Mr. Market falling out of bed due significantly to the Trump tariff whiplash has freed the business media to go with both barrels after Trump economic policies. Some headlines in the last two days:
Wall Street Fears Trump Will Wreck the Soft Landing Wall Street Journal
Is Trump Taking a ‘Liquidationist’ Approach to the Economy? Wall Street Journal
CEOs Don’t Plan to Openly Question Trump. Ask Again If the Market Crashes 20%. Wall Street Journal. Subhead: “Behind closed doors, business leaders air plenty of concerns about the administration and its policies.”
US CEOs Need to Find Their Missing Backbones Bloomberg
Trump’s $1.4 Trillion Tariff Threat Spurs Companies to Seek Cover Bloomberg
How Do You Sell America on a Recession? Bloomberg
U.S. markets tumble as Trump dismisses economic fears CNBC
Trump ‘an agent of chaos and confusion, economists warn CNBC — but a U.S. recession isn’t in the cards yet CNBC. Note the part after the dash does not appear in a search.
Musk’s cuts fail to stop US federal spending hitting new record Financial Times
Wall Street loses hope in a ‘Trump put’ for markets Financial Times
Trump’s tariffs are starting to bite American builders Business Insider
I’m a Canadian mom who frequently traveled to the States. Now I’m avoiding the US and boycotting American products. Business Insider
For the first time, a majority of Americans don’t like Trump’s economic policies Business Insider
And yes, not only is this selection not unrepresentative, but there is more where that came from.
Even libertarians are turning on Trump:
Nobody is pulling punches on Trump’s handling of the economy in the White House briefing room … not even Fox News. pic.twitter.com/jYN7ubMYxs
— The Recount (@therecount) March 11, 2025
The DOGE Tracker Shows DOGE Savings Only 8.2 Percent of the Claim Michael Shedlock
How Do We Lower the Trade Tensions Between the U.S. and Canada? Michael Shedlock
And even though the economy is softening (as we’ll see below, at a quickening pace due to consumers cutting back on spending), inflation pressures have yet to meaningfully abate:
Price of Natural Gas Futures Up 140% Year-over-Year: One More Reason for Inflation to Not Back off Easily Wolf Richter
Inflation eased in February, but trade war threatens higher prices Washington Post
On the one hand, eggs are only eggs. On the other, they have come to symbolize the Biden and now Trump Administration’s inability to curb inflation:
The cost of eggs in the U.S. jumped 10.4% last month, the Consumer Price Index shows. Eggs are nearly 60% more expensive than a year ago. https://t.co/p9kcmzK384
— The Associated Press (@AP) March 12, 2025
Mind you, not all business/economic tsuris is Trump’s fault:
How things got so bad for airlines seemingly overnight Business Insider
We’ll briefly turn to two new stories on Trumponomics, which go beyond Mr. Market’s misery and tariff freakout. One is the lead item in the Wall Street Journal, Consumer Angst Is Striking All Income Levels. The story describes clearly how the rate of decline in confidence and spending accelerated in February as compared to January. And this is before Musk started threatening bulwarks of many Americans finances, Social Security and Medicare. Remember it isn’t just retirees who get whacked. Those within 10 to 15 years of retirement who expected Social Security to be a significant part of their retirement funding are likely to hunker down further on spending to try to bulk up their nest eggs. From a reader by e-mail:
I am slated to start getting my SS in September after waiting until the end of the window. The promised amount will be a substantial part of my retirement income. Ditto for my better half who will retire at the end of June. It better be there. I have paid into the system with every paycheck since I was 15 years old in the summer of 1971.
Those who made Bernie Sanders impossible, twice, made Donald Trump inevitable, twice.
The opener from from the Journal’s account:
American consumers have had a lot to fret about so far this year, between never-ending tariff headlines, stubborn inflation and most recently, fresh fears about a recession. These concerns seem to be hitting spending by both rich and poor, across necessities and luxuries, all at once.
