Is the Trump White House Engineering a Recession? A Hard Look at the Data

Executive Summary: Is the White House Engineering a Recession?

Wall Street is increasingly convinced that Trump’s administration is deliberately slowing the economy—not due to mismanagement, but as a strategic move to force the Federal Reserve into rate cuts, weaken the U.S. dollar, and set up a supply-side economic boom.

Key Takeaways

Nomura strategist Charlie McElligott argues that Trump wants a controlled recession to trigger disinflation, lower interest rates, and shift the U.S. economy toward a pro-business, export-driven model.
Market signals confirm recession expectations:
- The U.S. dollar index (DXY) has fallen 4% since January.
- Polymarket recession odds have jumped from 22% to 37%.
- S&P 500 is down 5% from February highs, while bond markets are pricing in Fed cuts.
Tariffs on China, Mexico, and Canada are key tools in this strategy, raising costs to slow demand without letting inflation spiral out of control.
The Fed holds the key—Trump’s economic team is betting that Powell will be forced to cut rates to stabilize the economy.
Historical parallels suggest two possible outcomes:
- The Reagan Model (1981-82): A short, sharp recession followed by a booming recovery.
- The Nixon Model (1971-74): A miscalculated slowdown that leads to stagflation and prolonged economic stagnation.
The next six months are critical. If the Fed cuts rates aggressively, Trump’s plan could work—if not, the economy risks slipping into a deeper recession than expected.

Bottom Line

This is a high-risk, high-reward strategy. If executed well, Trump could recreate a Reagan-style economic revival. If it backfires, he risks unleashing a stagflation crisis worse than the 1970s.

The coming months will determine whether this is a masterstroke—or an economic disaster in the making.

Introduction: The Case for an Engineered Recession

Wall Street is whispering what no one in Washington wants to say out loud: What if this recession isn’t an accident?

According to Nomura’s Charlie McElligott, one of the most aggressive and data-driven analysts on Wall Street, the Trump administration wants a slowdown—a controlled detonation of the U.S. economy designed to 0weaken the dollar, force Federal Reserve rate cuts, and set up a pro-business economic rebound.

And the markets are starting to believe it.

The U.S. dollar index (DXY) has dropped 4% since January—a major devaluation signal.
On the crypto prediction market Polymarket, traders now assign a 37% probability of a U.S. recession in 2025, up from just 22% at the start of the year.
The yield on 2-year Treasuries has dropped 44 basis points since January, showing that traders expect aggressive rate cuts.
The S&P 500 is down 5% from its February highs, while McElligott’s "Animal Spirits" basket of high-risk trades has collapsed 22% since December—meaning hedge funds are unwinding leverage in anticipation of a slowdown.

So what’s the endgame? According to McElligott, this isn’t just about trade wars, inflation, or the usual boom-bust cycle. Trump’s team is engineering a demand shock—hitting the brakes on the economy just enough to force the Fed into action.

If it works, the result will be an economic realignment driven by supply-side policies—lower taxes, deregulation, and a weaker dollar boosting U.S. exports.

If it fails? Well, history isn’t kind to politicians who miscalculate recessions.

But is this actually happening? And how much control does the White House really have over the economy? Let’s get into the data.

1. The Case for an Engineered Recession

If you believe Nomura’s Charlie McElligott, the White House is deliberately slowing the economy down—not by accident, not by incompetence, but by design.

The strategy? Manufacture a short-term slowdown to trigger Federal Reserve rate cuts, weaken the U.S. dollar, and create the perfect conditions for a supply-side economic boom heading into 2026.

The Key Mechanism: A Demand Shock to Force the Fed’s Hand

McElligott’s argument is that Trump’s administration doesn’t want to fight inflation through traditional means like government spending or stimulus—instead, they want to constrict demand just enough to force the Federal Reserve to cut rates.

And the numbers suggest this is already happening:

GDP growth has slowed to 1.8% in Q4 2024, down from 3.2% in Q2 (Bureau of Economic Analysis).
The U.S. dollar index (DXY) is down 4% since January, as traders bet on future rate cuts and a weaker currency.
Inflation is falling faster than expected—dropping from 3.4% in December to 2.9% in February (Bureau of Labor Statistics).
Fed futures pricing now expects three rate cuts in 2025, up from just one expected cut in December 2024 (CME FedWatch Tool).

