And just as inflation was down to a level where the Fed would be comfortable enough to start cutting rates, this administration came into foil all of that. Even if you really believe in these policies, which is highly controversial, one has to wonder why they timed it so soon basically forcing the Fed into a corner. It's as if this administration has a mandate to destroy the US economy.
csomar · 5h ago
> forcing the Fed into a corner
Assuming independent, the Fed responsibility of lower inflation is higher than employment. They might tolerate some inflation for employment but we can only tell after the effects of tariffs kick in and we see the new inflation numbers.
aaroninsf · 4h ago
We can dispense with polite formulations under current circumstances.
One would have to be a moron or literally mentally ill to "believe in these policies,"
either having no understanding, or, having invested in some delusional confabulated make believe universe where the fundamental order of our civilization is collectively reworked (including by enemies and competitors at every scale) in a context of rapidly degrading climate, to suit your ideology.
jpster · 1h ago
I mistakenly assumed Scott Bessent knew better and would do better, given his financial markets experience.
From Wikipedia: “He was hired by Soros Fund Management, eventually becoming the head of its London office. In this role, in September 1992, he was a leading member of the group that profited by $1 billion on Black Wednesday, the British Pound sterling crisis.”
chneu · 3h ago
The president doesn't even believe in these policies.
Trump says anything he can think of and then whatever people respond to he goes with.
That + the last person to discuss something with him are his two leading decision making policies.
antifa · 3h ago
> One would have to be a moron or literally mentally ill to "believe in these policies,"
Playing devils advocate, I think most people thought the incoming tariffs were going to be a lot smaller, also maybe assumed there would be an industrial policy.
vkou · 2h ago
Those people should have probably paid attention to the clown parade of 2016-2020, with the administration's revolving door of one incompetent person being brought in after another (many of them getting fired, and a bunch of others went to prison).
Followed by 2021-2024, where all the adults in the room were talking to the press, explaining how hard they had to work to convince Trump why he shouldn't carry out his worst ideas.
Followed by all of those people getting fired in January of 2025, and replaced by lickspittles, sycophants, and other flavors of yes-men.
There's no way that someone who surrounds himself with the kind of cabinet that he does, or reacts to criticism and feedback the way he does is going to be making good decisions.
praptak · 6h ago
Peter Navarro on CNBC reacts to the shrinking GDP number by insisting it's actually good news because if you strip out the effect of tariffs "you have 3 percent growth. So we really like where we're at now."
It could actually make some sense - if Walmart spent their spare cash importing Chinese stuff before the tariffs rather than spending it on American stuff, I think that would have the effect of lowering GDP or domestic product. Presumably next month they'd stock up on American stuff which would cause a bounceback in the figures.
iAMkenough · 2h ago
Unfortunately there's more nuance, as some materials to produce American stuff can't be sourced domestically or imported affordably.
Realistically we'll see a few giants pivot to less quality materials, many large and medium size businesses reduce their offerings, and a large amount of small businesses dissolving or filling for bankruptcy after not being able to weather the abrupt, completely voluntary supply chain disruptions across various industries.
fuzzfactor · 1h ago
Some people with a PhD can be the complete opposite of "advanced".
sjsdaiuasgdia · 4h ago
"We have always been at war with Eastasia."
praptak · 4h ago
"If you strip the effects of having all limbs off, I'm actually well above the top fighting condition" -- the Black Knight
anon7000 · 1h ago
Ah yes, if you ignore the effect of someone punching me in the face, I’m actually doing quite well
nancyminusone · 3h ago
"the oil was spilled outside of the environment"
ty6853 · 8h ago
Unfortunately housing will still not get cheaper because nearly the entire supply is locked into 30 year loans at near 0%, even a fool would starve, default their car note, and sell their every last valuable before giving that up.
sambull · 8h ago
We won't ever see a 2008 style price drop again. My house was going for $399K before I bought it in 2011 for $199K @ <4%.
Unfortunately we got lucky, the big players in REO weren't ready to 'close' that many packages last time. My first devops role was at a company that was working with big players to make sure next time this exact scenario presented itself the big guys will be able to deploy their cash to gobble these things up.
josefresco · 8h ago
> We won't ever see a 2008 style price drop again
That's what they told me when I bought my $250K condo in the early 2000's. Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K.
Never forget: "The market can remain irrational longer than you can remain solvent"
VeninVidiaVicii · 8h ago
I’ll go you one further — it seems like every time some prescient comment about the economy gets extremely upvoted, the economy does the literal opposite thing.
chasd00 · 7h ago
All economic academics need to do is track my stock purchases and use them as a negative indicator :) That strategy would win awards.
itsoktocry · 8h ago
>Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K.
And what's it worth today? What is the average annual price appreciation since you bought it?
Watching "home value" month-to-month is pointless.
josefresco · 6h ago
According to Zillow $429K. Of course, what it's "worth" today vs. tomorrow is the issue here. It's the same condo with (seemingly) no improvements. The increase in value is 100% market driven. $429K could be $215K tomorrow.
As far as your "month to month" comment - I'm not a real estate investor. Just a guy, with a growing family who went to sell his house in 2008 and was told it was worth less than half of what I paid. It was a setback, we survived, we were fortunate.
No comments yet
tossandthrow · 8h ago
Risk tends to build up and be released in different ways every time.
It is right that it is not likely a credit crisis that will be the trigger next time.
But it could be hyperinflation - which would de-facto crash the housing market.
Right now the PE value for the housing market is really high, and it is not likely to continue up forever.
LastTrain · 8h ago
Go find a graph of housing prices 1963 to current, you will see that the events leading up to and including 2008 did nothing to help or hinder housing affordability in the long run. We are due a 2008 style correction but that will not make housing affordable either. The real problem is that household income stopped outpacing home prices in the 1970s.
Workaccount2 · 7h ago
The core actual problem is that there are good places to live, and finite land in those places.
The next step up "problem" is that the income curve has flattened greatly in the last 75 years. So there are many more high earners mixed in that they are carrying "regular home" prices up with them.
In 1967 lower/middle/upper class ratio was 36%/54%/10%
In 2019 lower/middle/upper class ratio was 25%/41%/34%
The middle class is shrinking because people are getting richer, not poorer. That's the part you never hear people say. Probably because they don't even know it and just assume everyone is broke.
I can only imagine now, after the pandemic money shower (not stimulus checks), that this effect is even greater. Hell upper class might actually be at parity with middle class now.
No. It is thinking of and treating homes like an investment, and the lack of laws to discourage that. Housing prices have little to supply -vs- demand for actual housing, it is demand for housing as an investment instrument that drives prices. Do you think in 2008 suddenly fewer people needed places to live?
CraigJPerry · 4h ago
> … lower/middle/upper class ratio was …
That chart says it’s for households, not individuals so for the time scale shown (70s onwards) all you’re seeing is that 1 earner households became 2 earner households.
The stuff about upper class growing does not follow from that. Poor analysis.
inetknght · 7h ago
> The core actual problem is that there are good places to live
Nah. Climate change is real, and humans can absolutely affect it.
Not enough good places to live? Make new ones. It takes decades or centuries but it can be done.
Workaccount2 · 6h ago
You can't just make new places attractive, they usually are proximal to valuable resources or land features. A dramatic example of this are the arab states that are trying to brute force make the desert an attractive place to be. Nothing in those cities is economically organic, it's all oil money trying to LARP functional cities built in logical locations.
inetknght · 6h ago
> A dramatic example of this are the arab states that are trying to brute force make the desert an attractive place to be
They're doing it wrong. I'll point to places adjacent to the sahara building a "green wall" which is turning parts of the sahara back to a savannah and replenishes the water table.
I think you are confusing nature with economic vitality. There needs to be economic value inherent in a location for a city to thrive. Having grass and water doesn't mean much at all in this regard. You need things like natural harbors, navigable river ways or mine-able resources.
Pretty much all the good spots for cities have already been claimed, hundreds of years or even millennia ago. These are the spots people live in, and the spots people want to live in (as evidenced by ever increasing cost to live there).
inetknght · 2h ago
> Having grass and water doesn't mean much at all in this regard. You need things like natural harbors, navigable river ways or mine-able resources.
Harbors? No. Trains and airplanes exist.
River ways? Los Angeles and California have demonstrated, with the LA river, that rivers can be constructed. Also, trains and airplanes exist. Wanna complain about no water? Well that's where land revitalization comes in.
Mine-able resources? Perhaps. There are lots (!) of resources in deserts that aren't mined. I also argue that food is basically a mine-able resource. I also argue that many resources can be imported instead. I also argue that plenty of people can work remotely without ever working a field or a mine.
ty6853 · 6h ago
In my state the people are there because there is water. You can't make new places attractive, because all the people will be dead. It's basically a 100% correlation between location of towns and whether you can economically drill or divert water there.
kevin_thibedeau · 7h ago
It's REITs that distort the market most. They can gobble up homes with insane price insensitivity and wait for their rental payoff in 30 years all while trading them around as derivatives.
wahern · 3h ago
> The real problem is that household income stopped outpacing home prices in the 1970s.
On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much.
The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.
ty6853 · 8h ago
The materials are very cheap.
Last year I built a house for ~30k shell, about ~60k with utilities and everything inside of it. My own labor.
Of course, there are only a handful of counties that will let you do that without licenses, or a building plan, or inspections at times that preclude holding a job. Because there is always some self-righteous actor, screaming at the rooftop that their neighbor is going to kill the whole neighborhood in a fire, no matter that housing has been virtually completely unregulated for owner/builders in my county for 2 decades and none of the hysteria people warned of came to fruition.
The plus is all these people screaming for expensive regulations are absolutely scared shitless of my area, and do not live here. Which is nirvana.
wcarss · 3h ago
That may just be regulatory inertia keeping you safe.
Most people aren't building insanely stupid and dangerous homes because in most places they legally can't, and very few work specifically just in your county, so they just do what they mostly do, which is mostly safe and up to code. Maybe they cut a few corners. Probably a few weirdos doing entirely their own thing.
By the same token, if your weird neck of the woods made seatbelts non mandatory, it wouldn't mean everyone takes them off as they drive through, so the subsequent maintained levels of vehicular loss of life would say nothing about the increase of safety seatbelts provide. A few weirdos might be taking the belt off, though!
Still, it'd only take one weirdo's entirely preventable and lethal to their kids house fire/car crash to prove them idiotic and probably get the law changed.
ty6853 · 2h ago
Many people and kids die from effects of homelessness yet regulations that make houses less accessible persist, so I'm not confident of your thesis people will fix the laws to save the kids.
I would posit one of the best things we could do to save children would be to completely deregulate the housing industry and eliminate trades licensing. This would not only enable housing accessibility but more money for education, healthcare, and good food for kids.
Supposedly they don't need any permits. I didn't know there's something called roof grade spray foam.
slashdev · 8h ago
In general yes, but in practice housing prices are down big in a lot of areas and still falling. Decisions happen at the margin, which means it's the marginal home owner who lost their job and has to sell, which pushes up supply at a time when demand is very weak - and that's your lower prices.
But it's very regional. Some areas will continue to see rising or stable prices.
FinnLobsien · 8h ago
That's the big problem. You can find cheap housing easily, but not where most people want to live. The problem could even get worse if there are fewer opportunities, but they remain concentrated in the Bay, NYC, etc.
shortrounddev2 · 8h ago
Different world post-covid. Lots of people are willing to live in the middle of nowhere to buy a house, they just couldn't before because they needed to live near major job markets. A lot more people are able to work remote now.
I'd say that it changes the situation a little, but not everyone is able to work remote yet, so there's still the draw toward large city centers like you say. But personally I've met plenty of people who ditched their big city for the midwest as soon as they got approval to go remote. When their companies told them to go back to the office, they quit and found another job
rthomas6 · 7h ago
Well I'm moving to get out of Alabama, so not everyone...
danny_codes · 5h ago
That effect only persists as long as people can pay their mortgages. Unfortunately the vast majority of people require a car to survive, and require food to survive. Defaults will begin if/when recession bites hard.
ActorNightly · 5h ago
Depends. If job markets start taking a significant hit, there is a crossover point at which people will be selling houses to either move or for cash.
aprilthird2021 · 7h ago
I keep hoping it won't require a Bane-style takeover of major housing markets for me to afford a house, but that hope fades a bit every day
dsign · 6h ago
Slightly meta, when looking from outside, reading here feels like having your friends in the much-bigger-than-the-Titanic ship comment on it while the ship that was the emblem of the world sinks. The worst part of it is that every person outside of US watching this have a little demon sitting on their shoulder repeating, "They voted for him. A second time! You can't pity them." But I will say it anyway: stay strong.
gnarlouse · 6h ago
“They voted for him a second time” is a lapse in logic. There’s 1/2 of America that didn’t vote for him, the majority of which probably didn’t twice.
If you’re not an American, you don’t get to use bad American logic. ;)
chneu · 3h ago
As an American who did vote, please stop acting like "herp derp half the country didn't vote for him because they didn't vote" is some gotcha that proves Americans aren't idiots.
Not voting was a vote for trump. Low turnout benefits trump. Americans had the choice between trump and a black woman, Americans chose trump.
Americans are so stupid and refuse to look at ourselves in a fair light. It's so dumb and the rest of the world is laughing at us.
"You can always count on Americans to do the right thing, after they've tried everything else." What this quote means is that Americans falsely believe we're exceptional and different when in reality we aren't, but we'll waste a ton of time/resources before we admit it.
dsign · 4h ago
:-) That's a very American way of thinking, believing that you have the monopoly on bad logic. My data shows that you only got the razor-thin trade surplus there in the last few years.
Sammi · 4h ago
Here's the logic: You guys voted him in and committed to him a second time, ergo you are the ones that want this and you are the ones who are responsible for him. He's yours - a pure reflection of you guys. This is why the rest of the world don't trust you.
mikestew · 3h ago
That logic tells me you didn’t read the comment you’re replying to. I mean, I’m sure you read it, but how you walked away thinking your reply was apropos mystifies me.
mvdtnz · 2h ago
Don't tell me what I can't do, you don't get to decide what non-Americans don't do. There's absolutely nothing wrong with the logic that Americans voted for this man. The insane left wing in your country bears as much responsibility for his election as anyone else by galvanising the nation with your extremely stupid identity politics for the last 8 years.
beloch · 2h ago
It's not about pity so much as self-protection.
Trump's second term has given the world a wake-up call. Although Trump will likely be gone in four years, the MAGA movement could be long-lived and always four years or less away from taking over again. Even if Trump backs down on tariff's and expansionism during his own term, trust in the U.S. as a military ally and economic partner won't be restored quickly or easily.
What we're now seeing is world military alliances and the economy rewiring themselves, not to be subservient vassals of a hostile U.S., as Trump hopes, but to bypass the U.S.. If trade barriers around the U.S. are going to come and go in an unpredictable manner, then business will respond by building outside of that uncertainty. Manufacture of some low-end products may be onshored to the U.S., but only to meet domestic U.S. demand if and where that is high enough. It doesn't make sense to move manufacturing inside a region with unpredictable trade barriers if it's going to serve a global market.
Take a look at the election results in Canada. What was expected to be an easy majority win for the Conservatives just a few months ago came out as near-majority for the Liberals. Both parties campaigned on anti-Trump measures that include increasing East-West trade/infrastructure within Canada, diversification of the economy to rely more on Asian and European markets, and reduced spending on defence products from the U.S.. This is long-term policy that will make Canada less vulnerable to future MAGA'ruptions, even long after Trump is gone. Trump could do a 180 tomorrow, but the impact of what he's already done will last for decades at the very least.
ahmeneeroe-v2 · 6h ago
Unless you're watching this from the moon, your country is in a worse position than the US.
usui · 3h ago
A lot of arrogance to automatically assume any other country is in a worse position without any information. What if the person was posting from China on a VPN? How would the statement remain true then?
ahmeneeroe-v2 · 2h ago
Yes, China specifically is also in a worse position than the US in this trade war.
georgeecollins · 6h ago
What if that turns out to be not true? China's trade with the US is not that big in $ terms and if they take an economic hit it will be unifying. The USA did this to them. Europe wasn't doing that well before, this jolt could be bad short term, but not that bad long term. And again, very unifying.
