production ahead of the tariffs taking effect. Furthermore, new housing starts rebounded last month, but this is viewed as a recovery after a significant drop in January due to weather factors.

The trend in Consumer spending is the most frustrating, as reflected in the retail sales data released by the USA Department of Commerce and the inflation-adjusted consumer spending data. However, overall, Powell still stated that the economy is solid.

"What really shows obvious worries are the 'soft data', that is, various survey results," said Federal Reserve Chairman Powell after the policy meeting on Wednesday. "If these concerns would affect the 'hard data', we should see signs of that soon, and of course we would make corresponding judgments. But so far, we have not seen such a situation occurring."