The White House’s ideal scenario: The Fed sees slowing growth and falling inflation, then slashes rates aggressively—freeing up cheaper capital, boosting asset prices, and setting the stage for a pro-business economic resurgence before 2026.

Trump’s Economic Playbook: Reagan Redux?

This isn’t a new idea. The Reagan administration engineered a similar slowdown in the early 1980s by allowing the Fed to drive interest rates sky-high before cutting them—triggering a painful recession, but ultimately paving the way for a supply-side economic explosion.

In 1981-82, GDP growth fell to -1.8% before rebounding to 7.2% by 1984 (Federal Reserve Economic Data).
Inflation dropped from 13.5% in 1980 to 3.2% by 1983, while unemployment peaked at 10.8% before falling to 7.5% in two years.
The stock market rallied over 200% between 1982 and 1987 as businesses took advantage of lower rates and lower taxes.

Trump’s team seems to be playing a similar game—but with one major difference: Instead of letting the Fed jack up rates first, they’re manufacturing disinflation through trade policy and demand contraction.

That’s where tariffs come in.

The White House’s Next Move: Tariffs as an Economic Weapon

To ensure a slowdown, Trump has raised tariffs on Canada, Mexico, and China—policies that should, in theory, increase consumer costs and drag down corporate margins.

Tariffs on Chinese imports are expected to raise U.S. consumer prices by 0.5% in 2025 (Peterson Institute for International Economics).
The National Retail Federation projects a $100 billion drag on consumer spending due to higher import costs.
U.S. manufacturing has contracted for 16 consecutive months, the longest streak since the Great Recession (ISM Manufacturing Index).

By making imports more expensive, the administration is artificially constraining demand—cooling inflation while putting pressure on the Fed to act sooner.

Big Risk, Bigger Reward?

If this strategy pays off, Trump will force the Fed into early rate cuts, weaken the dollar, and set the stage for a Reagan-style economic resurgence in the back half of his second term.

If it fails? The White House might crash the economy harder than they intended—and if stagflation creeps in, they won’t have many options left.

Next up, let’s look at how Wall Street is reacting—because the smart money is already placing its bets.

2. Tariffs as a Blunt Weapon: What’s the Goal?

If you want to engineer a recession, there are two main ways to do it:

Jack up interest rates like Volcker did in the 1980s, choking the economy with expensive credit.
Kill demand through trade restrictions, raising costs without letting inflation spiral out of control.

Trump’s team has clearly chosen Option #2, using tariffs as a financial weapon to hit both inflation and growth simultaneously—a risky move that could either force the Fed into action or push the economy over the edge.

The Data: Tariffs Are Already Squeezing the Economy

Trump has re-imposed tariffs on China, raised duties on Canada and Mexico, and expanded restrictions on European imports.
The new China tariffs could raise U.S. consumer prices by at least 0.5% in 2025 (Peterson Institute for International Economics).
U.S. corporate profit margins have shrunk to 8.3% in Q4 2024, down from 10.7% a year ago (Bureau of Economic Analysis).
The National Retail Federation estimates a $100 billion hit to consumer spending due to higher import costs.

By making imported goods more expensive, the White House is forcing companies to pass costs onto consumers—but only marginally, ensuring that inflation doesn’t spike enough for the Fed to panic.

Instead, this policy ensures a slow economic drag—enough to dampen demand and trigger rate cuts without completely tanking the economy.

McElligott’s Take: Trump Wants to Kill the Dollar’s Strength

According to Nomura’s McElligott, the real game here is dollar devaluation.

The U.S. dollar index (DXY) has fallen 4% since January, largely because markets are pricing in Fed rate cuts.
A weaker dollar benefits U.S. exporters—boosting manufacturing and helping domestic producers compete against foreign imports.
Trump’s policies appear to be intentionally targeting the dollar’s reserve currency status—weakening it to make U.S. goods cheaper abroad.

This is classic "beggar-thy-neighbor" economic policy—depress the currency to make exports competitive while forcing other economies to absorb the inflationary hit.

The Consumer and Business Reaction: Confidence is Cracking

So far, the fallout from Trump’s tariffs is starting to show up in consumer and business sentiment:

Consumer confidence dropped from 107.1 in January to 102.9 in February (Conference Board).
Retail sales growth has slowed to 1.2% YoY, down from 3.9% at the start of 2024 (Census Bureau).
Surveys of U.S. manufacturers show 16 consecutive months of contraction, the longest streak since the Great Recession (ISM Manufacturing Index).

