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https://x.com/RealEJAntoni/status/1856745193246003242
Real wages fell under Biden-Harris and never really recovered.
Inflation still closer to 3% than 2%. Debt exploding, especially in the last few months. We passed $1T in interest payments per year on the debt. For reference, the US collected $2.43T in personal income tax in FY 2024, and another $530B in corporate income taxes.
The good news is that a Republican Congress is more likely to slow the pace of spending increases (it is too much to expect spending cuts). They started in 2022, which is a big reason why inflation actually started coming down, because we now know the Inflation Reduction Act did not reduce inflation.
That being said, deep cuts are needed, and the economy will suffer. Think back to what Reagan inherited in 1980, and what 1981-82 were like. It will be much worse this time.
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https://x.com/RealEJAntoni/status/1856778628417126841h
ttps://x.com/KobeissiLetter/status/1856814001784521106
Deficit for FY24 came in at $1.8T.
At 34% of GDP, cuts to government spending will necessarily be painful.
https://tradingeconomics.com/united-states/government-spending-to-gdp
Incredible that government spending as a percent of GDP remained over 43 for FY21.
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https://x.com/RealEJAntoni/status/1857068509261357530 and now revisions to inflation related numbers. Going to be a bumpy economic ride.
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https://x.com/porterstansb/status/1857057210498453855
Yes. But also the expected result of government deficit spending / money printing. So Trump will be inheriting a double whammy of inflation caused by lower interest rates (an error in traditional Fed governance theory) and increased spending. In addition, I don’t trust the BLS / official government statistics, so the jobs numbers and consumer debt numbers may not be accurate. My guess is that we may be in for a Paul Voelker like interest rate shock to bring prices under control.
Keep in mind that Biden drained and did not refill the Strategic Petroleum Reserve, so an oil shock can be mitigated by more US production, but the US could be vulnerable to a short term shock in energy prices as well.
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https://x.com/bravosresearch/status/1857110313729986980
Mortgage rates are going up even after the Fed cuts. Why? Because people aren’t buying bonds. There’s significant default risk, and the Asian economies are looking for more stable assets (and moving away from the dollar as the world’s reserve currency). Discounted bonds mean increased interest rates. If you have X, the thread also discussed the lower labor participation rate, something I have posted about before.
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https://x.com/FinanceLancelot/status/1857232594334519595
Super nerdy, but pulling liquidity will create bank runs.
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The good news is that labor force participation rates in the 25-54 age group are going up, nearing all-time highs. As the Boomers retire, the overall participation rate is going down.
The double-edged sword of reshoring manufacturing is going to have three effects:
- It will boost GDP as we make more of what we need in America.
- It will cause inflation and rates to increase. It’s expensive to bring back all that manufacturing.
- We will have need for bodies to do all that work. It’s unlikely that 70 year olds will return to the factories. Part of the answer is immigration. As much as the country might want to deport millions of people, it is highly unlikely that America will be able to expel more than Obama and Trump did at their peak. And Biden/Harris let in so many illegal aliens that the sheer number will overwhelm DHS’s resources. I doubt they will deport workers in agriculture, construction or hospitality.
There are 1.19 million “final removal” standing orders of deportation. If DHS deports those along with criminals, I think most Americans would be satisfied.
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https://x.com/bravosresearch/status/1857085090595000759
It’s 1982 all over again?
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https://x.com/CGasparino/status/1859617665922330990
I was wondering what was happening with money market funds (usual holders of short term securities).
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Interesting statement by the incoming AG nominee Pam Bondi. “The Department of Justice, the prosecutors will be prosecuted, the bad ones…The investigators will be investigated.”
That sort of statement is a career decision. Attorneys generally circle the wagons to defend their own, particularly those in their chosen fields. She will get next to no cooperation from the target community. They don’t generally wish to weed out the bad actors, as might happen in other businesses.
It’s bad enough and difficult enough to pursue this strategy. It is 10x harder when you decide to publicize it. For better or worse, Ms. Bondi’s life is going to get very interesting.