After the Trump tariffs in the first term, US sales of Soy Beans to China never recovered. They switched to Brazil. What if the rest of the world just start buying fewer treasury bills (or paying less for the return) from now on? It is possible this could be worse for the USA than other developed countries.
ahmeneeroe-v2 · 5h ago
Nothing ventured, nothing gained. I'm willing to take the bet the US comes out on top.
Sammi · 4h ago
Is your thought process really this empty? I worry for you guys. This is how cult members think - they defer to the great power who has promised to deliver for them even if they keep screwing them over.
Trump is screwing you over and he's doing it publicly. He's selling meme coins and selling your government. He dismantling the US for his personal profit and you are cheering.
ahmeneeroe-v2 · 3h ago
>Is your thought process really this empty?
No but we are so far apart on foundational beliefs about the state of the country over the last 20ish years that it really isn't worthwhile for most of us to discuss this anymore.
One side says we're saving the country, the other side thinks we're destroying it [another side thinks the first two sides are both crazy]. It's time to see who's right.
Ah, good to know the other side is now throwing out voter fraud accusations as well.
gre · 3h ago
I'm not on the democrats' side either.
I am posting an article that states there was disenfranchisement on a scale large enough to tip the election. You can find other sources than just this article.
pedroma · 4h ago
Did you forget the Russia collusion thing from 2016?
laughingcurve · 6h ago
As someone who voted against Donald Trump... Saying that is just hardcore cope and not relevant to the thread / original post.
remich · 5h ago
Yeah I don't get why so many people are willing to believe conspiracy theories when the actual theory that many people in this country just have shit for brains is much more persuasive.
os2warpman · 8h ago
The primer button on this contraction machine has only just been pressed, baby.
This is just us pulling an initial vacuum, drawing the real contraction in.
jmull · 7h ago
It's going to get worse.
This is actually buoyed by buying ahead of the tariffs, and the tariffs themselves haven't had a chance to take effect yet.
The economic nosedive is just beginning.
Jcampuzano2 · 7h ago
Trump will still be blaming Biden for this all the way down to the bottom and until the last day of his presidency, and his cult will eat that shit up.
tmountain · 4h ago
The die hard supporters, yes, but his approval is already in decline across a bunch of key demographics (women, independents, hispanics). The only President that has been less popular in the first 100 days is... Trump (first term). The majority disapprove with the current handling of the Ukraine war, ending foreign aid programs, and immigration (his strong point). His approval on the economy has fallen 13 points since December, which should be alarming for his party, as that was a key factor in his re-election (Biden inflation concerns). He can blame Biden all he wants, but the majority of Americans identify current economy as belonging to Trump. It's hard to blame Biden when he's been so vocal and brazen about the tariffs.
tim333 · 3h ago
I think Trump 2 is polling lower than Trump 1. He of course is saying it's because the pollsters are criminals who should be investigated for fraud.
mvdtnz · 2h ago
> The only President that has been less popular in the first 100 days is... Trump
The same guy who got re-elected? Early term approval ratings mean less than nothing.
JohnnyMarcone · 6h ago
Are you confident enough in that prediction to short the market?
JohnTHaller · 4h ago
"Markets can remain irrational longer than you can remain solvent." - John Maynard Keynes
Sammi · 4h ago
You're the second person to make that quote in this discussion. It's such a lazy sentiment. You do know that there are people who have long careers in options trading, right?
margalabargala · 1h ago
It's a reasonable response to the commenter saying "yeah well if you think so you should go tie your financial wellbeing to you being right".
Just because it's someone's profession doesn't mean is is or should be everyone's profession.
antifa · 2h ago
Not everyone is a gambling addict.
boplicity · 6h ago
> This is actually buoyed by buying ahead of the tariff
Actually, the way the report works is the opposite. The increase in purchasing ahead of the tariffs counted against GDP growth, in terms of how the numbers were calculated in this report.
To be clear: Trump is a disaster, and I disagree with his approach.
jmull · 4h ago
You're right. It's Gross Domestic Product after all.
I was jumping ahead too quickly to overall economic activity (which is going to drop).
japhib · 4h ago
Interesting! Can you explain how this works? (economics noob over here)
thfuran · 3h ago
People buying and selling goods and services within the US are contributing to the GDP. If some people take some of that money they would've spent domestically and instead use it to import extra stuff (which doesn't count towards GDP), the GDP will go down.
seanmcdirmid · 3h ago
> instead use it to import extra stuff
Most of the value of an iPhone is recorded as American GDP because American IP and software went into it, Apple is keeping a lot of the price for the phone, and only sending a bit off to China for assembly (and a larger bit off to South Korea, Japan, and Taiwan for components that China is assembling). What remains is still a lot of American GDP.
A small business who is contracting China to make the thing that they then sell is also generating a lot of GDP. Yes, they send some percent off to China to make the thing, but a majority is GDP generated here in the USA (the small business does the design, marketing, sales, etc...). If they go belly up because of the trade war (very likely, since no one else can make their thing, and before China developed this capability, making the thing wasn't even possible!), that GDP is gone, the people that small business was employing are unemployed.
The increased purchases should not decrease American GDP, unless consumers are buying directly from China using Temu and are not buying at Walmart.
thfuran · 2h ago
Yes, selling things contributes to GDP. But importing things does not. If you take money that you would've spent buying something in the US and use it to import something that you haven't sold yet, you've decreased GDP wrt the counterfactual.
seanmcdirmid · 2h ago
Its not just selling things, it is designing those things, marketing those things, writing the software for those things, all of that is high value stuff that Trump is basically ignoring. There is a good reason we got richer after China entered the WTO rather than poorer: we focused on high value goods, IP, and services, which was only possible because we were able to outsource low value assembly to China.
If you take that money you would have spent buying something in the US that has imported parts (like its assembly), and instead say go out and by a DJI drone on TEMU, yes, you've decreased GDP. If you simply have no money to buy anything because DOGE decided to cut your federal job, then that would also decrease GDP.
zdragnar · 8h ago
First I hear that the CPI, inflation, gas, food and medical costs are all down, and new employment exceed expectations by 100k.
Now I hear the GDP contacted? So many mixed signals.
apples_oranges · 8h ago
Well, I assume if economic activity is reduced, oil gets cheaper due to less demand, and this can have positive effect on some indicators.
seanmcdirmid · 8h ago
Oil prices are usually correlated with economic health. The better the economy, the higher oil prices. Trump saying he would lower oil prices sounded more like a threat to me during the campaign: yes, the price of oil went negative during his first term, but mix that wasn’t a good thing at all.
roxolotl · 8h ago
Yea the funny thing about oil prices is that if they go too low there's no longer a reason to pump. The US was the world's largest oil producer in 2024 but prices below about $60 a barrel mean most of that pumping isn't worth doing.
It's very rare that prices going down is good. It usually results in a spiral that is negatively self reinforcing. Price stability is what you generally want.
semiquaver · 8h ago
> It usually results in a spiral that is negatively self reinforcing
In the case of oil, suppliers would stop pumping when it was no longer economically viable to do so, contracting supply and thus raising the price until it reached equilibrium. The same should be true of other goods. Why do you think that decreasing prices tends to create a downward spiral?
The price signal cannot function if it can only move in one direction.
breakyerself · 8h ago
I think you're both right. Prices going low means less incentive to pump, which leads to decreased supply and prices stabilize.
Also prices going low means companies fold, people get laid off, the economy gets weaker, so demand goes down some more.
These things are going to feedback until equilibrium is reached.
WorldMaker · 7h ago
A related factor is what part of the ratchet we are in. In the 1800s the ratchet was "ever upward" and if economic factors shutdown some pumps there were plenty of incentives to keep that shutdown temporary and through more capital investment at it to bring back when market forces shifted again. In the 2000s we may truly be in the "downward spiral" ratchet where enough pumping shuts down, those shutdowns are permanent. There's far more competition from increasingly cheap solar and wind and other renewable energy sources than there ever was.
Eventually permanently decreased supply can also drive prices back upward, sometimes faster, as less competition means more supply-side bargaining power.
(Permanently decreased suppliers of oil may be a win for the planet in the long run, hopefully, but breaking the entire economy is perhaps the dumbest way to try to do that.)
mint2 · 4h ago
Deflationary spirals are possible. Why would a consumer buy goods today if they’ll be cheaper tomorrow?
XorNot · 8h ago
Negative prices at all points are market failures of one form or another. They're never good.
this_user · 8h ago
All these data are backward looking. The employment numbers were for March before "Liberation Day". The real impact of all of this will only become apparent in the full Q2 data.
surgical_fire · 3h ago
Actually Q3. In Q2 companies will be offloading all the things they imported ahead of tarriffs kick in.
tzs · 17m ago
As far as gas and food goes if you hear something like that you really need to check to see where they got their data. There have been some high ranking government officials giving out numbers that are questionable which might be reported uncritically by some sources.
For example at least 4 times the President said a couple weeks ago that gas in 3 states hit $1.98/gal, and he also said a couple weeks ago that egg prices are down 93% since he took office.
No one has been able to find out where that cheap gas and those cheap eggs are, and so some people are beginning to suspect that the President may have been mistaken.
adverbly · 8h ago
If prices go down, doesn't that mean GDP also goes down assuming that that the quantity of items purchased doesn't change?
victorbjorklund · 8h ago
Prices affect peoples and companies buying decision. If an Iphone is 1000 dollars instead of 4000 dollars more Iphones will be sold.
margalabargala · 1h ago
Sure, but 4x more?
selectodude · 8h ago
Not really. if consumption stayed the same while prices changed, real GDP would not change. That would just be deflation.
slashdev · 8h ago
The labor market is the most lagging of all economic indicators. It doesn't turn over until we're really in the recession.
Leading indicators, like housing and manufacturing, are not looking promising.
anovikov · 8h ago
It's quite natural that if economy contracts, prices go down. It happens (almost) all of the time - the only big exception was 1973-1979 because of Arab oil embargo - only time when GDP was falling AND prices rising faster than usual. Every other recession was accompanied with falling prices, or at the very least, falling inflation. That's why fiat money exists - to prevent it from becoming a self-perpetuating vicious cycle.
acdha · 7h ago
This is just getting started, too, since the first half of Q1 was continuing to grow at the previous rates. Tge Atlanta Fed was projecting growth just under +2.5% until late February, and is now forecasting -2.7%:
> This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden “Overhang.” This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!
I'm curious how long he will get away with denying reality like this. The economical situation is likely to have much more immediate effects on people that almost every other topic. It should be much harder for him to do his usual thing once the economy really crashes, but who knows how his supporters will actually react.
ujkhsjkdhf234 · 7h ago
This is fascism by the way. The enemy is strong but weak, good times are always around the corner once we finish with the next hardship, there is a group of immigrants, gay people, trans people preventing us from reaching the promised land and we must get rid of them.
jihadjihad · 5h ago
> but who knows how his supporters will actually react.
It's all about the framing. Prices up, wages down during Biden? Armageddon and only Trump can save us.
Prices up, wages down during Trump? It's okay, we're making an investment--we tolerate being worse off today to be better off tomorrow. Look at all the trash Trump's taking out! It's only going to get cleaner!
One test will be how much pain we've endured by the time midterms roll around, and how many people sour on the current admin and elected reps.
Another will be in 3.5 years, where we will find out if the joists and beams raised by our democracy's framers were solid enough to last 250+ years.
Tadpole9181 · 7h ago
Forever. The answer is "forever". The GOP are a cult at this point, they will never return to this objective reality.
mclau157 · 7h ago
He has an out for now, but that out will not last forever
vixen99 · 7h ago
No comment on Trump's view but meanwhile what going to happen to the 1$trillion trade deficit? How long can that reality be denied? Is that a sustainable position? I'm an economic ignoramus so I just curious as what knowledgeable people think about this.
foobarian · 6h ago
So let me get this straight: a bunch of foreign countries send you mega-ship loads of goods, and all they get back in return is paper. How is this a bad thing?
kstrauser · 5h ago
My trade deficit with Amazon, Target, Walmart, etc. is in the many tens of thousands of dollars. When are those freeloaders going to start paying me for a change?
tomrod · 7h ago
People are certainly aware of the trade deficit. A trade deficit is not a bad thing.
- A growing trade deficit can reflect a robust economy. As U.S. consumers and businesses increase spending, imports rise, leading to a higher trade deficit. Simultaneously, higher U.S. interest rates attract foreign investment, strengthening the dollar and making imports more affordable.
- The U.S. trade deficit is counterbalanced by a capital account surplus, meaning foreign entities invest heavily in U.S. assets. This influx of capital supports economic growth, funds government debt, and contributes to job creation, particularly in sectors like manufacturing.
- Trade deficits allow U.S. consumers access to a wide array of affordable foreign goods. This access enhances purchasing power and living standards. Moreover, U.S. firms benefit from importing competitively priced intermediate goods, boosting productivity and innovation.
- While the U.S. often has a goods trade deficit, it maintains a surplus in services, including finance, education, and technology. This surplus offsets the goods deficit and underscores the U.S.'s competitive advantage in high-value service sectors.
Wikipedia
- The U.S. dollar's status as the world's primary reserve currency enables the country to run trade deficits without immediate financial repercussions. Foreign nations hold dollars to facilitate international trade, which supports U.S. borrowing and spending capabilities.
- Concerns that trade deficits lead to job losses, especially in manufacturing, are often overstated. Research indicates that factors like automation and technological advancements have a more significant impact on employment trends than trade deficits.
- Trade deficits foster global economic interdependence, which can enhance diplomatic relations and geopolitical stability. By being a major importer, the U.S. strengthens its ties with exporting countries, promoting mutual economic interests.
While trade deficits can present challenges, they also offer benefits that contribute to the U.S. economy's dynamism and resilience. It's essential to consider the broader economic context rather than viewing trade deficits in isolation.
billti · 3h ago
> While the U.S. often has a goods trade deficit, it maintains a surplus in services, including finance, education, and technology
Maybe a naive question, but are only goods considered? I had always assumed the 'deficit' was "money in minus money out", and thus selling services, etc. would be included in it.
beAbU · 1h ago
I believe services are specifically excluded to play into the narrative of there being a trade deficit.
tim333 · 2h ago
Probably pretty sustainable. If the US was financing it by selling off its assets and running out then that would be unsustainable but the US is cranking out assets like nobody's business.
As an example Tesla the company didn't exist 30 years ago. Say you got some shares early you can sell those to the Chinese in return for their widgets. That kind of thing can go on and on.
HDThoreaun · 6h ago
Trade deficits are sustainable indefinitely when foreign countries want to hoard your currency. The only reason countries would want to stop hoarding dollars is if the US gov does something stupid like start a trade war
shellac · 7h ago
Trade deficit is a partial view of matters, and may not mean much anyway. It's a partial view in that there are a bunch of things it doesn't cover like inward investment. And it may not mean much in the same way my household runs a trade deficit with the local shop, which I have sustained for decades with no obvious ill effect beside my waistline.
laughingcurve · 6h ago
Respectfully, have you confused 'trade deficit' and 'budget deficit' similar to Trump? Being a net importer is not the same as having the governments outlays exceed it's inlays.
Conservatives rightly used to be concerned about budget deficits -- but trade deficits are entirely different. Just because they share the same word does not necessarily mean they are the same indicator.
I would be happy to see America as a net exporter, but I genuinely have to ask ... what is it that America - the richest country in the world - is going to make that other people want regularly aside from mass agriculture, specialized services, and advanced manufacturing??
Our domestic manufacturing base is thankfully not geared to produce a bunch of plastic crap to try to compete with China. And if you want to onshore critical supply chains -- great -- but again that has nothing to do with the idea of a trade deficit.