Take low-income consumers: At an interview at the Economic Club of Chicago in late February, Walmart Chief Executive Doug McMillon said “budget-pressured” customers are showing stressed behaviors: They are buying smaller pack sizes at the end of the month because their “money runs out before the month is gone.” McDonald’s said in its most recent earnings call that the fast-food industry has had a “sluggish start” to the year, in part because of weak demand from low-income consumers. Across the U.S. fast-food industry, sales to low-income guests were down by a double-digit percentage in the fourth quarter compared with a year earlier, according to McDonald’s.
Things don’t look much better on the higher end. American consumers’ spending on the luxury market, which includes high-end department stores and online platforms, fell 9.3% in February from a year earlier, worse than the 5.9% decline in January, according to Citi’s analysis of its credit-card transactions data.
Costco whose membership-fee-paying customer base skews higher-income, said last week that demand has shifted toward lower-cost proteins such as ground beef and poultry. Its members are still spending but are being “very choiceful” about where they spend, Chief Financial Officer Gary Millerchip said. He said consumers could become even pickier if they see more inflation from tariffs.
The Journal helpfully provides charts that show that the big Biden deficits did not translate into fatter wages:
Later in the Journal’s discussion:
The economy has seen pockets of weakness in recent years, but nothing that suggests such widespread weakness…. Several years of inflation—particularly on necessities such as groceries, rents and utility bills—have hit poorer Americans hard. But a strong stock market, buoyed by artificial-intelligence hype, kept wealthier folks spending.
Recall how we have repeatedly featured analyses by Tom Ferguson and Servaas Storm that showed how depending groaf has become on the outlays of the richest cohort, to the degree that it was a big factor in stoking inflation. The Journal later took up this thesis.
But now:
This week alone, consumers have had plenty of new developments to digest. President Trump on Sunday declined to rule out a U.S. recession as a result of his economic policies, causing stocks to plummet. This was followed by yet another roller coaster of tariff threats, counter-tariffs and reversals. While Wednesday’s inflation data showed price increases slowing down slightly in February, that is cold comfort because it is too early to reflect the effects of Trump’s tariffs…
Many also have less cold hard cash on hand. Checking and savings deposit balances across all income levels have declined over the 12-month period through February and are getting closer to inflation-adjusted 2019 levels…
What this means is that consumers generally are less able to absorb shocks, just as uncertainty is soaring. It is hard to blame them for turning cautious, even if that means the economy suffers.
So shorter: Mr. Market and the Confidence Fairy were keeping the economy chugging along, even if it was not widely recognized as a two tier enterprise. Now Trump has managed to whack them both, hard. Remember, a surprising trend since the crisis is the degree to which even the moderately to very wealthy would borrow against assets. Falls in asset prices put a hard brake on that as an additional booster.
A new Axios story, Voters disapprove of Trump’s economic policies, polls show, explains why the public view of Trump’s schemes has soured:
The big picture: The ramifications of Trump’s policies are already rippling outwards and impacting businesses and communities.
- The National Federation of Independent Business’s uncertainty index for small businesses rose to it’s second-highest reading ever last month since the 1980s, and many small businesses report raising prices, MarketWatchreported.
- In fact, a slew of small business owners have spoken out about the detrimental impacts Trump’s tariffs will have on their ability to maintain their businesses.
- Delta, Southwest and American airlines all warned this week that their first-quarter revenue or earnings forecasts will fall below expectations due to weaker consumer demand.
Our thought bubble, from Axios’ Ben Berkowitz: Investors are beginning to realize the first-term “Trump put” — the notion that he’d change policy if markets reacted negatively — isn’t in evidence this time around.
- There’s a greater willingness by his team to let whatever happens happen, which is an adjustment to past Trump economic practice that’s coming as a shock to some people.
Recall that the mother of all shock doctrines, Pinochet’s 1975-1975 program, which unlike the Trump program, did produce some initial promising results, eventually led to damage so severe as to lead Pinochet to go hard into reverse.1 As we have seen repeatedly (particular tariff threats, the Ukraine negotiations, Trump ritually beating up on Bibi before shoring him up, Iran) Trump seems to relish making radical reversals simply because he can. But how much ego investment does he have in his tariff and Federal institution destruction program? He’s rhapsodsized so much about how wonderful it was in the great pre-electricity, barely-any-indoor plumbing Gilded Era that one can expect him to be far less responsive than he has on his other pet project. I’d like to see we’ll see soon enough, but we may not.