If these numbers continue to trend downward, Trump’s administration may need to accelerate rate cuts sooner than expected—or risk an outright collapse in demand.

How Does This End? The Two Scenarios

Right now, the White House is playing a dangerous game:

Best-Case Scenario: The tariffs slow growth just enough to force the Fed into rate cuts, weakening the dollar and setting up a pro-business economic rebound.
Worst-Case Scenario: The demand shock spins out of control, leading to layoffs, collapsing consumer sentiment, and a full-scale recession before the Fed can react.

McElligott believes Trump is betting that markets will tolerate short-term pain in exchange for long-term gains. But if markets panic too soon, all bets are off.

Wall Street is already adjusting its bets. Next up, let’s break down how traders are reacting—and what their money is saying about where this is headed.

3. Wall Street’s Reaction: Betting on a Recession?

The White House might not admit it, but Wall Street is already betting that a recession is coming. And not just any recession—one deliberately engineered to force the Federal Reserve into rate cuts.

McElligott’s theory might sound like a conspiracy, but the markets don’t trade on theories—they trade on hard data and probabilities. Right now, the smart money is piling into trades that suggest a controlled economic slowdown is already in progress.

Traders Are Pricing in a Recession

On Polymarket, traders now assign a 37% probability of a U.S. recession in 2025, up from 22% in January.
The S&P 500 is down 5% from its mid-February peak, reflecting growing uncertainty in the stock market.
Leveraged funds have unwound their long positions at the fastest rate since mid-2022 (CFTC data).
The U.S. Treasury yield curve remains inverted, with the 2-year yield sitting 35 basis points above the 10-year yield—a classic recession warning.
Nomura’s "Animal Spirits" index, which tracks high-risk trades, has crashed 22% since December—meaning hedge funds are getting out of risky positions fast.

These moves suggest that investors are hedging against a slowdown, not a soft landing.

Rate Cuts Are Now a Virtual Certainty

Wall Street doesn’t just think the economy is slowing—it’s already pricing in aggressive Federal Reserve rate cuts:

The CME FedWatch tool now assigns a 75% probability that the Fed will cut rates by at least 75 basis points in 2025.
2-year Treasury yields have dropped 44 basis points since January, a sign that bond traders expect looser monetary policy.
Gold has surged to $2,200 per ounce, a new all-time high, as investors hedge against economic uncertainty.

If this was just a routine economic cycle, markets wouldn’t be this aggressive. The pricing suggests traders believe Trump’s team is deliberately slowing the economy down to create conditions for major rate cuts.

Where’s the Trump Put?

Historically, every administration has had a “Put” level—a point where the government steps in to rescue the markets.

For Biden, it was the CHIPS Act and student loan relief.
For Trump’s first term, it was the 2017 tax cuts.

So where is Trump’s “Put” this time?

McElligott argues that the White House’s floor for action is much lower than the market expects—meaning stocks might have to drop another 10-15% before Trump pivots to a stimulus package.

This is why traders haven’t rushed back in yet—they don’t know how much pain the White House is willing to tolerate.

What Comes Next? Watch These Signals

If McElligott is right, we should see the following in the coming months:

The S&P 500 falling another 5-7% before stabilizing—a sign that the market is waiting for policy confirmation.
The Fed signaling 100 basis points of rate cuts before July—a sign that the slowdown is working as planned.
DXY (U.S. Dollar Index) dropping below 100—a sign that currency devaluation is part of the strategy.

Right now, Wall Street is betting on a recession—but not a collapse.

The question is: Can Trump control the slowdown before it spirals out of hand?

4. Economic Risks: Could This Backfire?

Trump’s administration may think they’re playing 4D chess, but history has a way of punishing bad bets on the economy.

If this is an engineered recession, it’s a high-stakes gamble with very little room for error. A slowdown that’s too sharp or mistimed could trigger stagflation, collapse consumer confidence, and wreck Trump’s entire economic playbook before it even gets started.

Right now, the data is flashing early warning signs that this could spiral out of control.

