The Trump Economy Continues to Underwhelm
Trade deficits, growth, and manufacturing not what was promised.
Via the NYT: U.S. Economy Grew More Slowly at End of 2025.
Gross domestic product, adjusted for inflation, grew at a 1.4 percent annual rate in the final three months of the year, the Commerce Department said on Friday. That was down from a 4.4 percent rate in the third quarter, partly because of the prolonged shutdown.
[…]
Inflation, which Mr. Trump promised to end “on day one,” picked up in 2025. The trade deficit in goods, which Mr. Trump promised to shrink, hit a record high. The manufacturing sector, which Mr. Trump promised to restore, shed jobs.
It seems especially poignant today to underscore the loss of manufacturing jobs and the increased trade deficit in goods, given that tariffs were supposed to fix those things.
Overall, in terms of GDP growth, 2025 was roughly comparable to 2024:
Given the volatility in the quarterly data, many economists instead focused on the year as a whole. G.D.P. increased 2.2 percent in 2025, measured from the end of 2024, compared with 2.3 percent the previous year.
This, of course, requires me to note that everyone who was willing to risk Trump 2.0 because of the economy, well, it’s hard to say that was a good gamble (spoiler: it was never a good gamble). We have roughly the same GDP numbers and similar inflation figures, but also a much worse job scene.
The trade deficit numbers, which do not concern me especially, are worth highlighting only because the tariffs are not accomplishing their stated goals:
But, I guess since the Dow is around 50k and the wealth continues to concentrate in the upper, upper echelons, then it’s all ok, right?
Maybe arbitrary tariffs, screwing around with the global economic order, and cutting taxes for the rich isn’t an especially efficacious set of economic policies.
Interesting that international money seeking good return continues to flow quite heavily into US stock market funds
But that seems to be based on the continue appreciation in prices, not dividends, of US tech stocks.
If the current AI specuative valuations get reversed, the entire US general (as opposed to firm-specific) funds are likely to suffer, and badly, imho.
Given the indications that investors are already hedging against dollar depreciation, a stocks funds fall could easily trigger a lot of moves out, hence a limited dollar correction, but that in turn trigeering a lot of hedging positions.
Then the Fed has to look at interest rates re the dollar position, or accept an inflationary dollar depreciation. With related issues re either debt repayment cost, or in extremis foreign held debt sell-off.
Tariffs plus an AI stock surge may turn out to have been sub-optimal, compared to Biden’s industrial policy and infrastructure approach.
Long term strategy vs “sugar rush”?
Don’t forget the increasingly weak USD, and that the DOW gains are dwarfed by most of Europe. So even though the richest get even richer, the middle-wealthy investor class also doesn’t have a lot to show for this dice roll.
By my count that leaves the .0001% against… Like… Everybody else.
Can the dumbass Democrats make the economy THE issue? Probably not.
It’s going to be fine, relax. We’re simply going to spend hundreds of billions of dollars building an industry whose purpose is to replace all of their customers with semi-smart computer chips. Once they’ve rendered humans obsolete we will have a future of picking through the trash of the tech elite. And they will retreat to their underground lairs, complete with a full Bond villain’s worth of henchpersons, many presumably Elon’s humanoid robots armed with submachine guns.
Their every need will be catered to as though. . . as though they were billionaires. Which, they already are. Which leaves them looking like psychopaths, grasping and destroying for no rational reason. Like tapeworms, eternally hungry, slowly killing their host.
Tell me that’s not exactly what people like Elon and Brin and Thiel have in mind.
@JohnSF:
Of the overseas money going into the US stock market, I wonder how much of it is wishful thinking AI bubble pumping.
Seven companies, Google, MS, Nvidia, Texla, Fakebook, Amazon, and Apple make up between 33-40% of the returns in the S&P 500 index. All of them, except perhaps Apple, are invested in AI.
If Trump had the sense God gave a flea, he’d welcome the get-out-jail face saving card SCOTUS has given him, to let go of his economy-killing tariff taxes.
@DK:
THIS!
It’s quite amusing, but if anything can preserve the “Trump bubble” for the mid-terms, its the Supremes zapping his tariffs.
However, Trump does not, it seems, have the sense God gave a flea.
Amazingly enough.
Trump brings in new 10% tariff as Supreme Court rejects his global import taxes