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1 From ECONNED:
Chile has been widely, and falsely, cited as a successful “free markets” experiment. Even though Chilean dictator Augusto Pinochet’s aggressive implementation of reforms that were devised by followers of the Chicago School of Economics led to speculation and looting followed by a bust, it was touted in the United States as a triumph. Friedman claimed in 1982 that Pinochet “has supported a fully free-market economy as a matter of principle. Chile is an economic miracle.” The State Department deemed Chile to be “a casebook study in sound economic management.”
Those assertions do not stand up to the most cursory examination. Even the temporary gains scored by Chile relied on heavy-handed government intervention….
The “Chicago boys,” a group of thirty Chileans who had become followers of Friedman as students at the University of Chicago, assumed control of most economic policy roles. In 1975, the finance minister announced the new program: opening of trade, deregulation, privatization, and deep cuts in public spending.
The economy initially appeared to respond well to these changes as foreign money flowed in and inflation fell. But this seeming prosperity was largely a speculative bubble and an export boom. The newly liberalized economy went heavily into debt, with the funds going mainly to real estate, business acquisitions, and consumer spending rather than productive investment. Some state assets were sold at huge discounts to insiders. For instance, industrial combines, or grupos, acquired banks at a 40% discount to book value, and then used them to provide loans to the grupos to buy up manufacturers.
In 1979, when the government set a currency peg too high, it set the stage for what Nobel Prize winner George Akerlof and Stanford’s Paul Romer call “looting” (we discuss this syndrome in chapter 7). Entrepreneurs, rather than taking risk in the normal fashion, by gambling on success, instead engage in bankruptcy fraud. They borrow against their companies and find ways to siphon funds to themselves and affiliates, either by overpaying themselves, extracting too much in dividends, or moving funds to related parties.
The bubble worsened as banks gave low-interest-rate foreign currency loans, knowing full when the peso fell. But it permitted them to use the proceeds to seize more assets at preferential prices, thanks to artificially cheap borrowing and the eventual subsidy of default.
And the export boom, the other engine of growth, was, contrary to stateside propaganda, not the result of “free market” reforms either. The Pinochet regime did not reverse the Allende land reforms and return farms to their former owners. Instead, it practiced what amounted to industrial policy and gave the farms to middle-class entrepreneurs, who built fruit and wine businesses that became successful exporters. The other major export was copper, which remained in government hands.
And even in this growth period, the gains were concentrated among the wealthy. Unemployment rose to 16% and the distribution of income became more regressive. The Catholic Church’s soup kitchens became a vital stopgap.
The bust came in late 1981. Banks, on the verge of collapse thanks to dodgy loans, cut lending. GDP contracted sharply in 1982 and 1983. Manufacturing output fell by 28% and unemployment rose to 20%. The neoliberal regime suddenly resorted to Keynesian backpedaling to quell violent protests. The state seized a majority of the banks and implemented tougher banking laws. Pinochet restored the minimum wage, the rights of unions to bargain, and launched a program to create 500,000 jobs.
Just like they brand Health care act under Obama as Obamacare, they need to brand this economy on Trump and coin a word-Trumponics sounds good. People need to know and more importantly make the connection of their collapsing 401K to Trump.
Actually, Obama initially hated the term “Obamacare”. He later embraced it when the Dem-friendly media took to touting how it had reduced the number of Americans without health insurance…omitting that many found Obamacare policies to be so skimpy and costly as to make it a coin toss as to whether to stump up for them or not.
Saw a video news clip of Trump a few days ago where he stated America was going to be rolling in money from all the income derived from tariffs, would not know what to do with it all – rim shot ….