Consumer Confidence Is Cracking

Consumer confidence dropped from 107.1 in January to 102.9 in February, marking the steepest two-month decline since 2022 (Conference Board).
Retail sales growth is slowing sharply, rising just 1.2% year-over-year, down from 3.9% a year ago (Census Bureau).
Personal savings rates have fallen to 3.7%, well below the 8.5% pre-pandemic average, meaning consumers have little buffer left if a recession hits.

The Job Market Is Starting to Weaken

So far, the labor market has held up better than expected, but cracks are forming:

Initial jobless claims have risen to 235,000 per week, up from 198,000 in December (Department of Labor).
Layoffs in tech and finance have accelerated, with major firms like Goldman Sachs, Google, and Amazon announcing cost cuts.
The U.S. unemployment rate ticked up to 3.9% in February, the highest since early 2023 (Bureau of Labor Statistics).

If job losses continue climbing past 4.2%, the White House may lose control of the narrative—especially if layoffs spread from white-collar sectors into manufacturing and retail.

The Nightmare Scenario: Stagflation Returns

The biggest risk is that Trump’s plan backfires—meaning the economy slows down without inflation cooling fast enough. This is what happened in the 1970s stagflation era, and it led to a decade of slow growth, weak wages, and volatile markets.

Here’s what stagflation would look like in 2025:

GDP growth falls below 1%, but inflation stays above 3%.
The Fed refuses to cut rates aggressively, fearing a resurgence in price pressures.
Businesses freeze hiring, leading to rising unemployment without any recovery in sight.

What Would Force a White House Pivot?

If this strategy starts to backfire, there are two key levels where Trump’s team would likely step in:

S&P 500 down 15-20% from current levels – If markets drop this much, expect emergency tax cuts or stimulus proposals.
Unemployment above 4.5% – If job losses accelerate, Trump’s White House will likely pressure the Fed to cut even faster.

The problem? By the time these thresholds are hit, the damage may already be done.

Right now, the White House is walking a fine line between “controlled slowdown” and “economic freefall.”

The only thing keeping this from spiraling further? The Federal Reserve. And that’s where we go next.

5. The Fed’s Role: Can Powell Be Forced?

If the White House is engineering a recession, it all hinges on one player: Federal Reserve Chairman Jerome Powell.

Trump can impose tariffs, restrict trade, and choke demand, but he can’t directly cut interest rates—that’s Powell’s call. And right now, the Federal Reserve is stuck between two bad options:

Cut rates too soon, risking an inflationary rebound that undermines Fed credibility.
Hold rates too high for too long, letting the economy slide into a deep recession before finally stepping in.

McElligott’s thesis is clear: Trump is trying to force Powell’s hand by slowing the economy just enough to make aggressive rate cuts inevitable.

Powell’s Dilemma: Rate Cuts vs. Inflation Risks

The Fed’s official inflation target is 2%, but inflation is still sitting at 2.9% (February 2025) (Bureau of Labor Statistics).
The White House is betting that slower economic growth will push inflation down below 2.5%, forcing Powell to cut rates.
But if tariffs keep prices elevated, the Fed could hesitate to cut rates as aggressively as markets expect.

What the Fed Needs to See Before Cutting Rates

There are two key economic indicators Powell is watching before making a move:

Unemployment rate above 4.2% – Right now, it’s 3.9%, but if it crosses 4.2% by mid-2025, the Fed will almost certainly start cutting.
Core inflation below 2.5% – Inflation is trending downward, but if it stalls above 2.5%, Powell may refuse to cut aggressively.

The Market Is Already Pricing in Rate Cuts

Wall Street isn’t waiting for Powell to make a decision—it’s already betting heavily on cuts in 2025:

The CME FedWatch tool assigns a 75% probability of at least 75 basis points of rate cuts in 2025.
2-year Treasury yields have dropped 44 basis points since January, reflecting expectations of a looser monetary policy.
The S&P 500 remains highly volatile, with traders uncertain whether Powell will cut aggressively or hold the line.

The White House’s Endgame: How This Strategy Works (If It Works)

Trump’s economic team is hoping for a specific sequence of events:

The economy slows just enough to bring inflation down—but not enough to crash into a deep recession.
The Fed responds by cutting rates by 75-100 basis points in the second half of 2025.
Lower rates spark a stock market rally, weakens the dollar further, and stimulates exports.
By early 2026, growth re-accelerates, setting Trump up for a Reagan-style economic boom heading into the election cycle.

