I think that most observers agree that the risk of recession has gone up since Trump started slapping tariffs on our trade partners regardless of whether they were former ally or foe. By raising costs for consumers and businesses alike, it will surely drag down economic activity. Sky high tariffs on China will be especially damaging if they aren't rationalized fairly quickly.

The tariffs took all the headlines away from another potent source of chaos and uncertainty that was dominating he headlines before the last couple of weeks: Trump's assault on the US federal government, cutting jobs and funding of programs willy-nilly with little regard to whether or not the US people value what the former employees were doing.

The widespread uncertainty still weighs heavy on an enormous variety of businesses: from a non-profit that no longer gets federal funding and has to cut everyone loose, to any business that relies on an imported or exported finished good or part, especially from China. Will the 'reciprocal' tariffs come back after the 90 day pause?

CEOs will be trying to delay significant decisions and investments to see how it will sort out. Many businesses that rely on Chinese parts or goods will be crushed.

Without significant moves from Trump to reduce the rampant uncertainty in the economy, I see a recession as a virtual lock. It's earnings season now, and early reports have been good, but with the companies cautioning on the forward outlook. Earnings will be muddled by different effects, like a pull-forward of demand as people snap up inventory at current prices, but I think that as soon as next quarter some companies will experience serious negative effects, and two quarters out even more so. Stock market drops, declines in consumer confidence, increases in inflation expectations, and a Fed also sidelined by uncertainty all could feed together to create a serious recession in very little time.

CEOs are scared to speak out forthrightly, for fear of retribution by Trump, but they are sending out distress signals in muted language.

Of course I could be wrong, but I expect that a recession is already starting, and if a contraction isn't evident in the current quarter when it's reported down the road, then the it probably will in the next.