Of mafia dons , Trump is more Madonna ( US) rather than Mogilevich ( grand don of world crime syndicates, Russia). Out of his depth all round?
Trump 720 degress round and round we go, reminds me of a scene in Flawless 2008. Michael Caine plays London Diamond’s janitor being interrogated by the insurance investigator (Lambert Wilson) of entire diamond inventory gone missing as Demi Moore (the only female company Manager repeatedly passed over in promotion) looks on. Growing exasperated with the investigator’s endless minutia questions, Janitor asks investigator in English understatement: “You sound like someone who’s looking for something. Perhaps if you tell me what it is, I could help you find it.”
Well that was quick. Trump only had his Inauguration Day about 7 weeks ago and he has already succeeded into steering the US economy towards a ditch with the press shouting ‘Woop! Woop! Terrain. Terrain. Pull up! Pull up!’ Makes you wonder what he will do for the next 200 or so weeks.
Trump has certainly done tremendous damage and created a lot of uncertainty but there are a lot of signs that the wheels were starting to come off the economy in November, December, and January.
Hiring was slowing and inflation was being way too persistent. Trump has now thrown his brand of chaos into the mix and nobody knows what is going to happen next.
The stock market is at an inflection point and might come back really strong if he gets his tax cuts passed cleanly. If he doesn’t , look out below and it’s going to be an ugly ride.
Most Americans living through the second Gilded Age don’t remember, but the first one was replete with violence. Labor actions and protests were met with armed strike breakers and corporate militia massacres. The Pinkerton Detective Agency targeted labor organizers and fought pitched battles with strikers. Workers and Anarchists responded with bombings and assassinations.
It’s ironic that Trump idolizes President McKinley, who was president during the first Gilded Age, and the beginning of the American empire, while Trump presides over the second Gilded Age and final chapter of the American empire.
McKinley was assassinated by an anarchist. And while history doesn’t repeat, perhaps it rhymes?
“Managed recession”, a phrase heard Tuesday from a true believer, lol.
Meanwhile, Mark Cuban (a democrat and Trump critic, I believe) prepares to feast on the carcass of government agencies destroyed by DOGE:
Oligarchs will feast, and they’ll feast, and they’ll feast, feast, feast, feast!
It’ll be the US’s Yeltsin era.
I don’t think Russians or anybody else will feel much pity. Indeed, dual-nationality carpetbaggers from across the world will likely going be flying in to get a piece of the privatization action.
How ironic would it be if the Chinese and Russians got in on the action?
Pretty sure dual-nationality Americans would be flying out of the country at the same with their looted fortunes to places safe from lynch mobs. Zuckerburg already has that mansion with the bunkers waiting for him in Hawaii and Thiel has New Zealand citizenship after spending only 12 days in the country-
https://www.theguardian.com/world/2017/jun/29/new-zealand-gave-peter-thiel-citizenship-after-spending-just-12-days-there
Eggs. That foodstuff so symbolic in so many ways. Besides the economy, which I’ll muse about, Easter is coming up. Eggs at Easter are a thoroughly nonbiblical sign of lavishness, fertility, and renewal (along with bunnies, in the US of A).
On BookFace after the election, a number of liberals were posting memes along the lines of, “Hah, the MAGAts sold their civil rights for a dozen eggs!” One immediately notices just how out of touch liberals are. No wonder the Democrats can’t win and can’t operate as an opposition.
The egg represents several things that are now being pointed up in U.S. culture. Notice the guy at the refrigerator in the TwiXt? Here in Italy (and as I recall, in France), eggs are not refrigerated. The refrigeration is a clue that there is a problem in the U.S. food distribution system, one more foodstuff that is being abused. Recall the salmonella outbreaks. Recall that USonions can’t get a caesar salad with its traditional ingredient: a raw egg.
I am not a big consumer of eggs: I use them to make savory tarts, quick breads, and cakes. But many of our fellow commenters mention that they eat the traditional U.S. breakfast: two eggs, sunny-side up.