What Could Go Wrong?

If Powell doesn’t cut rates fast enough, the slowdown could deepen into an actual recession—not the mild contraction the White House is hoping for.

If Powell cuts too soon and inflation rebounds, markets could lose confidence in the Fed, leading to a scenario where both growth and inflation are out of control.

The Bottom Line: Who Blinks First?

Right now, this is a game of chicken between Trump’s White House and the Federal Reserve.

If Powell waits too long to cut rates, the recession could get out of control before a recovery can take hold.
If Powell cuts too soon, the Fed’s credibility is shot—and inflation could surge back before the 2026 election cycle.

Either way, the Fed holds the fate of Trump’s economic strategy in its hands.

The next big test? Whether Powell signals a rate cut at the Fed’s next policy meeting.

Because if the cuts don’t come, the entire plan could backfire spectacularly.

Up next: Has this strategy ever worked before? Let’s look at the historical parallels.

6. Historical Parallels: Has This Happened Before?

If the Trump administration is deliberately engineering a slowdown, it wouldn’t be the first time a White House has used recession as a policy tool. History shows that intentional economic contractions can work—but only under specific conditions.

The big question: Is Trump following Reagan’s economic playbook, or is this Nixon-style stagflation all over again?

Reagan’s 1981-82 Engineered Recession: A Playbook for Trump?

One of the most successful examples of an engineered economic slowdown was Reagan’s 1981-82 recession, which was orchestrated to kill inflation and reset the economy.

Inflation in 1980 hit 13.5%, leading Federal Reserve Chairman Paul Volcker to push interest rates above 20% to crush price growth.
Unemployment peaked at 10.8% in 1982, the highest since the Great Depression.
GDP contracted by 1.8%, triggering a sharp recession that was politically painful.

But the strategy worked. By 1983:

Inflation had collapsed to 3.2%.
The Federal Reserve cut rates, allowing businesses to expand again.
GDP surged by 7.2% in 1984, kicking off a massive economic boom.

Is Trump Trying to Copy Reagan?

There are clear similarities between Reagan’s engineered slowdown and Trump’s current approach:

Both administrations pushed for supply-side policies—Reagan with tax cuts and deregulation, Trump with tariffs and a weaker dollar.
Both slowed the economy intentionally to reset inflation and interest rates—Reagan through high interest rates, Trump through tariffs and demand contraction.
Both sought long-term business growth over short-term economic pain.

However, there’s a key difference:

Reagan let Volcker control inflation first, then cut rates.
Trump is trying to trigger rate cuts while inflation is still above target—a far riskier approach.

If Trump miscalculates, he risks following a very different historical precedent—one that led to a decade of economic stagnation.

Nixon’s 1971-74 Stagflation Disaster: The Worst-Case Scenario

The worst historical comparison for Trump is Nixon’s economic collapse in the 1970s.

In 1971, Nixon imposed tariffs, wage controls, and a temporary price freeze to fight inflation.
Instead of fixing the problem, it created supply shortages, raised costs, and choked economic growth.
By 1974, the U.S. was in a full-blown recession, inflation was above 12%, and unemployment had skyrocketed to 9%.

The result? A stagflation crisis that lasted the entire decade.

If Trump’s timing is off, he could end up stagnating growth while keeping inflation high, leading to the exact same stagflation nightmare.

Bush’s 2001 Rate-Cut Gamble: A Warning Sign?

A more recent case study is George W. Bush’s response to the 2001 recession.

After the dot-com crash, Bush pushed for immediate Fed rate cuts and tax cuts to prevent a deeper collapse.
The Fed cut rates aggressively, but the economic rebound was slow and uneven.
By 2003, the U.S. experienced its first jobless recovery, meaning GDP grew but workers didn’t feel the benefits.

Trump could be facing a similar risk—if the Fed cuts rates but job growth stays weak, the U.S. could enter a prolonged low-growth cycle instead of a fast rebound.

Which Path Will Trump’s Economy Follow?

Right now, Trump’s strategy could lead in two directions:

If the Fed cuts rates fast enough, the economy could follow Reagan’s 1983 boom, with a weaker dollar boosting exports and businesses thriving under supply-side policies.
If inflation stays sticky and growth stagnates, the U.S. could repeat Nixon’s stagflation crisis, with slow growth, high unemployment, and long-term market uncertainty.