New attorney general pick’s past vow: prosecute the ‘bad’ prosecutors who indicted Trump
The accuracy of Trump’s/Bondi’s position with respect to DoJ and FBI lawyers is almost immaterial. They’re despised at the outset.
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But…if there is validity in Trump’s antipathy towards the Deep State (not just the part that’s trying to put him behind bars)…then Trump faces an enormously high hurdle, a conundrum that he is almost unilaterally trying to solve.
Republicans push back against Democrats’ claims that Trump intelligence pick Gabbard is compromised
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https://x.com/RealEJAntoni/status/1861924021282988518
https://x.com/KobeissiLetter/status/1861858357440651714
And inflation seems to be following the Carter – Reagan transition model.
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Recession Since 2022: US Economic Income and Output Have Fallen Overall for Four Years
“Cumulative inflation since 2019 has been understated by nearly half. This has resulted in cumulative growth being overstated by roughly 15%. This is a large amount for just 5 years – peak-to-trough drop in real GDP during the 2008 crisis was 4%.”
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Interesting article. During the campaign, lefties insisted the economy was doing fine, often pointing to the stock market as proof. At least half the voters called BS.
Anyone who was purchasing groceries over the last 5 years knew the economy was a mess without input from partisans or Phds.
My own index is the BDBI. (Beeg Dawg Breakfast Index.) My benchmark – 3 egg Denver omelette, potatoes, coffee and toast is roughly double since 2019.
I haven’t trusted reported labor numbers for years, going back to Obama claims how many jobs were created coming out the 2008 recession. Two examples – Obama probably claimed x number of teachers jobs created in a Wisconsin school district. Problem was there were more “jobs” created than teachers. Another was in the construction industry. 3 part time jobs were counted as 3 jobs created, even if all 3 were filled by the same worker at different times.
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Right. Would you rather believe Biden/Harris or your own lying eyes?
Mrs. Mick and I shop regularly. Prices are astronomical. Salaries haven’t budged much. It’s the logical outcome of printing an inordinate amount of money during COVID, which we stockpiled when we couldn’t spend it anyway.
Presto. Ridiculous inflation. And every time I see the official “9% inflation peak” statistic, I just lauuuugh and laaaaaaaaaugh. Because that’s a fiction. I have the same experience that Beeg Dawg has.
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https://x.com/KobeissiLetter/status/1867245625579843674 new unemployment claims jumped a lot. Continuing claims also at a high level. What’s going on, and is it intentional?
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I don’t see this like 1980. the 70’s had us emerging from Vietnam war which drove distortions in the economy as well as nixons failed wage/price controls. Energy was a much bigger part of GDP, and the various energy shocks also contributed to inflation. Of course a similarity is a listless washington unable to set clear direction. At any rate, I see our economy as significant less inflationary and more diverse than 1980. That doesn’t mean we won’t have to do some more battles with inflation, though
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I think we’re going to have structurally high inflation and interest rates for quite a while. We’re reshoring much of our manufacturing, and that’s going to require a lot of capital. The returns will have to be high, particularly in an era in which Federal deficits are sky-high and Social Security outlays will skyrocket.
Really, we only have one chance to get out of this alive, and that’s to follow the following formula:
- DOGE needs to be effective. We need to reduce the size of the government and its outlays.
- Reshoring manufacturing needs to be effective. Which means we need to transform white collar workers into blue collar workers. This should work at the young level, could work at the middle age level, unlikely to work at the older level.
- Need to give amnesty to immigrants, expand H1-Bs, close the border and blow the doors off of exports.
- Need to reface the military.
- Need to increase the Social Security age.
- Need to raise taxes at the higher levels; meaning, enact a wealth tax and an estate tax with teeth and reduce income taxes for the lower four quintiles of the population.
- Need to remake Education. I’d keep the DoE and mandate Federal standards. I’d add a lot of classes that either aren’t in school or are no longer in school. Fundamentally, we have the same class lineup our great-great-great grandparents did. We need classes in personal finance, metal and woodworking and other skills immediately applicable, home economics, cooking and nutrition, basic morality, etc.