Genuinely looking for a thoughtful engagement here
dragonwriter · 5h ago
> Conservatives rightly used to be concerned about budget deficits
Consevratives used to (and still do) talk about budget deficits to derail conversations about programs they are opposed to but which are too popular to directly attack, but—then and now—continued to run up massive deficits on their own priorities, including shifting tax burden off of their wealthy benefactors.
watwut · 5h ago
If conservatives worried about budget deficits, they would make them smaller. As it happens, budget deficits go up under conservative governments more then under democratic ones.
It just so happen that tax breaks and military cost much more money then what they pretend save.
lawn · 7h ago
It won't be helped by Trump increasing the debt at least.
0xy · 7h ago
March jobs and inflation numbers were significantly better than expected. Milk and eggs are down 30% from the peak.
The middle class and poor are focused on buying food and gas, not on their stock portfolio.
JohnnyMarcone · 6h ago
Imagine being middle class in your late 50s right now and eyeing retirement. Even worse, imagine you were planning to retire this year and now plan to work another couple years due to fear. The cherry being, the entire time you're worried that there will be a recession that will force you to retire before you're ready.
jccalhoun · 5h ago
Yep. That's me. And my state's Republican supermajority just cut the budget of the community college I teach at by 10%.
mikestew · 3h ago
Or yet another option: retired last year, and even if Trump is re-elected, it’ll be good for the markets, right?
Yeah, that was me last June. Thankfully the spouse is still working.
ujkhsjkdhf234 · 7h ago
The price of eggs was due to a nationwide bird flu epidemic. It had nothing to do with Biden, Harris, or Trump for that matter. The problem was eventually going to resolve itself.
mountainriver · 5h ago
Inflation lags a lot, we will feel the tariff nonsense soon
aprilthird2021 · 7h ago
This is completely wrong. The middle class' retirement is in the stock market, and they know that.
59% of Americans say Trump is making the economy worse [0]
This was the expected result. The economy does not like uncertainty, and it is almost impossible to plan ahead until there is some clarity how and when the current trade war situation will resolve. The longer that takes, the worse the damage to the real economy will get.
austin-cheney · 8h ago
It will almost certainly contract more significantly into the second quarter as well. Many businesses remain reliant upon goods from China and are taken a massive financial hit on purchases now, but they are also waiting for the trade war to cool off before making future purchases. That will create a demand rush once the tariffs cool down and if they don't cool down these businesses will continue to have the same financial troubles but will also have inventory problems too.
In short, it must get worse before it can get better irrespective of what happens next or when.
FinnLobsien · 8h ago
The problem is that factories take years to build, many forms of agriculture take years to yield results too.
So when the tariffs can change every day and you don't know if they'll be around in 5 years, do you commit millions to building something that doesn't pay off until 5 years from now?
A_D_E_P_T · 8h ago
> The problem is that factories take years to build
Nobody's even building them right now. CAPEX and industrial investment have declined in recent months. (!!) They may even drop further. So it seems that if the aim is to revitalize America's industrial base, the present strategy isn't working, but is having an opposite effect.
badloginagain · 8h ago
Which is funny because US industrial investment was on a tear pre-tariff as companies near/on-shored at historic rates. Not only were tariff's not needed, they've effectively shut down their intended goal.
sorcerer-mar · 8h ago
This chart is a pretty astounding look at how successful Bidenomics was at achieving this and how catastrophic Trumponomics is already turning out to be:
Credit to prior on-shoring should go to Covid 19 and the Chinese government's heavy handed response to it, not any US policy or administration.
Talk to anyone in industry and they'll say "we on/near shored because Covid supply chain problems taught us a lesson" or something along those lines. Those investments were just starting to bear fruit in the past few years.
Edit: And before anyone tries to put words in my mouth, this is neither an endorsement of "Trumpenomics" nor a dispute of the prior commenter's statement about them.
sorcerer-mar · 7h ago
The difference between on- and near-shoring is pretty important, and I'm going to bet the trillion dollars in incentives played a far, far bigger role than the delta in people's resilience estimations between putting a factory in Mexico vs the United States.
Credit should go to all factors, but sorry it's foolish to think orchestration of a trillion dollars into exactly these sectors wouldn't play a huge role.
potato3732842 · 7h ago
>The difference between on- and near-shoring is pretty important,
Of course. I don't think many saw coming that we wouldn't be on friendly trade terms with Mexico and Canada.
> and I'm going to bet the trillion dollars in incentives played a far, far bigger role than the delta in people's resilience estimations
Which have you seen companies respond more swiftly to, opportunities to make money, or disruptions in their existing ways of making money? Which gets the CEO on the phone faster, a potential business deal or a prod outage?
Just about everyone experienced the latter during Covid. "Yeah we'd love to do all the electrical for your covid construction boom fueled McMansion development but switchgear is back ordered 18mo, sorry", and so on and so on across many industries. And they're all real salty about it.
I'm sure the incentives added fuel to the fire, but the way the Chinese economy stayed disrupted for longer really pained a lot of people in the US who depend on stuff from there to make money here.
sorcerer-mar · 7h ago
> Of course. I don't think many saw coming that we wouldn't be on friendly trade terms with Mexico and Canada.
My point is that near-shoring is the obvious thing to do under the rationale you're talking about, but actually wouldn't show up in that chart.
Here's a comparison of the US vs Europe (which experienced similar China shocks):
The IRA added huge incentives towards factory construction in certain areas. Biden also maintained strategic tariffs on certain industries (as opposed to the blanket tariffs Trump is using.) I understand that people with specific political preferences would like to believe these incentives didn’t work, but there’s every reason to believe the simpler explanation: incentives like this do work. We should be learning from these results instead of denying them.
SoftTalker · 6h ago
The tariffs have been in effect for less than a month.
danans · 6h ago
Companies started shifting plans as soon as the election result was decided in November. Many started stockpiling Chinese imports then. Additionally many have paused Capex due to the economic uncertainty:
The tariffs were not a surprise after the election. The President said he was going to enact crushing tariffs, so this was effectively predictable since early November.
parsimo2010 · 7h ago
> if the aim is to revitalize America's industrial base, the present strategy isn't working
The issue is that the aim clearly isn’t to revitalize the industrial base. If it were, then the tariffs wouldn’t be removed after negotiating with other countries. Since other countries can make deals to reduce the tariffs on their products, then it’s clear that the aim isn’t to get Americans to build things at home. The tariffs are clearly some kind of brinkmanship game to pressure other countries into making concessions.
neogodless · 7h ago
Don't forget that the 10% for everyone tariffs were not paused, nor can they be negotiated away.
parsimo2010 · 6h ago
> 10% for everyone tariffs were not paused, nor can they be negotiated away
But "everyone" doesn't mean everyone because everything on this list is exempt from the global 10% tariff and recriprocal tariffs (https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...). Categories have been added to the list after influential people called the President. So even the 10% for "everyone" tariff can be negotiated away if you give the President something he values.
thayne · 5h ago
Which suggests it isn't just a way to get foreign countries to negotiate, but also a way to get domestic companies to negotiate with him, possibly in a way to increase his personal power.
No comments yet
tmountain · 5h ago
There is no "aim". The tariffs are something Trump has been "wanting to do" for decades, and now that he has almost absolute power and is surrounded by sycophants, he gets to do whatever he wants. This is a flex. A way for him to "play hardball" with the rest of the world but without any clear notion of what the next step us. He's said that other countries will have to "pay a lot". What does it even mean? There is no plan. There is no ask. There is no endgame. His cronies are too afraid of him to tell him that this is a terrible idea, and now that he owns it, he'll sooner go down with the ship than admit he was wrong.
StackRanker3000 · 7h ago
I think the aim of the tariffs changes depending on President Trump’s mood, what the market is doing, what the press is saying, and who he spoke to last.
krferriter · 4h ago
We are both suppressing international trade of consumer goods and making it harder and more expensive to build out the infrastructure to build consumer goods in the US.
threeseed · 8h ago
You need an educated, skilled and plentiful workforce for global manufacturing.
US has taken concrete steps in the last 100 days to reduce all three.
Moto7451 · 7h ago
The strategy of the US has been Hegemony. Friendly foreign partners were intended to take over industries we did not want in our own backyards for political, diplomatic, economic, or environmental reasons. For a stint in college I was an International Relations major and this was 100 series education. At a basic level this is discussed as the “Pollution Haven Hypothesis.”
A political/diplomatic example is rebuilding the Japanese Steel industry after WWII so they could regain self sufficiency. Until we decide to shoot ourselves in the foot hard enough we’ve had a consistent trading partner in high quality steel ever since.
The current “strategy” is painful because it has the weight of the past 60-70 years working against it.
SpicyLemonZest · 6h ago
I dunno. This reads to me like an attempt to retroactively justify the effects of US policies that were aimed at a different purpose. I don't think I've ever seen an American politician say that they'd prefer for industry X or Y to be located in a different country.
vel0city · 6h ago
Just going to ignore the Marshall Plan and Reverse Course policies then I guess?
This isn't some retroactive attempt to justify something. This was the actual policy at the time.
SpicyLemonZest · 5h ago
I don't think either of these policies intended or caused other countries to "take over industries we did not want in our own backyards". In the 50s and 60s the US still ran consistent trade surpluses.
tmountain · 5h ago
Factories also require global supply chains. Not the United States strong point at the moment...
fuzzfactor · 6h ago
A lot of businesses now have to face that to survive, they need to increase their market share or profit margin by double-digit percentages when they probably don't have double-digit numbers there to begin with :\
And double-digit increases are what they have been working toward the whole time, they know how to do it, that's how they have managed to get by, even though they know it will takes years. These are great business operators, they know they'll make it if they persevere, they just don't know how many years.
And these were the businesses that were shrewdly operating successfully in the USA in difficult markets with slim margins, even if they were leaning to any extent on cheap foreign materials, labor, or even weighted more toward robust domestic commerce in general.
Prevailing in situations that "average" businessmen aren't quite up to.
How do you think the less-skilled operators are going to feel? They know who they are. Lots of times their businesses are totally dependent on the majority of Americans overall being "richer" than most. And in less than 100 days really, that's been brought into question more times than in any other previous decade. With things like over-taxing and currency exchange taking their toll at the same time commerce itself as a source of prosperity is receding, this is going to make them some of them the most nervous of all.
Trump has always been foolish with money, after his first term the US can no longer afford lots of things that were affordable under all previous presidents, you can't make this up.
When a recognized business-bozo-in-chief can remotely do more percentage damage in one day than a business owner can make up for in one year, might as well give up now, or at least take a sabbatical. Trump can't last forever, and anybody who replaces him may not be any wiser or less misguided, but at least would be more stable & trustworthy.
ActorNightly · 5h ago
Unfortunately Trump is going to stay a 3d term, so more damage is gonna be done.
nyantaro1 · 1h ago
I am not an American. I understand this would be unconstitutional, right? Or is there an actual path to allow a third term for a president?
dehrmann · 5h ago
There's a chance the tariffs will be rejected by the Supreme Court within a year, a chance something political happens within the next two years (senators and representatives will turn on Trump as soon as he becomes a liability in the next election), and new management will be here in four years.
Too much is in flux to make an expensive decision that won't see value for years. There'd need to be grants to jump start construction.
exe34 · 5h ago
That might be a good time for him to move to whatever his Reichstag fire will be and make sure he stays on. The argument could be that this sort of long term development requires a firm and constant leadership for a long time.
AnimalMuppet · 6h ago
If you believe certain business cycle theories, the way an economic downturn starts is when businesses no longer see the need for additional new capacity. So there's declining CAPEX. Then the 40% of the economy that is CAPEX-related takes a downturn. Even though the 60% that is consumer goods is still for the moment going at full capacity, the CAPEX-related part suffers layoffs. That in turn affects the consumer spending part of the economy.
So if CAPEX is declining, the downturn has already started. (I mean, I guess the article's headline already told us that...)
ty6853 · 7h ago
OF course capex declines when you tarriff.
Part of Trump's genius tarriff plan was closing trade deficits.
Except trade deficit is just mostly a measure of how much countries choose to park the returns on their goods/services in your own country as investment in capex, domestic investments, etc. It is the foreigner choosing not to take the dollar or exchanged goods back to their own country, but to invest it in your own country.
You literally kill capex by killing the trade deficit.
marcosdumay · 3h ago
Kinda, but domestic capex is overwhelmingly more important than foreign investment in almost every country, and the US is absolutely included on that set.
So, on practice, you won't find a correlation here.
KingOfCoders · 7h ago
Fun fact: The GDR (East Germany) had a massive coffee problem because of dollars (scarce). So they heavily invested in Vietnam for coffee production. It took 10 years for the coffee to be produced, and the GDR collapsed before. After German reunification Vietnam became one of the biggest coffee producers.
Yes. And even if we could wave a magical wand and materialize a whole new city (or region) with thousands of new factories and also a workforce complete with training, and housing for them, and new universities to continue the training for them and their children, and new power plants to supply the power and water needs of this new region as well as a transportation infrastructure to support all this new economic activity. New airports, new rail networks, and new shipping ports. Even if all that could happen instantaneously, the result of all these new Made-in-USA goods would still be astronomically higher prices for all Americans. The US is one of the most expensive places to live in the world, and all these factories have to pay those high prices both for their construction and for their ongoing operations. (I'm assuming here the magical wand only speeds time. It doesn't produce investment capital out of thin air.) So protective tariffs would need to continue on indefinitely so all these people could keep their very expensive jobs and all Americans would be paying the bill for it, forever.
giantg2 · 7h ago
I saw a study years ago that compared US made vs foreign made products and found that most imports had US made alternatives that were not substantially more expensive. Walmart made a big push to increase their percentage of US sourced products a few years ago. With the increase in automation, the labor costs aren't as much of a differentiator.
I'm not sure this small price difference will continue since I assume a reduction in imports might result in greater demand domestically and those factories might not be able to easily scale to absorb the shift.
heneryville · 6h ago
Survivorship bias. The only US made goods left are those that can compete with foreign production. You cannot use those remaining as evidence that all goods could be US made without significant price increases.
no_wizard · 4h ago
>With the increase in automation, the labor costs aren't as much of a differentiator
and unsurprisingly, the imported goods are the goods that are still heavily reliant on labor cost.
If automation was possible, it would be the preference of any business to use that over human labor, simply for the consistency of output and ability to control cost factors. I do believe this to be the case in most instances.
Thats why car companies have long advocated for tariffs on imported vehicles (and is one tariff we have consistently held for a long time).
spwa4 · 6h ago
link?
FinnLobsien · 7h ago
Yep! Though I guess that weirdly does get us back to some version of the 1960s/70s America these tariffs are supposed to revive: Where things were expensive (relative to buying power) but you bought them forever and might even know the people who made them.
If people will be happy to buy locally-made furniture for triple the price and having it last longer is a different question.
fabian2k · 8h ago
The factories would be more expensive because the materials and machines are also affected by tariffs. And you obviously can't rely on the tariffs to remain that way, Trump is far too flaky, hopefully not in power forever and the tariffs are just too damn stupid to remain. The harm they cause will be quite obvious soon.
akudha · 7h ago
What is the best case scenario here? Even if the tariff war ends next month, wouldn't production/shipping etc take weeks/months to recover? How are small businesses with limited cash flow expected to survive in the interim?
The most scary thing are medicines, medical equipment etc. Healthcare is going to become even more expensive, no?
Above everything else, why would other countries/allies/trading-partners trust the U.S govt again? I just can't comprehend how this is good for anyone, other than those with spare cash to buy up distressed assets
aftbit · 7h ago
>Other than those with spare cash to buy up distressed assets
That might be the whole point. Look at Trump's "now is a great time to buy" post.
It's also good for America's enemies. Maybe the goal is just a weakened America overall.
SpicyLemonZest · 7h ago
The best case scenario is that governments make agreements to accept more US exports, the trade war ends, and in a couple years conventional wisdom remembers this entire episode as a cautionary tale about crazy policies countries sometimes pursue when their trade balance gets too out of whack.
