The day after Trump took office, the Dow opened at 43487.83.
Yesterday the Dow closed at 42520.99. That’s a 2.2% drop.
I now wish that I had moved more of my IRA from mutuals to bonds and cash.
Trump’s approval polls suggest to me that he’d win the election again today, especially considering this. Is his honeymoon a weak one? Yes. Will it last? I hope not. But if you add up the Americans who say he is doing some things they disagree with, but at least shows strong leadership, and those who think he’s doing the right things, albeit sometimes the wrong way, he’s still fairly popular.
Joe Biden was about 6 points higher on the approval scale at this point in his presidency. I guess we have different opinions about what constitutes “popular”.
It’s the economy. Turns out most people are really selfish, and if they feel good about their money, they’re happy.
I am very confident there is a recession coming. And a big part of it will be due to Trump’s actions:
Federal worker layoffs take economic activity off the table.
Halting various grants and programs takes economic activity off the table and leads to layoffs
Halting payments to farmers takes economic activity off the table, and leads farmers to tighten their belts (or worse)
Tariffs make things more expensive and take economic activity off the table
All of those things will directly impact consumer spending, which is 68% of the economy.
Already we have:
Prices rising
Unemployment rising
Weakening consumer sentiment and spending
ADP jobs report out today showed 77,000 private jobs added, vs expectation of 148,000
Target said this week they’ve seen a significant drop in Feb sales.
This will be his undoing. The only question is whether it gets bad enough that he doesn’t make it to 2028
I agree w your top-line conclusion and you laundry list of dumb policy moves.
But how those 4 items are going to affect the economy depends very critically on what happens to the federal budget in response. If all that spending that suddenly isn’t happening and all that fresh tariff revenue is immediately reflected in tax and withholding cuts so the people still with jobs see an immediate take-home pay raise, the effect may be surprisingly mild.
If instead taxes on ordinary schmoes are unchanged and the decreased spending + increased revenue are simply reducing the federal budget deficit this year, or worse yet, are “spent” funding tax cuts only for corporations and oligarchs, then yes, an inflationary recession looms immediately.
Everything I’ve read is that the tax plan as it is now results in negligible savings for households below about $450,000
Recessions can be caused by a loss of confidence. And I think we’ve already reached the tipping point.
So I think Trump can still make it worse, but I don’t think he can make it better in the short term.
ETA: In the original post, I wanted to add that we’re so deep into a very long expansion, we were probably due anyway.
Agreed.
I had meant to include in my earlier post that although I know nothing of the tax plans, I was betting they’d choose my second option: tax cuts for oligarchs only.
His untimely demise might restore a lot of confidence. Doubly so if his successor promptly repudiated / rescinded most of the stupid shit and forced Musk out of the picture.
But it better be soon or a severe recession is baked in.
Look at it this way. The reason the TrumpMuskegon is lying so much about how much is being “saved” by Elmo’s ransacking the Federal Departments is tied to the Budget Resolution that passed the House last week. They have to inflate the amount saved so they can achieve the tax cuts. That is also the reason for the tariffs. The more the government collects from US companies from the tariffs, the bigger the tax cuts they will pass. Also the reason for the $5M green card, and the sale of Federal Assets (buildings). A short-term income to cover the fact that the ship is sinking.
I think it is obvious that the DOGE savings are imaginary, and the tariffs will be rescinded, so an inflationary recession is coming, no doubt. Elmo just has to keep fowling up SSA, Medicare, and the VA enough to so that nobody can identify that the savings are like the “irregularities” in the voting in Maricopa County, AZ, and other voting districts. There was never any there there, but as long as the CyberNinjas refused to show any proof of their absurd claims, it was difficult to prove.
It’s the same here, but with revenue instead of votes. Honestly, it’s the same scam Trump pulled in NY and was resulted in his felony convictions. Fake it, make it look like there is something (where there isn’t) until you get what you want.
If I’m correct (not a given), perhaps the easiest way to get past this coming recession is to go ahead and give Trump his tax cuts, then start putting the economy back together. Because, if he doesn’t get what he wants, he will just continue to lie, cheat, or worse, to get it. Of course, the same Trump strategy he’s used for half a century.
Did not hear the speech. But happy to hear Trump could not claim he got “free minerals” back for our gift of billions. No mineral deal.
I agree completely.
But for those who think they’ll lie about expenditures and borrowing, there’s a saying that you can’t fool the bond market. Because traders have to buy the bonds issued, they know exactly how much debt is out there.
So if the savings aren’t enough, or the tax cuts too much, the bond market will punish them. We’re at a point where bond markets are (IMHO) making it clear that the borrowing party is over, and borrowing costs are going to go up.