- BTW, Trump wants to abolish the debt ceiling. Right now, interest on our debt doubled from $345 bils. in 2020 to $870 bils. by the end of this year. This increases the percentage of our debt from 2.4% of GDP to 3.1% of GDP that solely goes to service the debt.
I could go on and on. Otherwise, we’re facing a slow, rolling crumbling of our country.
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Poison Pill? The pork packed into the latest continuing resolution is ridiculous.
1) $200B in Social Security benefits for government workers who have not paid into social security.
2) Congressional pay raise.
3) Opt out of Obama Care for Federal Employee Health Care.
4) $50B for Big Pharma
5) Transfer Federally controlled land for RFK Stadium.
6) $10B in aid to Farmers.Basically, Dems are introducing an Omnibus spending bill disguised as a continuing resolution, which will expire in Trump’s first 100 days in office.
I would like to see Congress pass a bill that prevents adding provisions to CRs. Congress should not be able to authorize new spending without passing a budget.
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Poison Pill? The pork packed into the latest continuing resolution is ridiculous. 1) $200B in Social Security benefits for government workers who have not paid into social security. 2) Congressional pay raise. 3) Opt out of Obama Care for Federal Employee Health Care. 4) $50B for Big Pharma 5) Transfer Federally controlled land for RFK Stadium. 6) $10B in aid to Farmers. Basically, Dems are introducing an Omnibus spending bill disguised as a continuing resolution, which will expire in Trump’s first 100 days in office. I would like to see Congress pass a bill that prevents adding provisions to CRs. Congress should not be able to authorize new spending without passing a budget.
Vivek’s thoughts:
I like Vivek’s approach, reducing the 1,574 page bill to just 75 words:
Vivek Ramaswamy on X: “Yes, it *is* possible to enact a simple 1-page Continuing Resolution, instead of 1,500+ page omnibus pork-fest. Here it is. https://t.co/2NBcDXtL03” / X
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https://www.msn.com/en-us/news/news/content/ar-AA1wnnID
Consumer confidence at recession levels.
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https://x.com/RealEJAntoni/status/1867368092902601195
Someone needs to investigate the BLS during the Biden administration. I’m pretty sure something fishy was going on.
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https://x.com/RealEJAntoni/status/1867368092902601195 Someone needs to investigate the BLS during the Biden administration. I’m pretty sure something fishy was going on.
First, economists are almost always off, by at least a little. Too much information, too much movement, too much that is unseen and the economy behaves oddly.
Second, the BLS estimates with its seasonal adjustments are generally off as well. It’s important to remember that these are still really just estimates. Their monthly estimate is composed of two surveys: one of households, and the other of businesses. They survey more than 100k businesses, non profits and govt. agencies, but there are 629,000 individual worksites, hence…they’re not perfect.
That’s why you get headlines like:
The US economy added 353,000 jobs in January, starting off 2024 with a bang | CNN Business
Third, COVID and 2021 really screwed with traditional prognostications, and led to wildly overstated job growth in 2021, 2022 and 2023. The quarterly census fo Employment and Wages is frequently off and these are also just estimates but that estimate at least depends on payroll tax counts, so it is more accurate than the other estimates.
Remember the 818,000 jobs miscount in August? Even that is an estimate, and will not be finalized until next month. In short, the BLS model overstated new business formation and understated deaths. So it wasn’t 160 million people that had jobs, it was 159.2 million.
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[quote quote=9620]https://x.com/balajis/status/1881090481217749273[/quote]
Is this why Congress wants to provide Social Security benefits to civil service workers?
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https://x.com/KobeissiLetter/status/1882497791769088453
I disagree with the request to reduce interest rates. To avoid the 1979-80 inflation resurgence, we need to raise rates. Short term stimulus for long term pain is not a good exchange.
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https://x.com/KobeissiLetter/status/1882497791769088453 I disagree with the request to reduce interest rates. To avoid the 1979-80 inflation resurgence, we need to raise rates. Short term stimulus for long term pain is not a good exchange.
