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Trump’s Inheritance
The second estimate of Q3 US GDP, released on Wednesday, painted a similar picture to the advance read: The world's largest economy performed quite well last quarter.
The headline growth print was an unrevised 2.8%, solid and hardly indicative of a looming recession, although I suppose the bears among you will argue these things tend to come out of nowhere.
Wednesday's release found GDI tallied at 2.2%, meaningfully lower than the headline GDP print, but still healthy. The average, which the N
Trump is inheriting a decent economy, which needs strategic long term adjustments, not shock therapy. Not his strength.
Trump, via DOGE, will simply push the financial responsibility for various programs (currently being managed by the states – but paid for with Federal money given to the states) down to the states and at the same time, stop the Federal government from sending money to the states to pay for such programs.
Then he will declare “success” at reducing Federal spending “waste”.
Meanwhile, the states will have to either raise taxes or borrow money to offset the decline in Federal money that is no longer available because the people will still need and want such services.
The populace will cry “fowl” and see through Trump’s shenanigans.
Won’t the populace just blame immigrants and China for it?
I am thinking that if Trump does implement the 25% across the board tariff and say getting rid of say 500k of immigrants a year it is not going to matter what the Fed does. The economy will crash, I’m thinking the GDP will go -5% and interest rates will be about 10% to curtail the 15% yearly inflation. Of course that is if the Fed is allowed to stay independent, if not, than we will have a Turkey situation, so maybe 3% 10 year treasury, with 15% inflation.
His tariff plan may be just a red herring to cover for his remake of the federal system including military to be loyal to him.
Forgot to mention the empty store shelves from countries not shipping goods to us because it’s not worth it to the suppliers.