Is that the most likely resolution? No, I don’t think so, I’m still holding most of my money out of the stock market. But doing lots of business with countries whose current government isn’t trustworthy isn’t an unheard of scenario.
mike-cardwell · 5h ago
Precisely. Seems fairly likely the tariffs will be gone 5 years from now one way or another. Who in their right mind would build a business based on those tariffs still existing into the future.
rtkwe · 7h ago
Even if they did get built they only make economic sense if there's still the tariffs or something drastically changes the cost formula (eg: automation that's simultaneously very adaptable to new products like a hoard of people) but more realistically the tariffs have to remain in place forever to keep the factories.
toomuchtodo · 8h ago
You just stop imports or raise prices until regime change. Until then, economic uncertainty and pain.
xnx · 8h ago
> You just stop imports or raise prices until regime change
Not a lot of domestic coffee production. I'm pretty sure there would be riots in the streets if coffee was $65/lb.
chasd00 · 8h ago
> riots in the streets if coffee was $65/lb.
Well at least it would be a slow moving riot with lots of yawning.
ceejayoz · 6h ago
Have you seen one of us when someone's between us and coffee?
We're sleepy if we need coffee. We're angry when we can't have coffee.
toomuchtodo · 7h ago
If people are unhappy with the outcome of harmful, irrational policy, they should feel empowered to riot. The government and representation is supposed to work for the people, after all. Accountability is important in governing systems.
xnx · 7h ago
I agree. I wondering what it would take to get through to the average person that voted for this administration.
fuzzfactor · 6h ago
If it's only inconveniences like $65 coffee that sets touchy people off enough to storm the Capitol or something, that's definitely not a riot. It's been fully proven by the party in power to be a legitimate demontstration of opinion.
What would it take anyway . . . ?
h2zizzle · 4h ago
Empathy. If well-off people were to fully understand the situation the rest of us find ourselves in, and the increasing likelihood that it will eventually become a problem for them, too, they'd put all of their HOA-busybody/PTA-pearl-clutcher/campaign donor might behind solving the issue. They are currently in "ignore it, it doesn't effect me, it's not my problem" mode, heavy.
pc86 · 8h ago
If it gets people to stop buying 1200 calorie starbucks drinks with 70g of sugar in them it will be worth it /s
nancyminusone · 7h ago
Nah, it'll just change to 100% sugar and 120000 calories.
LiquidSky · 6h ago
This isn't going to go away with a new administration. Global trust in the US is broken. Even this idea that things will swing wildly back when an administration changes is part of the problem. There's no going back from this, the US has permanently lost its position in the global order. Even our allies are looking elsewhere now.
toomuchtodo · 6h ago
I agree, which is good, because the US cannot be trusted to vote for adults (based on observations and the evidence). But punitive tariffs can go away under different governance, so some relief, but to your point, we're not going back to how things were because of the self inflicted trade harm.
_heimdall · 8h ago
factories also require relative stability to justify the upfront investment. If a person is so inclined, they would be raising money today to build a US factory that may open after Trump is out of office.
Personally I'd want one hell of an insurance policy to cover the risk of all that money being wasted when I finally open my doors and have to compete with overseas manufacturing that may no longer be burdened by these tariffs.
pydry · 8h ago
And industrial ecosystems like the one in Shenzhen take decades.
There is simply no way to speedrun that kind of development.
ahoka · 7h ago
Shenzhen WAS the speedrun.
rchaud · 7h ago
Exactly, I can't see how something like that could develop faster in peacetime.
api · 7h ago
Nobody is going to invest in a factory that's only profitable under this tariff regime because it's all based on Trump, who notoriously changes his mind or may die or get overridden after the midterms. What if Trump wakes up tomorrow and says "you know what? I had a man to man with Xi Xinpeng and now the trade war is off!"
I am not against repatriating manufacturing, but it's something that needs to be done with thought and strategy. This trade war is worse than Biden's Afghanistan withdrawal.
blipvert · 3h ago
Technically Trump’s Afghanistan withdrawal … Biden just didn’t repeal it.
Terr_ · 4h ago
> This trade war is worse than Biden's Afghanistan withdrawal.
"Biden's"? That's comparing an 100%-Trump fiasco with an 80%-Trump fiasco.
If we're gonna blame Biden for not breaking the US/Taliban ceasefire agreement and drawing things out... Then we need to talk about how it was Trump who made the agreement abandoning the Afghan government, Trump who negotiated that aggressive May 2021 deadline to land at the beginning of the next term [0], and Trump who had to be stopped by his staff from triggering a far-worse instant "fuck y'all, we bail" just days after he lost the election in Nov 2020. [1]
funny you assume rational thought has a hand in this
wslh · 6h ago
Welcome to Argentina, a country where we live on a roller coaster of shifting policies, economic turmoil, and ongoing corruption. While it's clear that not all countries are alike, it's interesting to observe what emerges from this kind of system.
ty6853 · 4h ago
Argentina's people seem to have dealt with this through mass tax fraud, hiding money in crypto/cash/real assets, insubordination to law, and electing a self proclaimed anarcho-capitalist. Somehow they've managed to thrive in a lot of ways, and not only that they can deal with an arbitrarily incompetent government through self-resilience.
Americans will learn too.
wslh · 4h ago
> Argentina's people seem to have dealt with this through mass tax fraud, hiding money in crypto/cash/real assets, insubordination to law, and electing a self proclaimed anarcho-capitalist.
It is not black or white when there is not real [power of] law enforcement.
myflash13 · 7h ago
> do you commit millions to building something that doesn't pay off until 5 years from now?
This is exactly the kind of short-termism that got us to where we are now. Why is it so hard to think on a 5-10 year timeline? This is country-level ADHD. Anything worth building requires long term investments. People in the past used to spend their life building cathedrals that they knew would never be finished in their lifetime, and now you're questioning whether it's worth investing in something that has an expected ROI in 5 years!
nemomarx · 7h ago
But what if 2 years in all the tariffs are cancelled and you go bankrupt?
if you want people to think long term you need long term stable policies that won't change the next time someone else sits in the oval office or Congress changes hands. you need to commit to a strategy.
No comments yet
Sparkle-san · 7h ago
The ROI isn't 5 years, it's more that it won't generate any returns for 5 years and those returns might not pan out depending on policy change. If you build an American factory and right as it's getting up and running, the next administration rolls back all tariffs, you're left with massive debt and everyone undercutting your prices.
myflash13 · 7h ago
Risk. It's called "doing business". Anyone who has built anything great took risks because they had a vision and believed in it. They weren't "rent seeking" and looking for guaranteed returns.
Remnant44 · 1h ago
You're missing half the equation.
It's Risk vs Reward. Anyone who built something great took huge risks, for a huge return.
There is no return here. At best, you've sunk a ton of capital into a low-profit business that is propped up only by government subsidy.
sharemywin · 7h ago
the upside has to justify the risk or it isn't a good investment.
senordevnyc · 7h ago
Show 'em how it's done then.
BizarroLand · 5h ago
There's a mousetrap down that hall and I don't smell any cheese
sharemywin · 7h ago
probably why congress should be putting tariffs into laws.
zorked · 7h ago
You are free to spend billions betting in an unstable government then. Show them how it's done!
Oh, you meant other people's money.
UncleMeat · 5h ago
What bank is going to finance a loan for a new factory whose profitability is predicated on this trade policy remaining stable for the next decade? Even if you as a business owner have appetite for this risk, the bank won't.
Lendal · 6h ago
Even if all those factories were built instantaneously, it still results in made-in-usa prices for all Americans for everything coming out of those factories, along with protective tariffs forever. A factory can't be constructed or operate going forward in the US for the same price as in China. The moment any president drops tariffs, all those factories will shut down immediately.
mcphage · 7h ago
> Why is it so hard to think on a 5-10 year timeline?
Because the tariff plans have changed every few days. If the tariffs were stable over 5-10 years, businesses would adapt.
> This is country-level ADHD.
Yes, these tariffs are.
hypeatei · 7h ago
This isn't long term thinking industrial policy. Flip flopping and using ChatGPT to steer tariff policy isn't looking ahead. Pure delusion.
Trump has control of all branches yet isn't passing any legislation. All he's doing is introducing uncertainty.
unbalancedevh · 7h ago
I work for a major tier-1 supplier for the trucking industry, and the outlook is not good. This year was supposed to be a good year as customers pre-buy to avoid upcoming changes in emission regulations, but the drop in trade with China means that goods aren't coming into the ports, so trucks aren't needed. OEMs are dropping their forecasts and pushing out new development, which means our projects are getting cancelled. A couple months ago we were talking about how we're going to hit our variable compensation profitability plans; but just yesterday we were told that we're going to have to take a mandatory 2 weeks of unpaid leave this year. The damage has already been done, and the next couple years don't look promising.
nemomarx · 7h ago
The gossip I'm hearing is that independent truckers and shipping companies might go out?
vkou · 5h ago
The market is also optimistic that this madness will be reined in before it gets really bad.
llm_nerd · 8h ago
It isn't just China, and it isn't just goods.
Tourist travel to the US has contracted, for instance. US service exports are suddenly extremely suspect and a lot of countries are finding alternatives. US goods exports are facing massive headwinds, and counter-tariffs in some other countries (China, where imports from the US have basically stopped, and Canada where $400B+ of US goods were sold last year, many of which now see a counter-tariff and boycotts/replacement).
The situation is going to get much, much worse, and there is a serious sense of denial among both the market and many participants who seem to think Trump can retreat from his economic folly and everything will be good again. It won't. There is a massive structural shift that is going to linger for decades.
throwawaymaths · 8h ago
To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US. Of course this is a generalization, there could be critical single/multi item goods that make this not a thing (note: it's not lithium or "the rare earth"). It's worth asking and doing a deeper analysis on the question: Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes". No, you do not need dropshipped junk or an electronic device with a 50% chance of working from amazon. Even for bulk conumer goods american alternatives are not substantially more expensive. I was shopping for cookie cutters recently and a US cookie cutter is $2 more than the chinese cookie cutter. Without even amortizing over the number of uses I'll get out of this, the marginal increase in cost is ~0, but I am certain that the way that online retailers sort sales by price, the number of buyers of the american good is way lower.
I think more likely problems are small electronic PCBs used for semi-bespoke controls in whatever manufacturing that actually {happens in/moves to} the us, hvac controls etc.
jsnell · 8h ago
> To steelman it, the US has a far lower dependence on trade as a percentage of GDP than just about any other country, so if any country will be likely to (raw-economic-numbers) survive a shock like this, it's the US.
The reason this line of thinking doesn't work is that these measures affect all the trade that the US does with anyone, but for any other country they affect only the trade with the US. The US relative dependence on the entire world is larger than any individual country's relative dependency on just the US.
To illustrate:
US imports seem to typically be about 15% of the US GDP. EU exports to the US are only 3% of the EU GDP. So we'd kind of expect the shock to the US to be 5x larger than the shock to the EU.
blipvert · 3h ago
The US’s Brexit moment.
austin-cheney · 8h ago
Surviving is hardly a desirable outcome. Surviving is akin to a Pyrrhic victory (which is net negative). The loss that follows is greater than the profit from the win even after the most desirable of outcomes.
In the case of the US the result is isolation. That means loss of economic strength as well as loss of political influence. Those are more expensive than they sound because the second and third order consequences are security concerns and more powerful coalitions in opposition.
throwawaymaths · 8h ago
> [isolation] means loss of economic strength as well as loss of political influence.
Could be. In the long term, the world needs to reckon with the fact that our implementation economic systems (capitalist, socialist, fascist) depend on population growth, and isolation could also mean removal from the chaos that ensues when the existing political systems can't cope. Assuming the US improves its situation, which believe it or not is oh so slightly better as a result of what's going on now.
faefox · 7h ago
> Assuming the US improves its situation, which believe it or not is oh so slightly better as a result of what's going on now.
You're right, I don't believe it. :)
Tadpole9181 · 7h ago
We're making nobody want to immigrate to the US. We're also not at all addressing the reason people aren't having kids anymore and taking rights away from women that's further scaring them away from it. We're not reforming to a post-scarcity, low replenishment economy here.
How does losing a compensatory supply of labor across both low and high skill markets, cutting off ourselves from backup, discouraging fertility rates, and kneecapping any incentive to invest in manufacturing domestically AT ALL help the situation?
throwawaymaths · 7h ago
> We're also not at all addressing the reason people aren't having kids anymore and taking rights away from women that's further scaring them away from it
I'm on your side on the political issue, but the data do not agree with you: The states with the most restrictive reproductive laws have higher fertility rates. I'm not claiming there is a correlation -- but rather fertility is not at all governed by reproductive laws (or even motherhood support, because those states also have shit motherhood support systems).
To answer your question: Surviving into an non-population-driven-growth regime requires primarily two factors:
- reducing reliance on financialization
- reducing reliance on pure consumption
I'm not saying the US is good at either of those two (it's not) but it's better than it was, say, in 2019. I would even look at your retort -- it used the word invest. That suggests a heavily financialization-dependent mindset. If you are looking through those lenses, it is difficult to imagine what the future needs to look like.
Tadpole9181 · 7h ago
We're not moving away from that. We're just making the capitalism more crony. I understand you're trying to steelman, but the argument fundamentally does not make sense.
Trump's economic and immigration and foreign labor policies do not encourage anything that mitigates the disaster of demographic collapse. We're making ourselves even more sensitive by taking away all the safety nets our economy could fall back on.
throwawaymaths · 3h ago
you misunderstand: i am implying trump is increasing cronyism but stumbling into "correct" policies along the way as an accidental side effect of his dumb shit.
threeseed · 8h ago
It’s going to be similar to Brexit.
It won’t cause the economy to collapse with alarms going off everywhere.
It will instead be a quiet, slow and sustained shrinking of the economy.
I was against Brexit, but I don't think the apocalyptic predictions have been borne out at all.
selectodude · 7h ago
Trade is bi-lateral. The UK’s trading partners were also harmed by their decision to leave. Short term, it’s just simply a net negative for everybody. Long term (decades), the UK will have a long run growth rate lower than the rest of the EU. Granted, our lack of a crystal ball means that we can just debate outcomes ad nauseum.
throwawaymaths · 8h ago
> It’s going to be similar to Brexit.
Agreed, this is the most likely outcome in the short term.
In the long term there are going to be unexpeted knock-on effects. Even a modest definancialization of the American economy makes it more robust to demographic changes and the end of the population-driven growth era. Lowered imports from abroad (especially china) and decreased consumption writ large means lower carbon footprint. Maintenance of airplanes getting more expensive means people fly less (already happening), again, lower carbon footprint.
jajko · 7h ago
You sure like whats happening now to keep making up excuses for why its actually good, all over this thread.
throwawaymaths · 3h ago
theres a lot to hate about this administration right now.
bumby · 7h ago
>Are the goods not being traded to the US "things that Americans can do without"? I think for a large portion of that, the answer is "yes".
How does one reconcile this with the fact that 2/3rds of the US economy is based on consumer goods? I agree with the general premise that we probably don’t need so much frivolous junk, but like it or lump it, that’s what our economy has been based on for decades. It would potentially take just as long to remake the economy into something else.
toss1 · 8h ago
Yup
Heard an interesting analysis by a Bloomberg Radio guest, running down the advantages/disadvantages between US and China. They came out mostly balanced, but the big imbalance is the population. The US population is a LOT less tolerant of disruption, and the Chinese population is more tolerant, and less informed, e.g., no one there even knows the rates are ~145%.