Because for all the fecklessness of the Trump admin, we have to get the borrowing under control. The current budget proposal STILL has us growing the debt at 6% GDP / year, which means even if we hit the (doubtful) 3% growth rate every year for the next 10, we will still have grown the debt by 34% in real terms.
Remind me … how does raising taxes to pay a landholder not to grow something generate economic activity?
I wasn’t defending the policy. But.
I don’t know how often farmers are paid not to plant. But if money is paid to them for whatever reason, it will drive at least some economic activity. I mean, the farmer could put the money in a hole out back, but most likely he’s spending it somewhere. New equipment, new barn, vacation, hookers and blow, they all become economic activity.
But that wasn’t really what I was talking about. The frozen programs do myriad things:
Some buy US ag products and use them to feed hungry people. This creates additional demand to grow crops, and that drives economic activity- from sales of inputs, to people to harvest, to John Deere repair techs, to truck drivers, to employees at the grain elevator.
Some provide incentives to help install more efficient irrigation systems, which employ excavators, plumbers*, electricians, etc
It doesn’t really matter, though. A billion dollars spread across 1000 farms will result in economic activity even if that money is just handed to the farms for no reason. And we could have a robust debate over the worth of such programs, but it’s undeniable that taking that money away reduces economic activity.
*I doubt licensed plumbers actually put the pipe in the ground, but whatever.
Farmers are ‘paid not to plant’ each year that they have acres enrolled in the Conservation Reserve Program (CRP). This program encourages farmers to no longer till marginal acreages, but instead return them to nature, so to speak. This may include planting natural grasses or trees or simply allowing nature to take its course. It’s not a great amount of money; in 2024, the average payment was $74 per acre. The total payout across all 50 states is just shy of 2 billion dollars.
Ex-convict and White House Senior Counselor Peter Navarro says that Canada has been taken over by Mexican cartels. It’s amazing that MAGA now believes that Canada has been abusing and cheating us for years even though I’d bet that idea had never crossed their minds until couple months ago. “We’ve always been at war with Eastasia” indeed.
And his message to other world leaders who are upset at tariffs: “All we’re asking for is fairness and to have them stop killing our people”. WTF? Got to keep ginning up the hate.
Aaron Rupar: "Peter Navarro: “Canada has been taken over by Mexican cartels” Big if true " — Bluesky
Political science of leadership:
Blockquote
Atlantic
“Weber wondered how the leaders of states derive legitimacy, the claim to rule rightfully. He thought it boiled down to two choices. One is rational legal bureaucracy (or “bureaucratic proceduralism”), a system in which legitimacy is bestowed by institutions following certain rules and norms. That is the American system we all took for granted until January 20. Presidents, federal officials, and military inductees swear an oath to the Constitution, not to a person.”
"The other source of legitimacy is more ancient, more common, and more intuitive—“the default form of rule in the premodern world,” Hanson and Kopstein write. “The state was little more than the extended ‘household’ of the ruler; it did not exist as a separate entity.” Weber called this system “patrimonialism” because rulers claimed to be the symbolic father of the people—the state’s personification and protector. Exactly that idea was implied in Trump’s own chilling declaration: “He who saves his Country does not violate any Law.”
“Patrimonialism is less a form of government than a style of governing. It is not defined by institutions or rules; rather, it can infect all forms of government by replacing impersonal, formal lines of authority with personalized, informal ones. Based on individual loyalty and connections, and on rewarding friends and punishing enemies (real or perceived), it can be found not just in states but also among tribes, street gangs, and criminal organizations.” Rauch cites as a current example of ruling by patrimonialism Vladimir Putin in Russia. So it is no surprise that Trump has a strange attraction for the Russian ruler
Blockquote
That’s very good. The prescription for what to do in response is weak, but the diagnosis is excellent. Very insightful.
I’m guessing that we would have to show that Daddy doesn’t have the capacity to be a good father anymore. Something that the prevailing regime would fight at any cost, and a conclusion that his followers would probably avoid at any cost of cognitive dissonance.
Just to be clean: The ‘one word’ is ‘patrimonial’? Or is there another one? (I can’t read the whole article.)
Yeah. Another one that I’m beating to death around here, because it’s spot-on and because it matters:
“One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back.”
― Carl Sagan
Some of the axiomatic Trump truisms need to be ‘pinned’ on a lot of these topics. I think they go a long way toward fostering an understanding of the first principles at work here.
This is actually pretty minor in comparison to the other horrors, but here’s Trump’s new ambassador to Canada – a right-wing asshole who’s on record as promising to insist on “respect” for the US and Herr Fuhrer, who opposed the last free trade agreement, and whose last ambassadorship featured this (bolding mine):
Trump previously had Hoekstra serve as ambassador to the Netherlands, where he found himself embroiled in a political interference scandal after hosting a fundraiser with members of a far-right party.