Outside the Beltway

Source: Official White House Photo

The Trump Economy Continues to Underwhelm

Trade deficits, growth, and manufacturing not what was promised.

Steven L. Taylor
11

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Source: Official White House Photo

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.

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11 responses to “The Trump Economy Continues to Underwhelm”

  1. JohnSF Avatar
    JohnSF

    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”?

    6
  2. ptfe Avatar
    ptfe

    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.

    6
  3. Daryl Avatar
    Daryl

    Can the dumbass Democrats make the economy THE issue? Probably not.

    2
  4. Michael Reynolds Avatar
    Michael Reynolds

    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.

    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.

    8
  5. Kathy Avatar
    Kathy

    @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.

    4
  6. DK Avatar
    DK

    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.

    7
  7. JohnSF Avatar
    JohnSF

    @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

    4
  8. JohnSF Avatar
    JohnSF

    @Kathy:

    “…how much of it is wishful thinking AI bubble pumping.”

    Most of it, imho. The US stock market index funds prices are being pumped primarily because of the tech-stocks.
    And those in turn because of AI.
    At some point, the investors are going to start asking “where’s the actual profit?”
    And “somewhere over the blue horizon” ain’t going to cut it.
    There WILL be profits, imho, from specialised applications, but the current capex is daft.
    The moment you get a stocks correction re AI capex: “Katy bar the door, because hell is coming to breakfast.”

    3
  9. JohnSF Avatar
    JohnSF

    @Michael Reynolds:
    They really are a very silly bunch of people.
    Assuming that all will always work out they may will, as if no others had agency.
    Not to mention, what’s the f@cking point of it all?
    That’s the thing that strikes me when you look at their ideologists, like Yarvin, etc:
    All this, and for what?
    Just to recreate a pseudo-Sumerian “god-king” hierarchy?
    ftlog, have you not got any better ambitions?

    Well. Musk may want to be god-emperor of Mars, which is something, I suppose.
    Their basic problem is that too many people are now beyond the old conditioned response of hierarchical submission.
    And they just don’t cut it as the “annointed king” anyway.
    “No truce with kings.”

    3
  10. DK Avatar
    DK

    @JohnSF: It’s wild the orange Epstein-bestie pedo so obsessed with not losing the midterms won’t let Roberts, Gorsuch, and Barrett help him with that and just stand down on his dumb tariffs.

    Staking a 2nd term economic legacy on unnecessary manmade inflation + a regressive consumption tax on poor and somewhat-less-poor consumers is crazy work.

    4
  11. Sleeping Dog Avatar
    Sleeping Dog

    @DK:
    @JohnSF:

    Trump isn’t upset about his eco policies being upended, what upsets him is losing his favorite whip to use on the rest of the world. The other methods for placing tariffs are limited and require congressional acquiescence, which won’t be happening.

    1

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