For better or for worse, you’re going to get your wish. Incipient inflation is pervasive, there are long-term, hardcore reasons behind it:
- Due to our deteriorating relationship with China and ongoing reshoring of manufacturing work and facilities, we will need the capital to build out our manufacturing base. Just as an aside, if China hadn’t acted so badly; e.g., threatening to withhold medicines that they were manufacturing for American and European pharma companies, they wouldn’t be in this mess.
- Trump’s intent to reduce the size and scope of government is going to have a negative effect on the economy — over time, it will be replaced by the aforementioned manufacturing increase, but short term, there’s only four inputs that constitute GDP: C (Consumer spending) + B (Business spending) + G (Government spending) + X (net of Exports over Imports). Business spending is likely to go up a bit, consumer spending won’t change much, hopefully Trump uses the tariffs properly as a negotiating tool. If Govt spending takes a big drop, that hamstrings the economy.
- We still have an increasing number of people chasing same number of resources (unless Trump can reduce energy costs). Uptick on inflation.
- COVID overhang. Caused inflation. It’s still there.
- Ongoing worker shortage of between 1/2 million and a million for open jobs. That causes incomes to go up which causes inflation to go up.
- Boomers have/are retiring. That means they are spending, rather than investing their capital. Capital gets removed from the capital base and money gets spent = upward tick on inflation.
Geopoliticist Peter Zeihan on what causes inflation:
Inflation: What’s Causing It and Why? – Zeihan on Geopolitics
And what the Fed can do about it:
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Zeihan is not the guy to turn to for economic insights. He is great for geopolitical insights, especially in Southeast Asia. He is mostly Keynesian.
If you’ve been following developments in Argentina over the last year you already know the blueprint Trump wants to follow. Dramatically reduce spending and simplify and eliminate regulations. Combined w/ strict control of the money supply and a simplified tax code, inflation will go away and we will be on a glide path to budget surpluses.
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https://x.com/bravosresearch/status/1857110313729986980 Mortgage rates are going up even after the Fed cuts. Why? Because people aren’t buying bonds. There’s significant default risk, and the Asian economies are looking for more stable assets (and moving away from the dollar as the world’s reserve currency). Discounted bonds mean increased interest rates. If you have X, the thread also discussed the lower labor participation rate, something I have posted about before.
Not only are mortgage rates going up but the housing market is the worst in thirty years. And that’s with the population increasing by 25%.
U.S. Homes Sales in 2024 Fell to Lowest Level in Nearly 30 Years – WSJ
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https://x.com/RealEJAntoni/status/1856745193246003242 Real wages fell under Biden-Harris and never really recovered. Inflation still closer to 3% than 2%. Debt exploding, especially in the last few months. We passed $1T in interest payments per year on the debt. For reference, the US collected $2.43T in personal income tax in FY 2024, and another $530B in corporate income taxes. The good news is that a Republican Congress is more likely to slow the pace of spending increases (it is too much to expect spending cuts). They started in 2022, which is a big reason why inflation actually started coming down, because we now know the Inflation Reduction Act did not reduce inflation. That being said, deep cuts are needed, and the economy will suffer. Think back to what Reagan inherited in 1980, and what 1981-82 were like. It will be much worse this time.
Dems want price cuts NOW, after their four year ravaging of American incomes. Finally, they pay attention to inflation NOW. Where were they for the past four years as real incomes declined?
Democrats slam Trump for not making good on promise to lower food prices
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And Americans are taking second jobs, side hustles, extra gigs to make ends meet, thanks to the ridiculously high prices caused by Democratic policies.
More Americans take on a second job or side hustle. They come at a cost.
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And consumer confidence fell slightly, although still above the level that signals recession.
U.S. Consumers Lose Confidence at Start of Trump’s Second Term – WSJ
Under 55 consumer confidence dropped, consumers over the age of 55 had increased confidence.
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https://x.com/RealEJAntoni/status/1884963943736602876
Holiday quarter, so heavy on the consumer spending (as opposed to government spending) contribution to GDP. The drop in investment spending is worrying, however. Unfortunately, both parties are more interested in short-term numbers than long-term growth.