What Signals to Watch for in the Coming Months

If Trump is following the Reagan model, expect:

Rapid rate cuts by mid-2025.
Unemployment peaking near 4.5% before reversing.
A weaker dollar boosting U.S. exports.

If this turns into a Nixon-style mistake, we’ll see:

Inflation staying above 3% while GDP growth drops close to 0%.
Layoffs spreading into manufacturing and retail.
The Fed resisting rate cuts due to inflation fears.

Final Thought: Timing Is Everything

Reagan’s engineered recession worked because it crushed inflation before the economy rebounded.

Nixon’s failed because he tried to fight inflation while restricting demand—causing economic stagnation instead.

Trump’s plan is a risky hybrid of both approaches—and whether it works or fails depends on one thing: how fast the Fed moves.

Up next: What happens next, and how will this strategy play out in the real economy?

7. Conclusion: What’s Next?

If Nomura’s Charlie McElligott is right, then Trump’s economic team is executing a calculated gamble—one that relies on forcing the Federal Reserve into rate cuts by slowing the economy just enough to create the right conditions for a future boom.

But what happens next? Will this strategy work, or is the White House playing with fire?

The Best-Case Scenario: Trump Pulls Off a Reagan-Style Reset

If this strategy goes according to plan, here’s how it unfolds:

The economy slows but doesn’t collapse. GDP growth drops to around 1% in mid-2025, but consumer spending and hiring hold up just enough to prevent a deep recession.
The Fed responds with rate cuts. As inflation drifts toward 2.5%, Powell cuts rates aggressively—dropping them by 75 to 100 basis points before the year ends.
The weaker U.S. dollar boosts exports and manufacturing. Tariffs slow imports, and a devalued dollar makes U.S. products more competitive in global markets. Moreover, tariffs on Albertan oil imports risk backfiring as Trump also just banned Venezuela crude imports.
By early 2026, business investment surges. With lower borrowing costs, companies expand, hiring picks up, and a new economic cycle begins.

In this scenario, Trump successfully engineers a temporary slowdown, uses it to push through supply-side policies, and emerges with a strong economy heading into 2027.

This would be the Reagan playbook all over again—pain now, growth later.

The Worst-Case Scenario: Nixon 2.0 and an Economic Crisis

If this strategy goes wrong, here’s what could happen:

The economy slows too much, too fast. Consumer spending contracts more than expected, GDP growth goes negative, and layoffs spread beyond tech and finance into retail and manufacturing.
Inflation refuses to drop below 3%. Tariffs raise costs on imported goods, keeping price pressures high. The Fed hesitates on rate cuts, afraid of rekindling inflation.
Wall Street panics. The S&P 500 falls another 10-15%, as investors realize the Fed won’t be cutting as fast as they hoped.
Stagflation sets in. With weak growth, sticky inflation, and cautious Fed policy, the economy enters a prolonged slump, just like the Nixon-era stagflation crisis of the 1970s.

In this scenario, Trump’s gamble fails spectacularly—and instead of triggering a boom, he traps the economy in a stagnation cycle that lasts years.

What to Watch for in the Next 6 Months

To figure out which direction the economy is heading, keep an eye on these three key indicators:

Unemployment Rate
- If job losses stay under 4.5%, the slowdown is controlled.
- If unemployment rises past 5%, the recession is spiraling beyond the White House’s control.
Fed Rate Cuts
- If Powell signals at least 75 basis points of cuts before July, the plan is working.
- If the Fed holds rates high past September, expect a deeper downturn.
Consumer Sentiment and Spending
- If spending remains stable, the slowdown is temporary.
- If confidence crashes and retail sales go negative, demand destruction is too severe.

Final Verdict: Masterstroke or Miscalculation?

If Trump is right, the economy will dip, stabilize, and then surge back stronger under lower rates and supply-side stimulus.
If Trump is wrong, this could trigger a stagflationary recession worse than anything the U.S. has seen in decades.

Right now, the entire economic future of the next few years hinges on how fast the Federal Reserve responds.

Wall Street is betting that rate cuts are coming—fast.
The White House is banking on a controlled slowdown.
The economy is caught in the middle.

One thing is certain: The next six months will tell us whether this is a brilliant strategic move—or an economic disaster in the making.