I'm inclined to agree. I see the US population as fully and multi-generationally accustomed to the luxury of comfortable living with a decent safety net. When things start to get really hard, the US population will get rapidly un-governable, while the Chinese will be both more ignorant, more controlled, and more willing to take some suffering for the country's good, while the US has been all about "ME" for quite a while.
throwawaymaths · 7h ago
Nah, the US has gone through plenty of crazy social shifts without totally collapsing. Since the civil war, historically, difficulty tends to galvanize the US public (for better or worse). You'll have to do a better job explaining why this time is different, that isn't just "vibes". American culture is full of inherent contradictions in individual/social balance. The biggest one recently is identity politics, and the swing to and from this movement is indicative of how malleable the US relationship with individualism is.
azinman2 · 6h ago
What’s different is the US is wayyyyy richer and more comfortable than any time previously in history, or at least was until recently (in terms of PPP of the avg person). When you grow up in those conditions, it’s like you’re the kid of a rich person who made all the money, and you now feel entitled to it without any of the work it took to get here, and without experiencing the pain without it or the lessons learned along the way. Instead you start to complain that you can’t do XYZ (buy a home, have a family, pay for healthcare), but because you didn’t create these conditions or experience life before, you just blame others without any of the tools to correct it for yourself.
maxerickson · 7h ago
You think the US population, on average, knows what the tariff rate with China is?
no_wizard · 7h ago
>I see the US population as fully and multi-generationally accustomed to the luxury of comfortable living with a decent safety net.
What gives you this idea, at all?
Our safety net is non existent in this country. The fact is most people in the US feel squeezed, thats why Trump was able to win with his America First attitude to begin with.
toss1 · 6h ago
Sure, maybe she's wrong and the US population is actually hardened, tough, and patriotic enough to get over their divisions and unite to support tariffs.
I'm looking at it from a general historic perspective. Just look back 100 years.
Of course the safety net could be a lot better and the GINI coefficient is awful, but there still has never been more wealth floating about the general population. When the people complaining loudest about their situation are having boat parades, driving $75K pickup trucks with aftermarket mods, and getting their news on 75" TVs, and their biggest complaint driving their vote is the price of eggs due to an avian flu pandemic, they are definitely comfortable.
When that changes in a matter of weeks, we'll see what happens.
I just found the analyst's observations valuable and worth sharing.
no_wizard · 5h ago
>Of course the safety net could be a lot better and the GINI coefficient is awful, but there still has never been more wealth floating about the general population. When the people complaining loudest about their situation are having boat parades, driving $75K pickup trucks with aftermarket mods, and getting their news on 75" TVs, and their biggest complaint driving their vote is the price of eggs due to an avian flu pandemic, they are definitely comfortable.
This isn't reflective of the median reality for most people. Simply put, the strata divide is growing even though there is a lot of wealth in US society, it is spread incredibly unevenly.
The US isn't well prepared to handle a trade war, never mind that this trade war is really cover for a class war because big businesses felt labor made too many gains from late 2020 through early 2023
toss1 · 5h ago
Agree the US is ill-prepared (and less-prepared vs Chins) for any kind of war, trade or otherwise, which was the point of the analyst I cited.
I won't dispute that the median reality for most people is far less than ideal. Yet from a historical perspective the overall life in the US is of historically unparalleled safety with overall peace and low crime rates, health with more ppl covered by insurance (but yes, less than 32 other developed nations, but higher top-quality care), and plenty of historically cheap goods imported from low-wage nations.
Yes, it can all be far better, the top 0.001% are stealing vast wealth that could literally transform lives, and there is a homeless problem from inadequate psych care. But we do not have massive poverty, unemployment is at record lows for decades, and so forth.
It appears we are about to find out what it is like to see breadlines and brutality.
And yes, I 100% agree the "trade war" is about cementing more gains for the top class because labor had it too good. They can only see a business model where they prosper only if everyone else suffers. They don't see the greater prosperity possible if everyone participates in building the prosperity.
no_wizard · 4h ago
>Yet from a historical perspective the overall life in the US is of historically unparalleled safety with overall peace and low crime rates, health with more ppl covered by insurance (but yes, less than 32 other developed nations, but higher top-quality care), and plenty of historically cheap goods imported from low-wage nations.
Which in context of the conversation, means nothing. I'm not disputing the fact that relative to historical circumstances, entire swaths of the world have it better than ever, but that doesn't end poverty or meaningfully increase stability under the current regime, and whatever comes of this - and its not going to be good - will last far longer than the regime is likely to be in power[0]. Addressing current and future concerns is what counts here, regardless of how good anyone has it.
[0]: I hope the US can maintain free and fair elections. Remains to be seen if this administration, its cronies, and its followers running congress and SCOTUS won't dismantle elections
llm_nerd · 8h ago
>To steelman it, the US has a far lower dependence on trade as a percentage of GDP
The US being the centre of trade is basically the entire foundation of its GDP. It is the reason the US $ is the global reserve. It is the reason the world holds t-bills. It's the reason silicon valley is in San Francisco and the centre of the music and movie industry is in LA. It's the reason the financial capital of the world is in NY. It's why science revolves...revolved...around the US.
If you're living in the richest large country in the world, it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub. The geographically-safe, still wealthy friendly power.
That is all dissolving at an astonishing pace, and the reality will be a harsh one. Like the other post said, the US isn't going to suddenly be poor, but instead it's just going to be an endless drain as the world reorients.
And I mean you can say "oh well we'll do without!", and...okay? I guess it's just the new minimalist world!
As to the "the US will be harmed less than others", while I actually believe the US will be one of the hardest hit countries of all, because most of the US economy relies upon an illusion, it's a silly self-comfort anyways because the US is the cause of all of this. It's like salting the land and then gloating because your crops weren't grow well anyways.
throwawaymaths · 7h ago
> It is the reason the US $ is the global reserve
That may have been the design case, but the reason it is now is just TINA. No other currency can absorb the volumes necessary. Let's go over the alternatives:
- Euro - has less than half the volume of the US. A possible contender, but remember each member state does get to dictate its own printing rules, so the
- Yen - one tenth the reserve volume, but pegged to a country that has been in several "lost" decades.
- Yuan - country has massive capital controls and you could get completely fucked if the government fears revolt and lets people move their money out of china. And yet, international reserves are LESS than the CAD.
> it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub.
I think you've got the causal arrow wrong on this. The US is geographically well situated. It touches both oceans, and has a huge gap between it and most of the rest of the world. It's ~energy independent, and has robust agricultural center. That's why it was untouched from both world wars and that's why it became the central hub of commerce in the postwar era. The US can afford to fuck up a lot of domestic and international policy and still generally speaking not worry about existential threats.
azinman2 · 6h ago
> It's ~energy independent
Not really. At least in terms of oil, the majority of what’s extracted cannot be refined in the US because all of the refineries were built for non-shale oil. Basically all of the oil gets sent abroad to be refined and then sent back.
Why this isn’t talked about more, especially under the context of “drill baby drill”, I don’t understand. If anything the slogan should be “refine, baby, refine”
throwawaymaths · 3h ago
yep thats why i put "~". youre absolutely correct but also in a pinch the us could fast track getting dirty athabasca sands oil in and mixing it with shale to get something more ingestable by our plant.
i would not be surprised if being ready for such a scenario + knowlege of shale reserve limitations is why those plants aren't kicked over so long as the trannsshipment for refining doesnt remain cost prohibitive.
llm_nerd · 7h ago
>I think you've got the causal arrow wrong on this.
My point was precisely that the US benefitted by geographical happenstance. Not sure how I got this wrong.
Regarding existential threats, nuclear proliferation is going to go through its worst period in human history. We are going to end this decade with a number of new nuclear bomb participants, and it's a profoundly obvious, inevitable outcome of the current US administration's myopic policies. And with that the probability that some American cities become glassed keeps spiralling ever upwards.
tim333 · 2h ago
Plus the defense industry of course. You could drop the tariffs overnight but much of the world which trusted America for their defence needs no longer do.
FollowingTheDao · 8h ago
Yes, everyone is whistling past the graveyard about this.
You will see panic in two weeks. I was talking to two truck drivers here in Lincoln, Nebraska I met at a Flying J. They are already talking about layoffs and job insecurity and they are wondering why no one cares. One of them asked where his bail out was.
The market, I think, is driven by AI and will be reactive, not predictive. All you need to do is be the quickest person out. All the under millionaire suckers will be wondering what happened to their 401k's.
azinman2 · 6h ago
If the millionaire has most money in the market, won’t they be wondering what happened to their money as well?
FollowingTheDao · 4h ago
They do not make up the majority, and most of them have other assets:
"only about 12% of U.S. households have a net worth over $1 million."
I’m in that 12% (fortunately). But I’m far from the 0.5%. The 0.5% have complex diversified assets. “Normal” millionaires like me are mostly real estate and market. We are vulnerable both to market losses and, if the economy crashes, much lower property values.
juujian · 8h ago
Well its quite unexpected to see this big of a change within only a three months period. I would have expected not to see any quantitative indications of the mess brewing up only by summer.
wiremine · 8h ago
> I would have expected not to see any quantitative indications of the mess brewing up only by summer.
Just curious why you would think this? Markets react fairly quickly to major events...
bonzini · 8h ago
So called "Liberation Day" and consequent mini-crash was on April 2, so this is just based on perception (of stupidity) rather than an anything real. No matter how well-grounded that perception is, the actual reaction to the tariffs is bound to be worse.
Retr0id · 5h ago
Markets can react quickly, but this 0.3% stat is measuring GDP. That said, GDP responded to the pandemic fairly promptly too.
dragonwriter · 5h ago
> Markets can react quickly, but this 0.3% stat is measuring GDP.
The GDP is the result of what markets (not the stock market, but actual markets for goods and services) do, if markets react quickly so does the GDP. And markets were reacting to tariff threats and other issues early in the term, Atlanta Fed GDPNow Q1 projection rapidly turned from strongly positive to negative in February, IIRC.
Retr0id · 5h ago
They both influence each other, yes. But GDP is largely a measure of consumer spending in the present, whereas stock markets are more forward-looking. Consumers, for the most part, respond to prices in the present. Savvy consumers have been stocking up in advance of anticipated price increases, and the less-savvy aren't really changing their spending yet because of stock buffers etc.
dgfitz · 8h ago
Objectively, the Q1 numbers probably actually reflect the Q3/Q4 2024 state of things, just like the Q2/Q3 numbers will more represent the actual Q1 2025 numbers.
It feels like this was the natural progression of stuffing trillions of dollars into the economy, along with ZIRP, and the free ride has ended. Tariffs will magnify the problem.
The whole bullwhip effect never occurred, prices never returned to pre-covid levels, as everyone claimed they would. So now we have years of stacking inflation that happened because of bloating the money supply, then ZIRP goes away, throw the tariff fears/uncertainty on top, and here we are. I have very little to no faith this administration will help the situation. Playing a game of chicken with the other global superpower is a losing proposition.
This problem has been years in the making, big ships don't turn on a dime.
tokai · 7h ago
A torpedo to the bow can sink a big ship in minutes though.
senordevnyc · 7h ago
prices never returned to pre-covid levels, as everyone claimed they would
No one who knows anything about economics or inflation claimed that prices would return to their pre-covid levels. However, inflation has gone way down from its peak.
BizarroLand · 5h ago
Inflation is a description of how fast prices increase. Prices on goods used to stay relatively static for months or years at a time, and sometimes even trended downwards.
Prices have basically only gone up on almost everything for the past 5 years. Going up slower does little good.
dragonwriter · 5h ago
> Prices on goods used to stay relatively static for months or years at a time, and sometimes even trended downwards. Prices have basically only gone up on almost everything for the past 5 years
No, consumer prices trending downward is called deflation and the economy has been actively managed to try to prevent that for a very long time. Mild inflation has been the target and rule for a very long time, with the deviations being high inflation outside of a few major economic collapses. This is not a new trend of the last 5 years.
dgfitz · 7h ago
Didn't basically everything go up but wages? So we inflated the cost of things by what, 15% or more over the past few years, wages didn't follow. All the savings and free money people had are gone now, it took a while.
I don't care if we blame the current economic policy, I don't like the current economic policy at all. I think the problem is much bigger than that.
I still would like to know where all that money went. I can't figure that out.
marcosdumay · 3h ago
> Didn't basically everything go up but wages?
That's how inflation works.
> I don't care if we blame the current economic policy
You mean the previous one until January, that stopped the inflation, or the current one that is making a lot of it for the next months?
> I still would like to know where all that money went.
The money is cycling around people and companies. That's what money almost always do, the US was an exception until recently, but exceptions to that never last.
dgfitz · 1h ago
> The money is cycling around people and companies. That's what money almost always do, the US was an exception until recently, but exceptions to that never last.
It is? Why have wages been so stagnant for so long? Isn't that one of the leading theories/reasons Trump was elected, people are completely strapped for cash. I had read recently that loans are being increasingly being paid late, credit card debt has grown massively, home prices and through the roof, and the job market is a disaster.
Where is all that money again?
dfxm12 · 5h ago
You almost answered your own question. The price of things went up, and they went up along with profits. The money went back to the firms who raised prices. It's greedflation.
I get Covid was a mess in real time and it was used as a political pawn, which really sucks. Trillions of dollars went into the US economy, and most of the country feels broke.
I don’t care how the market did, fuck the market, it’s a bubble that’s been waiting to pop for years.
Wealth tax. Progressive wealth tax that caps at a 100% tax on wealth over $10M. Exact number negotiable, but that's where I'm starting the bidding. No individual has a legitimate use for more than $10M in assets.
arrrg · 6h ago
US post pandemic economic recovery has been astonishingly great measured against other major economies.
Obviously (real) wages did take a hit like everywhere but have been recovering, too.
My working theory is that noticeable inflations makes people go crazy and trumps anything else. Completely closes people off to rational thought and that’s what sunk Biden. Despite awesome economic recovery given the circumstances.
Retric · 8h ago
The lag you describe assumes the underlying conditions haven’t changed. Taken to the absolute extreme, a nuclear war doesn’t care about the last quarter as even a giant ship halts when running into an island.
Trump’s been unusually active, so you’d expect to see direct impact in Q1 numbers.
dgfitz · 7h ago
Objectively, it hasn't. The market went nuts right after the election, and tariff day was less than a month ago. I don't have any fait in the current economic policy, but the Q1 numbers don't reflect Q1 as much as they do '24 Q3/Q4.
Retric · 7h ago
You’re assuming that rather than looking at the facts.
> tariff day was less than a month ago.
Even desiring the current economic policy doesn’t mean uncertainty is beneficial. My mother for example was confused about when the tariffs took effect and therefore delayed a major purchase. The economy is simply the aggregate of many such choices.
dgfitz · 6h ago
I hear you, and that's a fair point. I just can't reconcile how trillions of dollars came into the economy and over the past few years there were mostly massive layoffs, poor-to-mediocre hiring, stagnant wages, and massive inflation. Where is all that money?
I really think this is a huge elephant in the room that seems to be ignored.
Retric · 6h ago
To get consistent inflation you need to consistently create money. The inflation rate fell all the way down to 3% at the end of 2024. All that created money had already been sucked up by prior inflation and current higher prices.
The velocity of money is informative here, basically a dollar can only be part of so many transactions over a year. If rent is 1000$ and you get paid 4 days before rent is due you need to set aside 1000$. Bump that by 30% and now you need to set aside 1300$ and for those 4 days + however long it takes for the transaction to finish that extra 300$ isn’t part of the economy. Bank lending is a multiplier, but that runs into similar issues.
fuzzfactor · 5h ago
>To get consistent inflation you need to consistently create money.
Then what do you call it when nobody has much money left, but it's declining in purchasing power no differently than if more money was being created?
Retric · 4h ago
Past inflation, wealth inequality, and/or economic collapse depending on what you’re talking about?
It doesn’t really make sense to say that “nobody has it left” overall because money gets transferred in a transaction. So most people “not having money” could mean it’s someone else’s not gone.
However, money is only a signifier. It you mean the overall economy is declining long term, which is hasn’t been, that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant but the their income declines alongside their spending.
As to what you’re experiencing, in 2024 people where still a shock even if prices weren’t increasing people seem to expect them to fall. Falling prices would be deflation which is a negative outside commodities.
fuzzfactor · 3h ago
>depending on what you’re talking about?