I’m not a big fan of tariffs, but I do understand that we did not have fair trade policies with China. Hence I understood what Trump was doing during the first term. Saying things like we’re going to put tariffs on Taiwan when they are in the middle of providing jobs to ASU engineering grads in Phoenix seems counterproductive. Also, using the developing nation export strategy for growing domestic industry is an interesting tactic. Not sure it will work long term, but the opposite has not worked out well (see the Netherlands, and the UK).
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Three attributes of tariffs that no one discusses:
- Dear dumb sxxts who complain about Trump’s 25% tariff on Canadian goods: The Canadians have tariffs on American (and other country of origin) goods. Mexico does not have a general tariff, but there are exceptional tariffs in 20 different industry sectors depending on the item.
- The fact that a tariff is income for the government. It stays in the country and helps pay for the Democratic programs. The foreign nation selling the product into the American market takes a haircut, the American competing companies get a leg up, and yes, the American consumer pays a bit more, and the excess funds go to the American government to pay benefits for the less fortunate.
- No one is forcing people to purchase tariffed goods. You don’t want to pay the increased price, fine, buy your maple syrup from Maine instead of Canada.
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https://x.com/RealEJAntoni/status/1885002183512383786
Interesting point. The debt fueled juicing of GDP is not sustainable and has already slowed real growth.
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https://x.com/RealEJAntoni/status/1885002183512383786 Interesting point. The debt fueled juicing of GDP is not sustainable and has already slowed real growth.
I’ve been worried about this for a while. The basic calculation of GDP is:
- Consumer spending +
- Business investment/spending +
- Government spending +
- Net of Exports – Imports
Consumers don’t have any money left to spend. That’s constant. We still have a trade deficit. Trump is about to massively reduce government spending at the Federal level.
And that’s all fine, if business investment steps up. If the re-shoring of American manufacturing goes well, if tariffs (and tariff threats) have the desired effect of getting more countries to build here — which is what the Japanese have done — then maybe we avoid recession and have a stronger country. Energy investment and exploration will have something to do with that. Ideally, that will help with the trade deficit as well.
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I’ve been worried about this for a while. The basic calculation of GDP is:
- Consumer spending +
- Business investment/spending +
- Government spending +
- Net of Exports – Imports
Consumers don’t have any money left to spend. That’s constant. We still have a trade deficit. Trump is about to massively reduce government spending at the Federal level. And that’s all fine, if business investment steps up. If the re-shoring of American manufacturing goes well, if tariffs (and tariff threats) have the desired effect of getting more countries to build here — which is what the Japanese have done — then maybe we avoid recession and have a stronger country. Energy investment and exploration will have something to do with that. Ideally, that will help with the trade deficit as well.
I should have also mentioned that I think Trump intends to shrink the trade deficit, #4 above. My old econ prof used to tell us that the national debt didn’t matter much because it was largely money we owed to ourselves (probably true in 1982, not so true now) but the real problem was the trade deficit because we were actively exporting value.
I think what Trump is trying to do is:
- Increase #1 consumer spending (hence $5k dividend from shrinking govt)
- Encourage #2, businesses to invest more, and as we re-shore, they should invest more, same with foreign companies, we want them to build here.
- Massive reduction in government spending, including massive reduction in military and foreign spending.
- Improvement in the trade deficit #4.
I think Trump believes that tariffs will lead to greater domestic investment (as the Japanese and Koreans are already doing), which will lead to more jobs and more domestic money, and that tariffs will generate government revenue and improve the trade deficit.
We’ll see. Hope it works.
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https://x.com/RealEJAntoni/status/1887192676409266177
Congress helped create this spending mess.
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https://x.com/RealEJAntoni/status/1887507656513839409
Productivity still hasn’t recovered, as real wages are still down.
I agree that adjustments downward are normal. But this seems to be on another level.
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Those numbers are really grim…and what’s worse is that the negative discrepancy increased over the year…the discrepancy increased eight of the 11 months (December is still preliminary). Basically it shows a current shortfall of 610,000 jobs compared to what the Biden administration was publicizing.