Italian eggs come in fourpacks and sixpacks. In the U.S., if you are going to eat the traditional breakfast, you’ll require a dozen. Price becomes a political issue. The U.S. Constitution indicates that the federal government is supposed to encourage manufactures and trade and productivity. One wonders what is coming apart in the pursuit of happiness.
Hence: Eggs as a sign of deterioration in one’s standard of living, in the quality of food, and in availability of basics (like a doctor’s appointment).
An egg shortage? In the land of amber waves of grain and fruited plains? It’s a symptom that I keep monitoring. Just as I monitored prices in Chicago in September 2024, when I went to a nice (but not fancy-shmancy) café that I once frequented only to find that an espresso coffee and plain croissant had risen to USD 9.18 $.
That’s when I knew that Kamala Harris would lose. Eggs? Trump had better keep his eye on the egg.
The reason eggs in the US are refrigerated is our bizarre production system. Eggs are somehow power washed to remove a thin membrane….which keeps them from going bad faster! So in places with sensible practice, like Italy, Australia, and Southeast Asia, eggs in stores are not refrigerated and are good for about 3 weeks.
Just as a general point, in parliamentary democracies on a 4-5 year cycle of elections, the notion of ‘getting the cuts in’ first is quite common – almost standard procedure. While actually engineering a domestic recession is unusual (although not unknown), its standard practice to dampen economic expectations for the first 2 years or so in the hope/expectation that there will be a later upswing – most politicians are well aware that most people don’t vote on the basis of absolute economic conditions, but on expectations – i.e. if people feel ‘things are getting better’ they will be more likely to stick to an incumbent, hence its rare for a government to lose out during an upswing (even if they were responsible for the ‘dip’ – people have short memories). This is probably what UK Labour is trying to do, albeit incompetently.
This generally doesn’t happen in the US system because of the non-synchronous cycle of elections. But if you have a President who doesn’t really care about the mid terms, then this approach can make a certain amount of sense, especially if he is seeking rapid structural change. It doesn’t have to be a Pinochet type ideologically change – it may just be a calculation that there is a lot of deadwood and bubble in the system, and better to flush it out quickly, then use the following upswing to build in whatever new economic system you want. I suspect that Trump doesn’t really want a tariff based tax system, its just a short term way for him to shock the international trade system into the form he wants – i.e. one in which there is US onshoring and the US industry (not Wall Street) calls the shots.
Also, worth pointing out that Isabella Kaminski is speculating that a recession is part of an implied deal with the tech oligarchs – an initial cutting down to size in favour of a longer term accommodation – exactly what we’ve seen in Russia and China. I don’t particularly agree with this, but it is an idea worth holding in mind.
Some tech oligarchs seem to think this is what they’ll be getting: “Industrial Greatness Requires Economic Depressions” from Palladium, a Thiel mouthpiece.
Thanks for the link. Some real doozies in there – I think everyone here will have a laugh at the assumptions. E.g.
Who comes up with this stuff? As if “the poor” ever see a dollar of this money.
Trump is following in the other non consecutive terms footsteps, in that the Panic of 1893 got going just before Grover Cleveland was inaugurated, and the years 1893, 1894 and 1895 are the rarest for US silver coins-as not many were minted on account of lack of demand in commerce when money was mostly silver.
We’re gonna get there by other means to be determined, by our determined teetotalitarian leader.
And a lot of the post election spending and maybe some of the debt accumulated, was perhaps from Americans who anticipated the tarrifs and were buying before those went into effect. Anecdote is not data, but several friends and relatives bought large ticket items just in case. Cars, cell phones, etc.
As bad as the ‘70s economy was supposed to be there was never a shortage of eggs being flung at windows now and then.
I still see some finance types saying that the master plan to manage the deficit is on track (lower rates, weaker dollar, and another goal that I forget) but even if true, the mid terms have to be at risk. Wait until the Trump promised elimination of taxes on tips and social security are “deferred” to a later bill while the Trump tax cuts are extended (I’ve seen early whispers about this).
Just saw an email from my congress critter asking for constituents affected by federal cuts to contact his office. Signs of life in the Democratic party!