Prices going up when the money in peoples' pockets is not.
>money is only a signifier.
I agree, signifies how rich or poor you are, as an individual or a nation.
Not the numeric amount, but what it will buy instead.
>that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant
That would be true sooner or later even for those who rapidly decline to zero, think about those to which it would not have happened otherwise. Not to mention so many citizens not having a viable bank account to begin with these days.
By that definition those unfortunates would be suffering much worse than an "economic collapse", and there is great likelihood they would be overlooked until it is too late because everyone else has it so much worse-than-before themselves. Trump is not even as honest as Nixon, there's going to be a lot more businesses and families ruined before this is over. In times of triage for survival, only so many can be saved, and it can be kind of a crap shoot.
>Falling prices would be deflation
Got it. So rising prices are inflation.
IOW whatever it is beyond your control that makes it more difficult or impossible to afford what you once could. Or what was once almost within reach but can no longer be sure it's even on the horizon any more.
Got it. Not really the amount of money in "circulation", but what people are actually able to buy with it. Especially compared to what it was "before inflation".
People generally always figured this anyway, lots of them are not easy to fool.
Regardless of any fancy equations.
Retric · 1h ago
> whatever it is beyond your control that makes it more difficult or impossible o afford what you once could.
For the US you are really describing income inequality. Most individuals got fucked over a few are doing wildly better than ever. On net the overall economic output has been going up overall and per person since the country was founded, it’s simply not ending up in regular people’s hands.
Don’t forget the inherent march of technology where indoor plumbing > radio > TV > AC > cable > internet > cellphones > smartphones have all slowly been assumed to be something most people can afford. Similarly the standards for education, healthcare, homes, etc are rising faster than inflation because the standards keep rising. People aren’t buying modest 1bathroom 2 bedroom homes like they used to so yes those mini mansions cost more.
> deflation
Inflation becomes the new nominal.
If everyone has 2x as much money and things cost 2x as much forever that’s not deflation that’s just the new normal. For prices to fall you’d either need more economic output or less money in the economy.
Of course the extra money wasn’t evenly distributed, but again that’s income inequality…
FollowingTheDao · 8h ago
> big ships don't turn on a dime
No, but Trump is trying to turn the US ship in a dime, and like this aircraft carrier, we are about to drop a ton of money into the ocean...
Ironically, replacing multi-million dollar aircraft that 'fell into the sea' is part of what keeps the american GDP so high.
nxm · 5h ago
and keeps world trade safe and economy rolling, without the world paying for it.
rtkwe · 7h ago
It's wild to me how much the markets recovered with every little pause or extension. To me it feels like they're wildly optimistic that he'll back away from the cliff but I have strong doubts.
tbirdny · 6h ago
The jumps are short squeezes. You get the biggest up days in a bear market. When everyone is shorting and buying puts, if it starts going up a little bit, many of them cover, and to cover they have to buy, so it goes up.
ManlyBread · 6h ago
I wonder how much algorithmic trading affects this and whether these changes are just results of certain headlines being interpreted by some computer programs.
the_duke · 8h ago
A LOT of the typical financial analysts/pundits where definitely not expecting this - or at least not saying so out loud.
The chorus was slower growth in Q1, boosted by frontloading of purchases, with the real consequences only emerging in Q2 or Q3.
SideburnsOfDoom · 6h ago
This "chorus" prediction could be quite correct, just a bit too optimistic across the board.
fundad · 7h ago
In hindsight, it looks like a pump-an-dump scam.
deng · 8h ago
> This was the expected result.
You may have expected this (and if so, I hope you bought some good PUT options), but most economists certainly did not expect this already for the first quarter. On the contrary, there was more the expectation that because of the looming tariffs, people planning to buy larger goods this year would rather expedite the purchase and do it now to avoid rising prices later, leading to a boost in orders. It is quite probable that this has actually happened, and that makes this number even worse.
justinrubek · 7h ago
I am one of these people. I've been in terrible financial shape for years, and fairly recently, things have started to improve. I've chosen to deploy a fair amount of my savings to acquire things I need (and some wants, of course) under the assumption that they will be more out of reach in the future. It feels bad to do so, but it's not worth the risk to not.
dragonwriter · 5h ago
> You may have expected this (and if so, I hope you bought some good PUT options), but most economists certainly did not expect this already for the first quarter
Yes, they did, and the Atlanta Fed GDPNow estimate for Q1 has been negative since, IIRC, mid-February. That in Q1 we were likely in the first quarter of a significant recession that would get worse if some way out of the planned tariff apocalypse wasn't found was a widespread perception.
ActorNightly · 5h ago
Over the past years, its pretty clear that NOBODY really knows what they are talking about when it comes to economy. This is why all future forecasts are meaningless as well.
coldpie · 7h ago
> most economists certainly did not expect this already for the first quarter
For me personally, I've largely stopped buying non-required stuff. Not because of price increases, but because I'd rather have the cash on hand to help me & my friends to survive the next few years. Two of my friends lost their jobs in the Trump job cuts, and many of my friends are in less secure financial positions than I am. I'd rather be able to give them some cash than buy stuff I don't need, so I'm hanging on to my savings for now. Dark times ahead, and cash will be more useful than another guitar or whatever.
tomrod · 7h ago
Remember too that, for systemic collapse like this, things happen slowly, then all at once.
ActorNightly · 5h ago
I don't think there will be a full on collapse, because there is still underlying value in US (especially places like California that have GDP higher than some countries).
There is a lot of discussion on Reddit on empty ports etc. It sounds quite scary.
I suppose one silver lining is people ordering less crap? Might be good for the environment, just like during COVID. But a lot of businesses and people are going to be hurting :( As usual, people with cash will end up buying properties, businesses and other assets for pennies on the dollar.
marcosdumay · 3h ago
I don't get the empty ports narrative.
Yes, there have been photos of empty ports. But there number of ships headed into the US hasn't fallen yet¹, and tax changes take a up to a few months to reflect on the arriving trans-continental traffic.
So, are those some ports specialized in short distance commerce? Maybe domestic commerce?
1 - They notoriously have recently started to leave half-full. What means they'll need less time at the ports by June. That shouldn't make a difference now.
rchaud · 7h ago
> I suppose one silver lining is people ordering less crap?
By government decree. What other decisions should government make on our behalf?
saithound · 5h ago
Levy war, conclude peace, contract alliances, establish commerce. Also, mandate schooling, mandate vaccinations, forbid polluting the environment, set clocks forward, and various other acts.
Governments exist so that we can coordinate doing things that individually we couldn't do or wouldn't wish to do. It's us.
The problem with the tariffs is not that they're decreed by the government that your fellow citizens elected, it's that they're counterproductive to the extent that they're causing a recession.
SideburnsOfDoom · 7h ago
Yep, the empty ports reflect ships that set sail weeks ago. Expect slow / empty ports and effects of that to become more widespread in the USA in May.
Even if the situation was reversed tomorrow, ships cannot arrive until weeks later. I've seen "60 to 90 days" given, but I think this is time for the whole supply chain, not just port-to-port ship time.
And the situation won't reverse tomorrow. It's now at a place where neither US or Chinese leadership can change tactic without "losing face" badly.
This bad 2nd quarter is locked in. Likely much longer than that.
matthewdgreen · 7h ago
It’s worse. Even if the tariffs go away tomorrow (and Trump is currently indicating nothing of the sort) there will then be a frenzy as importers fight over the limited freight capacity. You should expect container prices to soar, the same way they did during COVID. No idea how long this will go on for.
SideburnsOfDoom · 7h ago
The USA elected a president who promised to impose tariffs. So they're going to get tariffs. As the quote goes "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."
As for China, I mentioned that it's now that they feel disrespected, and it's about "face".
That's why I'm sceptical of the USA leadership's claims that China is calling up now to negotiate trade, which China denies (1). Why would they call? The ships not arriving is the negotiating statement. That message has to first sink in, in clear terms. Which it should in May and June
I don't understand this "saving face", disrespect logic. Whose "face" is being saved here, by digging in? Is face-saving (what does that even mean in global politics?) so much more important over the livelihoods of millions of people, global economy (and peace which depends on economy) etc? This whole thing is bizarre...
matthewdgreen · 4h ago
I think what China wants here is some kind of durable agreement that they can base plans on. What they (and unfortunately, we US folks as well) are getting right now is extremely unpredictable. The tariffs are on one week, they’re paused the next, they’re 145% tomorrow, they might be half the next day. Even official deals that Trump negotiated, like USMCA, have the half-life of Iodine-131. What’s the point of negotiating an agreement if it’ll be ripped up or ignored next week? You have to go into a negotiation like this with the understanding that you cause some pain or the deal won’t stick.
I also think China recognizes that Trump negotiations are largely about dominance and Trump’s ability to convey a narrative that he “out-negotiated” the other guy, rather than an attempt to get the optimal deal for the US. When you’re negotiating with someone like that, maintaining “face” (ie preserving your position of respect within the negotiation) isn’t some mysterious Chinese concept: it’s just addressing Trump on his own terms, ie understanding that he only respects strength.
SideburnsOfDoom · 2h ago
> I don't understand this "saving face", disrespect logic.
It isn't logic, it's emotion.
"disrespectful" is a term that the Chinese officials have used to describe US officials statements (1). I'm not reasoning my way to that term, I'm noting that the Chinese are there.
That and "Bowing to a bully is like drinking poison to quench thirst" (2)
I agree with sibling comment that saving face is it's "addressing Trump on his own terms" but I wouldn't say it's "just" that. It's also universal human psychology to react defiantly, expressed in regional idioms.
I agree that it's bizarre that it ended up there, nevertheless this is the USA's "art of the deal" working out as well as it's going to. With China calling the bluff.
>There is a lot of discussion on Reddit on empty ports etc. It sounds quite scary.
Reddit is extremely biased toward being anti-Trump and anti-tariffs to a comical degree, so I would take anything written there with a grain of salt.
akudha · 5h ago
Yes, Reddit is biased. That said, they are posting numbers, pictures, facts etc, at least on this topic. Dismissing all those discussions and those with genuine concerns doesn't seem wise either
slashdev · 8h ago
People and businesses freeze when facing uncertainty. They cut back on spending and keep more cash in reserve in case they're going to need it. I fully agree that this is predictable, and if it drags on, I think it's likely to push the economy into recession (just one more quarter like this and we're there, technically.)
tomrod · 7h ago
Not just freeze. Panic buying is starting - many for toilet paper (remembering COVID), but more for beans and rice.
foobarian · 7h ago
We learned that lesson during COVID already and invested into a Japanese toilet. Problem solved :-D
dfxm12 · 7h ago
This was the expected result for the economic policy that Trump campaigned on and subsequently implemented.
The economy would be doing better if the previous admin's relatively hands off policy was continued.
fundad · 7h ago
Agreed. There is no reasonable argument that the people in charge and those that voted for them actually want economic growth. This was not only the expected result, it was the intended result.
duxup · 8h ago
I'm a little surprised by how much lag there has been, but I suspect a lot of organizations where holding out for some form of "maybe he will change his mind", but as it is Trump and his own people aren't even on the same page about IF they're even negotiating with China or not...
The mantra of some folks response to his more reckless statements has always been "it's just talk", but it seems to not be talk.
this_user · 8h ago
A lot of companies were building up inventory in Q1, which allows them to buffer the immediate impact. Some are also absorbing the tariffs for now, which will compress their margins for Q2. I think most of them are hoping that we might get a resolution in the foreseeable future, and then they at least have some clarity. But if that does not happen, we are going to see the full inflationary impact from tariffs eventually.
spamizbad · 8h ago
It sort of makes sense: If tariffs are here to stay, you're going to have to fundamentally change how your business operates in a way that's not easy (or cheap) to "undo". So you're better off punting until the last possible minute when you know you have to commit to the new reality.
duxup · 8h ago
Considering the reports of imports way down, it seems like retailers and others may be choosing just to not offer product rather than crank up prices in some cases.
That would fit the "can't alter my business that much..." mindset you're referencing I think.
raverbashing · 8h ago
I bet a lot of people in Wall Street are in denial or just playing chicken
this_user · 8h ago
The people in denial are mostly retail traders who keep buying the dip, because they don't understand that the market has fundamentally changed. A lot of the big portfolios, at least the reasonably smart ones, have de-risked and are not eager to jump back in aggressively. But that also means that structural bid that had been underlying the market since 2020 is no longer present. And that means things can fall a lot further and quicker than most people who came into the market after 2020 can imagine.
iamtheworstdev · 8h ago
it's beginning to look a lot like... 2008
xnx · 8h ago
Kind of, but I don't think there's any precedent for the world's most powerful economy performing seppuku.
WorldMaker · 7h ago
The Smoot-Hawley Tariff Act of 1930 [1], where a Republican majority enacted extreme tariffs against President Hoover's almost veto, is sometimes considered one of the smoking guns for how the Great Depression got so bad. That's quite a precedent to be concerned about here.
(Though this version is dumber with the President trying to do it through EOs, which is probably illegal and Congress should probably be much more upset their powers to be stupid are being usurped before their eyes.)
Well... if 2008 were an entirely self-inflicted wound caused by one malignant narcissist who believes himself to be a business genius despite the fact that his understanding of the global economy hasn't evolved since the 1980s or so (and it was already pretty shaky back then).
XorNot · 8h ago
Wall St is obligated to "buy the dip" is the thing - they're in it to make money now, so there's absolutely a ton of people trying to take a cut of the various market rebounds even if they have no confidence in the long run.
They just don't want to be left holding the bag.
apwell23 · 5h ago
seems like stock market and housing market do not give a fuck about 'uncertainty'
ActorNightly · 3h ago
yet.
apwell23 · 5h ago
why doesn't stock market not care about this then?
I got my quarterly report from my RIA. I pay them 1% annually of my holdings which is about 50k. They basically said expect a lot more major portfolio strategy change if the tariffs aren’t lifted. Every paragraph said the current policy is dangerous, in a different way, without attacking trump directly. Been with them 15 years and they’ve never sounded this worried.
Jcampuzano2 · 7h ago
To be honest it seems all kinda by design. It seems Intentional to cause this much disruption that will primarily affect the lower and middle classes portfolios that can't withstand as long in long term economic droughts.
It also leaves more with uncertainty so they get stuck at their current jobs for longer rather than leaving, giving more control back to employers.
Everything implemented seems to be intentionally pushing even more economic inequality and divide between the top and the bottom, and to push the diminishing middle class even lower down on the totem pole.
no_wizard · 3h ago
Trade wars are class wars. This is big business pushing back on labor gains made from the last few years. They can't let labor keep any power or gains because it means we might ask for more instead of continuing to defer to corporate power and the ultra rich.
I expect a wave of bad economic news, followed by a wave of consolidation, all the while prices rising, and toward the end of all this, the tariffs will be fully removed, but the prices will not meaningfully (if at all) come down, and the consolidation will have only further entrenched power at the top
aprilthird2021 · 7h ago
It's amazing how we were our own worst enemy all along. Nothing could stop the amazing American growth story except... Americans
ramesh31 · 7h ago
I think you're crazy as an individual to be holding anything but bonds at this point. What growth, exactly, are you hoping to capture? I'm not living in this lunatic's fever dream world. It's exactly what he wants; for the first and last thoughts of your day to be about what he has done, hoping and praying that he undoes it.
remich · 5h ago
Being all-in on bonds only works if we don't have significant capital flight from the U.S.
It's possible everything is just going to be bad.
csomar · 5h ago
> I think you're crazy as an individual to be holding anything but bonds at this point
What bonds? There is an almost zero chance that the expenses of the US government decrease while there is a good chance that their revenue takes a hit. At some point you can't pay your dues (and no, printing currency is not paying your dues, you are getting hit on your basis).
ramesh31 · 3h ago
Indeed I'd expect just about everyone holding cash is going to take a >10% haircut over the next year purely from the inflation that is about to explode. It's a devil you know kind of scenario.
coldpie · 6h ago
> I think you're crazy as an individual to be holding anything but bonds at this point.