The labor force participation rate, since end of WWII averaged 62.84%. Current rate is 62.6%. When Trump took over in 1/2017, it was 62.8% and it increased to 63.3%…what that means is that there were about 765,000 more people employed between the start of his term and the end. Incidentally, Obama presided over a long-term decline in LFPR from 65.7% in 1/09 to 62.7% in 12/16…and it reached a low of 62.4% in 2015. Don’t forget, Obama had 0.25% Fed interest rates for seven of his eight years…that’s quite a trick, having employment that bad with rates that low.
Obviously, it tanked at COVID, dropping to 60.1% at its nadir, but increasing to 61.5% by Trump’s last month, and continuing to increase as America came out of our self-imposed economic shutdown. It peaked at 62.8% (the long term average) last January, dropped to 62.5% last month, increased by a tick in Trump’s first month to 62.6%.
Civilian labor force participation rate
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https://x.com/profstonge/status/1888943503482175622
With the debt at the debt ceiling, there is no room for intervention. This was one of the most cynical plays by an outgoing administration. Really evil stuff.
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https://x.com/DonMiami3/status/1890404164594794515
Saw another statistic that people on fixed incomes (retirees) lost 22% of their purchasing power over the last four years. That’s quite a hit. I told my niece that she’s going to have to work about a third longer than she anticipated because of inflation. I think that really hit home for her.
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The Democrats have really become the party of the uncaring wealthy, basically the party of make-believe and/or people who lead make-believe lives. Hollywood, Wall Street, Silicon Valley, Big Law. And the groups who aren’t wealthy, but are devoted to make-believe, non-real-world causes like Big Media and Big Academia.
The net effect is that Democrats are simply astonished that inflation has the political impact that it does. It’s a uniquely childlike viewpoint…they don’t care about the price of eggs or gasoline, so why should anyone else?
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I should have also mentioned that I think Trump intends to shrink the trade deficit, #4 above. My old econ prof used to tell us that the national debt didn’t matter much because it was largely money we owed to ourselves (probably true in 1982, not so true now) but the real problem was the trade deficit because we were actively exporting value. I think what Trump is trying to do is:
- Increase #1 consumer spending (hence $5k dividend from shrinking govt)
- Encourage #2, businesses to invest more, and as we re-shore, they should invest more, same with foreign companies, we want them to build here.
- Massive reduction in government spending, including massive reduction in military and foreign spending.
- Improvement in the trade deficit #4.
I think Trump believes that tariffs will lead to greater domestic investment (as the Japanese and Koreans are already doing), which will lead to more jobs and more domestic money, and that tariffs will generate government revenue and improve the trade deficit. We’ll see. Hope it works.
This is what I’m talking about, a $500 billion investment by Apple.
Apple unveils historic $500B investment in US manufacturing, innovation: ‘Bullish on the future’
Incidentally…I don’t think Trump is wrong about the strategy. His bull-in-a-China-shop implementation is a challenge, and he’s definitely trying to thread the needle. It’s a good thing he can’t have a second term because his popularity is going to nose over.
But…
He’s right about a lot of things, he made the right call. The tariffs he implemented the first time around? Biden never removed them. He was right about the damage COVID did to our economy and our children. He’s fundamentally correct about the need to reinvest in America and reshore manufacturing, and he’s correct about the damage DEI has and will continue to do to our country. And I’m not talking about hiring non-white males, I don’t care about that. I’m talking about hiring unqualified people to make a political statement. That’s going to reverberate in a lot of really negative ways, as it already has.
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The key to Trump’s economic plan is more and better domestic investment and reshoring of manufacturing…much of which started long before his watch.
There is a valid concern about a recession, given the current cuts. Could happen, I suppose.
Economists are starting to worry about a serious Trump recession
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https://x.com/RealEJAntoni/status/1895113314536976768
Crazy. Quarterly inflation during the Biden administration finishes at 4.4%.
https://x.com/RealEJAntoni/status/1895126764189556786
Amazing how much we sacrificed long term growth for short term numbers.