I'm leaving my diversified retirement mutual funds as they are, because that's why they are diversified; but otherwise yeah, I sold all my other holdings during the rebound earlier this month. Not interested in participating in this wild ride.
isitsafeyet · 3h ago
This is why I pay someone who manages billions to take on my portfolio. If you’re smarter than my RIA can I hire you? Let me see your track record first.
ramesh31 · 2h ago
>If you’re smarter than my RIA can I hire you?
I am not. This is almost entirely an emotional decision. The "smart" thing to do from a purely algorithmic statistical point of view would be hold and wait. But I'll happily take my 5% for now, rather than waking up to crippling anxiety every morning about what the orange man is going to do next.
JohnnyMarcone · 6h ago
What is your investment horizon and when do you plan to buy back in?
Also did you take a huge take hit to reallocate to bonds or was it all in tax advantage accounts? Seems more crazy to sell all equities when you have to pay tax on the gains.
What will happen in the market if Trump keeps blinking and folds further, congress takes back the tariff power, Trump loses big in the midterms, GOP loses big in 28, AI ends up being a big thing, etc?
You will eventually have to buy back in and you don't know where the bottom is.
ramesh31 · 5h ago
>"Also did you take a huge take hit to reallocate to bonds or was it all in tax advantage accounts? Seems more crazy to sell all equities when you have to pay tax on the gains."
Speaking entirely to retirement accounts. Taxables are pretty much screwed either way.
>"What will happen in the market if Trump keeps blinking and folds further, congress takes back the tariff power, Trump loses big in the midterms, GOP loses big in 28, AI ends up being a big thing, etc?"
Maybe I will miss some growth. But watching my life's work evaporate on this wild ride is too much to stomach.
>"You will eventually have to buy back in and you don't know where the bottom is."
Indeed, and I don't intend to time it. Not waiting for a rebound. Waiting for sanity.
philipallstar · 5h ago
This 0.3% is the worst thing to happen to the US economy since Q1 2022, when it contracted by a much less reported-on 1.0%.
pcurve · 5h ago
Q2 is going to be bad.
nabla9 · 7h ago
Atlanta Fed has GDPNow forecasting model provides a "nowcast" of the official estimate.
It's currently -2.7 percent.
AnimalMuppet · 5h ago
For anyone else who wonders what that number means, it's a non-official estimate of what the final Q1 number will be. It's not a Q2 estimate.
amai · 1h ago
This is good news. It could be much worse given the chaos regime in the US at the moment.
Mr_Eri_Atlov · 8h ago
Statistically, the best business decision anyone could make in this time of great uncertainty is to await regime collapse.
yalogin · 8h ago
Why did snap not give second quarter projections? How will the economic uncertainty impact advertising? I thought that should be immune to an extent unlike Amazon or Walmart which are directly impacted.
fosk · 7h ago
Two questions for you:
1. Who pays for ads?
2. And if their business is being disrupted, what is the first budget that gets cut?
celsoazevedo · 6h ago
It will be interesting to see what happens in Q2. I assume a lot of people bought stuff before they actually needed to just to avoid post tariff prices.
Gimpei · 7h ago
I’m curious if any Trump voters are starting to feel any buyer’s remorse. The pain from the tariffs is only going to get worse. Soon we will have Trumpflation and a Trumpcession. Meanwhile, auto manufacturers are laying off employees. We are seeing pain with no gain. There is no reindustrialization nor will there ever be through this policy. For every economist except for Navarro, this is quite the own goal. I’m guessing you all were expecting Trump 1. Any doubts creeping in yet?
proof_by_vibes · 6h ago
Never underestimate the power of shame on the human psyche. Many would rather double down on the "reality distortion field" than to admit wrongdoing or poor judgement.
EasyMark · 46m ago
I honestly thought it would be more like 0.8% to 1.0% . The Senate is voting on rejecting Trump's tyrannical taxes today. Let's hope they get some actual bravery to stand up to Trump and shame the House of Republicans.
sillyreason · 8h ago
This is just common sense. Resist the urge of confirmatory bias.
Imports surged in q1 to front-run tariffs. Imports are subtracted from GDP. Therefore GDP shrank.
Imports do not subtract from GDP. Reasoning about the economy from an accounting identity does not lead to useful knowledge. Historically times of increasing imports are also times of increasing GDP. https://www.noahpinion.blog/p/imports-do-not-subtract-from-g...
A reasonable question here is "did companies spend down petty cash to import goods in Q1" (no change to GDP), or "did companies stop investing and producing domestically in order to afford to import more goods in Q1" (reduced GDP).
boplicity · 6h ago
> Imports do not subtract from GDP.
Whether or not that's true in reality, it is true in the report that caused the headline.
From the article:
> A logistical consideration makes Wednesday’s report difficult to interpret: Imports subtract from the Commerce Department’s calculation of GDP, since they represent spending on foreign-made goods and services.
timerol · 2h ago
They do subtract as an accounting identity, but reasoning from that makes no sense. My net income can be calculated as how much I consume plus my net savings. I = C + NS. So withdrawing from savings "subtracts from net income" in the same sense - ie, it has no explanatory power. If I do a home remodel, spending a bunch of saved up money, the way to understand that situation is not "my income would have been higher if I had not withdrawn from savings".
crazygringo · 3h ago
But the point is that this can't be responsible for the reported contraction, correct?
Because imports are only subtracted from the higher spending on imports in the first place.
Conceptually, imports are not part of GDP. Imports are never subtracted from GDP. But to calculate GDP, part of that is to take total spending (a number larger than GDP) and then subtract spending on imports.
So the 0.3% contraction in GDP has to be a real thing. Unless there's some other deeper technical discrepancy, or some kind of time lag where spending on imports and the import subtraction are being counted in different quarters?
jeffbee · 7h ago
Importing into inventories absolutely does decrease GDP. If you look at the Q1 stats some of them are normal, but imports and inventories had huge weird effects and government contribution was negative for the first time in a while.
Noah Smith is a galaxy-scale idiot, by the way.
timerol · 7h ago
Importing into inventories counts as both investment and import, resulting in no net change to GDP. Consumers importing for themselves counts as both import and consumption, resulting in no net change to GDP
LatteLazy · 4h ago
One way of counting gdp is to count everything sold and then subtract imports. This is because imports are inherently included in everything sold (if I buy a widget for 10usd from abroad and use it to make an 11usd product, that’s 1usd of gdp, not 11).
So when imports are subtracted that doesn’t mean gdp is “short” imports. It means it isn’t affected either way by imports.
FollowingTheDao · 8h ago
And of course, right on cue...
Trump blames Biden ‘overhang’ after GDP shrinks in first quarter, says growth will ‘take a while’
Funny, I did not hear him talk about how the economy would tank and people would have to "sacrifice" or growth would "take a while" when he was running for president.
eagerpace · 7h ago
Fear of a minor pain is not a good reason to not make a change. That’s how growth works.
dayvigo · 4h ago
If 1929 was a minor pain, then what's a major pain?
methuselah_in · 8h ago
I guess this was expected when someone thinks that he can do everyone else as he wishes.
neogodless · 8h ago
I don't know if this has a typo, and I don't want to think about it too much.
user9999999999 · 4h ago
literally handed an economy which was recovering quicker than the rest of the world...
pyb · 8h ago
...and the new policies haven't really taken effect yet.
wnevets · 7h ago
are you great again?
lukashoff · 7h ago
Play stupid games, win stupid prizes.
user9999999999 · 4h ago
"listen up liberal"
light_hue_1 · 8h ago
The Constitution says Congress sets tariffs. The law Trump is using to do this doesn't even contain the word tariff.
Can we please stop this insanity? We had a great economy before this guy messed with it.
This is why we keep economic policy in an independent agency instead of giving it to politicians.
pacoWebConsult · 8h ago
It's been about 100 years of congress abdicating their responsibility and delegating rule-making to agencies under the control of the executive, as well as the federal government coalescing power through the commerce clause and various other means. The US Government was never designed to be this top-heavy, and certainly not designed to allow one branch this much control. Natural consequences of a congress asleep at the wheel. More focused on quick public opinion wins through ham-fisted rules without having to actually write and maintain legislation than reducing the influence and power of the federal government and ceding power back to the states as designed.
ceejayoz · 8h ago
Congress lawfully delegated some decisions to the executive, in 1934 - https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act. They can undo that, if they want. I suspect they will, but only when it’s well beyond abundantly clear they need to.
threeseed · 8h ago
Congress delegated almost all decisions to the Executive.
That’s how the system works given that legislation is high-level, often vague and sometimes riddled with errors. Congress sets the goals and Executive i.e. public sector makes the decisions about how to implement it.
whatever1 · 8h ago
The Congress has not challenged the president, and very likely would vote for the tariffs anyway as the majority would support anything the president would say.
All the big corporations & big Money also have not challenged the president.
This is People’s & Money’s will.
fads_go · 7h ago
> very likely would vote for the tariffs anyway as the majority would support anything the president would say.
Very true, however,
1) it does slow the process somewhat and therefore also reduces total throughput, this keeps government more stable and also gives more time to respond. Slow and stable may or may not be the best way to run a company, but the government is not a company.
2) It would put the individual congresspeople on record, and they are somewhat more dependent on/accountable to their local population. If for example all the farmers realized that the tariffs would destroy the farmer's livelihood, we could see Iowa withdrawing suport.
The US goverment was set up the way it is for reasons.
The Republican constituency has begun to elect people on trial or even convicted of rape and pedophilia. It's too late, the well has been poisoned and a third of the population (with disproportionately powerful votes) have completely and totally lost their minds.
whalesalad · 8h ago
We are only 100 days in. It’s going to absolutely get worse.
readthenotes1 · 8h ago
The article is paywalled, so I cannot see if it mentions the controversy over the effect of all the gold that was brought into the US in 1Q.
Gdpnow is a prediction model (that has an alternate model that accounts for the gold move).
This is the actual calculation.
The uncorrected gdpnow number was too pessimistic while the human consensus was too optimistic. The corrected gdpnow number was pretty close (though last week nosedived too much). The early April gdpnow corrected number was bang on.
gymbeaux · 8h ago
[flagged]
beng-nl · 8h ago
“Killbots have a preset kill limit. Knowing their weakness, I sent wave after wave of my own men at them until they reached their limit and shut down.” - Zapp Brannigan
gymbeaux · 2h ago
Careful, relevant quotes are censored here. Too low-brow.
monkeyelite · 7h ago
When you find out the stock market isn’t just infinite risk-free money.
PLenz · 8h ago
I think about this line a lot when I read about what Trump and Musk are doing
No comments yet
jqpabc123 · 8h ago
Not to worry, the emperor will fix it --- by replacing the people who compile the numbers.
Any disagreement is a "hostile and political" act subjecting you to deportation without due process.
agumonkey · 7h ago
It's 50/50 on this possibility. There's an interview trending right now where the host is repeating to the 47th resident that "no what you say is not true, the evidence was faked/photoshopped" (and DJT had nothing to say beyond "why are you not saying yes to me, I'm potentially making you promoted and you're not being nice enough to me"). Chances are that people see that there are no clothes and won't bend over to sustain the lies.
That was a mind breaking interview fwiw. It really seems like the right wing is unable to keep track of the lies, and are self deluded by their ecosystem.
What do you expect to happen when you have a compulsive liar say whatever is on his mind and then an entire ecosystem repeating what he said as if it were fact.
agumonkey · 6h ago
They tried to make a 3rd reich sequel but like all sequels, it's not selling well.
tstrimple · 4h ago
They don't need to keep track of the lies. That's part of the power of flooding the zone. It also helps because there is always something their supporters can point to that they like. It literally doesn't matter how contradictory the statements are. These are people who elected someone who promised both massive tariffs and to lower the prices on goods.
nashashmi · 5h ago
I remember when we used to make fun of the Iraqi information minister. Never understood why or how he could be such an obvious liar.
Now we know what circumstances led to his position and performance. Now we Americans are familiar with the new situation.
snarf21 · 8h ago
We are definitely entering the era of Newspeak and Thoughtcrime. :sad:
Workaccount2 · 8h ago
"We found the department of economic reporting was full of wokes..."
ilrwbwrkhv · 2h ago
Just wait for the sniffling Marc Andreeson to tell you how it's just time to build now and it's all smooth sailing and blue skies.
To be fair, the government has a long history of changing how key metrics are measured to suit their needs. The CPI is pretty consistently changed to keep inflation rates roughly on target.
jmull · 7h ago
To actually be fair, you'd assess the level of politicization of the numbers the government produces.
While it's true that both 10 != 0 and 100 != 0, you are certainly off track trying to equate 10 and 100.
_heimdall · 1h ago
How do you explain a large deviation in magazine prices as listed in the CPI compared to the actual prices printed on the cover? Or swapping out steak for lesser cuts or ground beef?
You can claim that my assumed intent behind how the CPI is adjusted over time is a false equivalence. I'd argue with you there, but what absolutely is false equivalence is a pound of steak and a pound of ground beef.
kgwxd · 7h ago
I think this might be my favorite comment of all time.
illiac786 · 5h ago
I think it’s called “false equivalence”. I do prefer the mathematical form though.
Dumblydorr · 7h ago
“To be fair”, ok provide data. Do you have evidence that they consistently changed metrics to keep inflation on target? I only know of one change in the recent years and I don’t know if that even went through.
John23832 · 7h ago
Examples? There are definitely complaints about how CPI is calculated (particularly that it does not include housing), however it's not consistently changed.
goodtakes · 7h ago
I think that's far different that what's happening today. The other day Amazon was accused of being hostile and "political" for simply showing tariff costs in a price breakdown.
lawn · 7h ago
> To be fair
No, you're not being fair.
You're being disingenuous trying to equate changing the CPI with a dictator firing people for presenting numbers not consistent with his lies.
fuzzfactor · 4h ago
Recent years don't make a "long history".
The earlier you course-correct, or OTOH deviate, the more outsized the effect on your destination.
Remember when GNP was fired and replaced with GDP? And how it got that way?
That should be easy to pinpoint.
If not, you pretty much had to be there, and it would take some math back then that wouldn't do you any good at this point now.
pknerd · 8h ago
It was already a bubble. It is correcting now, knowing the facts that US gave away all jobs to China.
0xy · 7h ago
March jobs numbers were significantly better than expected. 70% better than estimated.
throwacct · 8h ago
This. Sooner or later, this had to happen.
amazingamazing · 8h ago
This is nothing. Wait until China figures out AI and India finishes taking the Software Engineering jobs.
phkahler · 8h ago
I'm starting to think current measures of "the economy" are bogus. It can't grow indefinitely - that's probably just inflation. If you measure productivity in hours rather than dollars, inflation gets a more direct measure: how many hours do I need to work to buy food?
Making a better product than last year is also a strange way to claim growth.
What would be a better measure?
timerol · 7h ago
Good news! The average worker has gone from spending about 25% of their paycheck on food in 1930[1] to about 11% today[2]. This is during a time period where the average worker has decreased their total hours[3]. This is confounded by more people entering the workforce, but the earliest data I can find suggests that we've gone from 58% of the population in the workforce in 1950 to 63% today[4].
[1] https://flatworldknowledge.lardbucket.org/books/beginning-ec... (Note that "Food" is "food as a percentage of income", and "eating out" is "eating out as a percentage of food" which makes the chart look weird. This means that the 11% number below includes the cost of the private taxi for your burrito.)
I don't believe we work less hours now. Something about that chart seems off. Wish I knew the methodology of its calculations
WorldMaker · 7h ago
I'm more concerned about the graph attributed to flatworldknowledge.lardbucket.org. I've lived on the internet long enough to know a shitposter when I see one and that's a whale of a URL that every fiber of my body says never to click. I know it is a logical fallacy to dismiss an entire argument simply by association with a crank, but that's my gut reaction to that post.
timerol · 7h ago
... I didn't even notice the name. That site is an archive of a collection of textbooks that were Creative Commons-licensed before 2012, dedicated to the memory of Aaron Swartz. Evidently https://2012books.lardbucket.org/books/beginning-economic-an... goes to the same place.