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https://x.com/RealEJAntoni/status/1895126764189556786 Amazing how much we sacrificed long term growth for short term numbers.
That second chart is alarming. As I mentioned in prior posts, Trump is cutting government spending. The entire key to his economic success is domestic investment. And as the chart proves, investment was fairly predictable up until COVID when it fell off the cliff. It recovered, somewhat, eventually, and the trend is one of two things: either it is poised for sharply increased growth, or it is going to tank. I don’t think there’s a middle ground. And frankly, I think the USA needs to grow and improve and reshore manufacturing and get more people working and get more goods build and manufactured and created on American soil.
I think Trump’s policies are trying to make that happen. He wants people to do less unproductive, unfulfilling, government automaton work and more actual private sector work. He wants to reverse the trade deficit, get businesses to invest and have consumers spend more.
It’s going to be tricky, but it needs to be done. Otherwise, continuing descent into mediocrity.
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[quote quote=9832]It’s going to be tricky, but it needs to be done. Otherwise, continuing descent into mediocrity.[/quote]
Tricky is an understatement. Timing is everything, and I don’t believe Trump will be able to pull it off without tanking the economy in the near term. There are too many levers to pull with exact timing needed to balance tariffs, re-shoring manufacturing and reduced government spending and keep the economy moving.
From eliminating everything from grants to programs that actually reduce cost for the consumer, I believe we are in for a bumpy economic ride.
https://www.cato.org/blog/high-costs-eliminating-de-minimis-shipping -
You’re saying the quiet part out loud, and I fundamentally agree. The last Democrat who tried to rein in the government was Clinton. Since 2008, the Fed government has belonged to the Democrats who shaped it for 14 of the last 17 years (I’m going to include the last year of Trump’s first term when COVID forced everyone’s hand and Trump had to knuckle under to some truly vapid, truly stupid policies). So the Dems have been on a pell-mell race to shape the government as the provider/resource of first and last resort, hence the mountainous debt and the cavalcade of Federal contractors.
I don’t think Trump can pull it off. Can he make government more efficient? Sure he can, at a massive, massive price. Can he make consumers spend more? Yes…if they have money in their pockets, they will spend more, but their family debt is 50% higher than when Obama left office. It climbed when Trump was in office but skyrocketed during Biden’s term. Can he improve the trade deficit? Over the long run, maybe. Short term, with the tariffs and ticking off our trade and military partners? Nope.
That leaves business investment…and this is why Trump might pull it off. CEOs invest when they’re feeling optimistic. And the CEO Optimism Index skyrocketed in Q1:
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https://x.com/Geiger_Capital/status/1895506136473960794
And so it begins.
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It gonna hurt and everybody is going to hate Trump, but this is necessary. Unfortunately too many people don’t realize they live off of government spending and haven’t prepared for a rainy day.
PLENTY of people would rather just continue the charade and keep borrowing to support consumption. They are wrong.
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Sic transit gloria mundi (so shut up and get back to work) -
Negative GDP growth around the corner, says the Atlanta Fed:
The first quarter is on track for negative GDP growth, Atlanta Fed indicator says
-1.5% shrinkage.
BTW, remember the guys who craterd the economy in 2008 and 2009? They’re back…
They Crashed the Economy in 2008. Now They’re Back and Bigger Than Ever. – WSJ
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https://x.com/RealEJAntoni/status/1898047061813006573
I agree. There’s no way to shrink government / undo the spending blowout without pain. The only question is how quickly it can be done, and how to minimize the pain.
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https://x.com/RealEJAntoni/status/1899435520075206950
Real hourly wages for Q3 revised down 1.7%, from a 1.6% gain to a .1% decrease.
https://x.com/FinanceLancelot/status/1898162616427516292
Banks are pulling back on credit. If consumers can’t use debt, consumer spending can’t prop up the economy. Don’t get me wrong, between government deficit spending and personal consumer debt exploding in the last four years, the US economy is not healthy. So things are going to get bad sooner than later. Maybe this shock therapy is what is needed.
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