I feel like I just got pranked by SEO somehow
timerol · 7h ago
Alas, the government provides no transparency into these calculations. What can a concerned citizen do, other than say "I don't believe"?
wait, are you saying they actually don't or is this some form of sarcasm? because the link clearly shows, to me at least, that they document the methods publicly
sillyreason · 7h ago
Why do you think the economy can't grow indefinitely? Living standards have skyrocketed in the last 200 years. Most people no longer die of appendicitis or dysentary in the USA. We have a/c now. And unlimited access to free information.
The backbone of what you are saying is planned obsolescence and other predatory practices
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rthomas6 · 8h ago
You can look at per capita GDP in inflation-adjusted dollars
mclau157 · 7h ago
Few people are concerned about growing indefinitely, more people are concerned about can it grow until they retire
sorcerer-mar · 8h ago
GDP was always a horseshit measure (the inventor of GDP essentially says so *in the paper in which he invented it). But it should still be extremely worrying when ~every possible indicator points toward bad.
Assuming independent, the Fed responsibility of lower inflation is higher than employment. They might tolerate some inflation for employment but we can only tell after the effects of tariffs kick in and we see the new inflation numbers.
One would have to be a moron or literally mentally ill to "believe in these policies,"
either having no understanding, or, having invested in some delusional confabulated make believe universe where the fundamental order of our civilization is collectively reworked (including by enemies and competitors at every scale) in a context of rapidly degrading climate, to suit your ideology.
From Wikipedia: “He was hired by Soros Fund Management, eventually becoming the head of its London office. In this role, in September 1992, he was a leading member of the group that profited by $1 billion on Black Wednesday, the British Pound sterling crisis.”
Trump says anything he can think of and then whatever people respond to he goes with.
That + the last person to discuss something with him are his two leading decision making policies.
Playing devils advocate, I think most people thought the incoming tariffs were going to be a lot smaller, also maybe assumed there would be an industrial policy.
Followed by 2021-2024, where all the adults in the room were talking to the press, explaining how hard they had to work to convince Trump why he shouldn't carry out his worst ideas.
Followed by all of those people getting fired in January of 2025, and replaced by lickspittles, sycophants, and other flavors of yes-men.
There's no way that someone who surrounds himself with the kind of cabinet that he does, or reacts to criticism and feedback the way he does is going to be making good decisions.
[0] https://www.cnbc.com/2025/04/30/trump-trade-navarro-us-gdp-d...
Realistically we'll see a few giants pivot to less quality materials, many large and medium size businesses reduce their offerings, and a large amount of small businesses dissolving or filling for bankruptcy after not being able to weather the abrupt, completely voluntary supply chain disruptions across various industries.
Unfortunately we got lucky, the big players in REO weren't ready to 'close' that many packages last time. My first devops role was at a company that was working with big players to make sure next time this exact scenario presented itself the big guys will be able to deploy their cash to gobble these things up.
That's what they told me when I bought my $250K condo in the early 2000's. Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K.
Never forget: "The market can remain irrational longer than you can remain solvent"
And what's it worth today? What is the average annual price appreciation since you bought it?
Watching "home value" month-to-month is pointless.
As far as your "month to month" comment - I'm not a real estate investor. Just a guy, with a growing family who went to sell his house in 2008 and was told it was worth less than half of what I paid. It was a setback, we survived, we were fortunate.
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It is right that it is not likely a credit crisis that will be the trigger next time.
But it could be hyperinflation - which would de-facto crash the housing market.
Right now the PE value for the housing market is really high, and it is not likely to continue up forever.
The next step up "problem" is that the income curve has flattened greatly in the last 75 years. So there are many more high earners mixed in that they are carrying "regular home" prices up with them.
In 1967 lower/middle/upper class ratio was 36%/54%/10%
In 2019 lower/middle/upper class ratio was 25%/41%/34%
The middle class is shrinking because people are getting richer, not poorer. That's the part you never hear people say. Probably because they don't even know it and just assume everyone is broke.
I can only imagine now, after the pandemic money shower (not stimulus checks), that this effect is even greater. Hell upper class might actually be at parity with middle class now.
[1]https://i.postimg.cc/NjKLYpjF/ulc2on31apqc1.jpg
That chart says it’s for households, not individuals so for the time scale shown (70s onwards) all you’re seeing is that 1 earner households became 2 earner households.
The stuff about upper class growing does not follow from that. Poor analysis.
Nah. Climate change is real, and humans can absolutely affect it.
Not enough good places to live? Make new ones. It takes decades or centuries but it can be done.
They're doing it wrong. I'll point to places adjacent to the sahara building a "green wall" which is turning parts of the sahara back to a savannah and replenishes the water table.
https://www.youtube.com/watch?v=xbBdIG--b58
Andrew Millison's youtube channel has several videos on the subject, and related subjects in other parts of the world too.
https://www.youtube.com/@amillison
Pretty much all the good spots for cities have already been claimed, hundreds of years or even millennia ago. These are the spots people live in, and the spots people want to live in (as evidenced by ever increasing cost to live there).
Harbors? No. Trains and airplanes exist.
River ways? Los Angeles and California have demonstrated, with the LA river, that rivers can be constructed. Also, trains and airplanes exist. Wanna complain about no water? Well that's where land revitalization comes in.
Mine-able resources? Perhaps. There are lots (!) of resources in deserts that aren't mined. I also argue that food is basically a mine-able resource. I also argue that many resources can be imported instead. I also argue that plenty of people can work remotely without ever working a field or a mine.
On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much.
The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.
Last year I built a house for ~30k shell, about ~60k with utilities and everything inside of it. My own labor.
Of course, there are only a handful of counties that will let you do that without licenses, or a building plan, or inspections at times that preclude holding a job. Because there is always some self-righteous actor, screaming at the rooftop that their neighbor is going to kill the whole neighborhood in a fire, no matter that housing has been virtually completely unregulated for owner/builders in my county for 2 decades and none of the hysteria people warned of came to fruition.
The plus is all these people screaming for expensive regulations are absolutely scared shitless of my area, and do not live here. Which is nirvana.
Most people aren't building insanely stupid and dangerous homes because in most places they legally can't, and very few work specifically just in your county, so they just do what they mostly do, which is mostly safe and up to code. Maybe they cut a few corners. Probably a few weirdos doing entirely their own thing.
By the same token, if your weird neck of the woods made seatbelts non mandatory, it wouldn't mean everyone takes them off as they drive through, so the subsequent maintained levels of vehicular loss of life would say nothing about the increase of safety seatbelts provide. A few weirdos might be taking the belt off, though!
Still, it'd only take one weirdo's entirely preventable and lethal to their kids house fire/car crash to prove them idiotic and probably get the law changed.
I would posit one of the best things we could do to save children would be to completely deregulate the housing industry and eliminate trades licensing. This would not only enable housing accessibility but more money for education, healthcare, and good food for kids.
https://www.youtube.com/watch?v=r9j1Wz89vdc
Supposedly they don't need any permits. I didn't know there's something called roof grade spray foam.
But it's very regional. Some areas will continue to see rising or stable prices.
I'd say that it changes the situation a little, but not everyone is able to work remote yet, so there's still the draw toward large city centers like you say. But personally I've met plenty of people who ditched their big city for the midwest as soon as they got approval to go remote. When their companies told them to go back to the office, they quit and found another job
If you’re not an American, you don’t get to use bad American logic. ;)
Not voting was a vote for trump. Low turnout benefits trump. Americans had the choice between trump and a black woman, Americans chose trump.
Americans are so stupid and refuse to look at ourselves in a fair light. It's so dumb and the rest of the world is laughing at us.
"You can always count on Americans to do the right thing, after they've tried everything else." What this quote means is that Americans falsely believe we're exceptional and different when in reality we aren't, but we'll waste a ton of time/resources before we admit it.
Trump's second term has given the world a wake-up call. Although Trump will likely be gone in four years, the MAGA movement could be long-lived and always four years or less away from taking over again. Even if Trump backs down on tariff's and expansionism during his own term, trust in the U.S. as a military ally and economic partner won't be restored quickly or easily.
What we're now seeing is world military alliances and the economy rewiring themselves, not to be subservient vassals of a hostile U.S., as Trump hopes, but to bypass the U.S.. If trade barriers around the U.S. are going to come and go in an unpredictable manner, then business will respond by building outside of that uncertainty. Manufacture of some low-end products may be onshored to the U.S., but only to meet domestic U.S. demand if and where that is high enough. It doesn't make sense to move manufacturing inside a region with unpredictable trade barriers if it's going to serve a global market.
Take a look at the election results in Canada. What was expected to be an easy majority win for the Conservatives just a few months ago came out as near-majority for the Liberals. Both parties campaigned on anti-Trump measures that include increasing East-West trade/infrastructure within Canada, diversification of the economy to rely more on Asian and European markets, and reduced spending on defence products from the U.S.. This is long-term policy that will make Canada less vulnerable to future MAGA'ruptions, even long after Trump is gone. Trump could do a 180 tomorrow, but the impact of what he's already done will last for decades at the very least.
After the Trump tariffs in the first term, US sales of Soy Beans to China never recovered. They switched to Brazil. What if the rest of the world just start buying fewer treasury bills (or paying less for the return) from now on? It is possible this could be worse for the USA than other developed countries.
Trump is screwing you over and he's doing it publicly. He's selling meme coins and selling your government. He dismantling the US for his personal profit and you are cheering.
No but we are so far apart on foundational beliefs about the state of the country over the last 20ish years that it really isn't worthwhile for most of us to discuss this anymore.
One side says we're saving the country, the other side thinks we're destroying it [another side thinks the first two sides are both crazy]. It's time to see who's right.
https://www.gregpalast.com/trump-lost-vote-suppression-won/
I am posting an article that states there was disenfranchisement on a scale large enough to tip the election. You can find other sources than just this article.
This is just us pulling an initial vacuum, drawing the real contraction in.
This is actually buoyed by buying ahead of the tariffs, and the tariffs themselves haven't had a chance to take effect yet.
The economic nosedive is just beginning.
The same guy who got re-elected? Early term approval ratings mean less than nothing.
Just because it's someone's profession doesn't mean is is or should be everyone's profession.
Actually, the way the report works is the opposite. The increase in purchasing ahead of the tariffs counted against GDP growth, in terms of how the numbers were calculated in this report.
To be clear: Trump is a disaster, and I disagree with his approach.
I was jumping ahead too quickly to overall economic activity (which is going to drop).
Most of the value of an iPhone is recorded as American GDP because American IP and software went into it, Apple is keeping a lot of the price for the phone, and only sending a bit off to China for assembly (and a larger bit off to South Korea, Japan, and Taiwan for components that China is assembling). What remains is still a lot of American GDP.
A small business who is contracting China to make the thing that they then sell is also generating a lot of GDP. Yes, they send some percent off to China to make the thing, but a majority is GDP generated here in the USA (the small business does the design, marketing, sales, etc...). If they go belly up because of the trade war (very likely, since no one else can make their thing, and before China developed this capability, making the thing wasn't even possible!), that GDP is gone, the people that small business was employing are unemployed.
The increased purchases should not decrease American GDP, unless consumers are buying directly from China using Temu and are not buying at Walmart.
If you take that money you would have spent buying something in the US that has imported parts (like its assembly), and instead say go out and by a DJI drone on TEMU, yes, you've decreased GDP. If you simply have no money to buy anything because DOGE decided to cut your federal job, then that would also decrease GDP.
Now I hear the GDP contacted? So many mixed signals.
It's very rare that prices going down is good. It usually results in a spiral that is negatively self reinforcing. Price stability is what you generally want.
The price signal cannot function if it can only move in one direction.
Eventually permanently decreased supply can also drive prices back upward, sometimes faster, as less competition means more supply-side bargaining power.
(Permanently decreased suppliers of oil may be a win for the planet in the long run, hopefully, but breaking the entire economy is perhaps the dumbest way to try to do that.)
For example at least 4 times the President said a couple weeks ago that gas in 3 states hit $1.98/gal, and he also said a couple weeks ago that egg prices are down 93% since he took office.
No one has been able to find out where that cheap gas and those cheap eggs are, and so some people are beginning to suspect that the President may have been mistaken.
Leading indicators, like housing and manufacturing, are not looking promising.
https://www.atlantafed.org/cqer/research/gdpnow
> This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th. Tariffs will soon start kicking in, and companies are starting to move into the USA in record numbers. Our Country will boom, but we have to get rid of the Biden “Overhang.” This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!
I'm curious how long he will get away with denying reality like this. The economical situation is likely to have much more immediate effects on people that almost every other topic. It should be much harder for him to do his usual thing once the economy really crashes, but who knows how his supporters will actually react.
It's all about the framing. Prices up, wages down during Biden? Armageddon and only Trump can save us.
Prices up, wages down during Trump? It's okay, we're making an investment--we tolerate being worse off today to be better off tomorrow. Look at all the trash Trump's taking out! It's only going to get cleaner!
One test will be how much pain we've endured by the time midterms roll around, and how many people sour on the current admin and elected reps.
Another will be in 3.5 years, where we will find out if the joists and beams raised by our democracy's framers were solid enough to last 250+ years.
- A growing trade deficit can reflect a robust economy. As U.S. consumers and businesses increase spending, imports rise, leading to a higher trade deficit. Simultaneously, higher U.S. interest rates attract foreign investment, strengthening the dollar and making imports more affordable.
- The U.S. trade deficit is counterbalanced by a capital account surplus, meaning foreign entities invest heavily in U.S. assets. This influx of capital supports economic growth, funds government debt, and contributes to job creation, particularly in sectors like manufacturing.
- Trade deficits allow U.S. consumers access to a wide array of affordable foreign goods. This access enhances purchasing power and living standards. Moreover, U.S. firms benefit from importing competitively priced intermediate goods, boosting productivity and innovation.
- While the U.S. often has a goods trade deficit, it maintains a surplus in services, including finance, education, and technology. This surplus offsets the goods deficit and underscores the U.S.'s competitive advantage in high-value service sectors. Wikipedia
- The U.S. dollar's status as the world's primary reserve currency enables the country to run trade deficits without immediate financial repercussions. Foreign nations hold dollars to facilitate international trade, which supports U.S. borrowing and spending capabilities.
- Concerns that trade deficits lead to job losses, especially in manufacturing, are often overstated. Research indicates that factors like automation and technological advancements have a more significant impact on employment trends than trade deficits.
- Trade deficits foster global economic interdependence, which can enhance diplomatic relations and geopolitical stability. By being a major importer, the U.S. strengthens its ties with exporting countries, promoting mutual economic interests.
While trade deficits can present challenges, they also offer benefits that contribute to the U.S. economy's dynamism and resilience. It's essential to consider the broader economic context rather than viewing trade deficits in isolation.
Maybe a naive question, but are only goods considered? I had always assumed the 'deficit' was "money in minus money out", and thus selling services, etc. would be included in it.
As an example Tesla the company didn't exist 30 years ago. Say you got some shares early you can sell those to the Chinese in return for their widgets. That kind of thing can go on and on.
Conservatives rightly used to be concerned about budget deficits -- but trade deficits are entirely different. Just because they share the same word does not necessarily mean they are the same indicator.
I would be happy to see America as a net exporter, but I genuinely have to ask ... what is it that America - the richest country in the world - is going to make that other people want regularly aside from mass agriculture, specialized services, and advanced manufacturing??
Our domestic manufacturing base is thankfully not geared to produce a bunch of plastic crap to try to compete with China. And if you want to onshore critical supply chains -- great -- but again that has nothing to do with the idea of a trade deficit.
Genuinely looking for a thoughtful engagement here
Consevratives used to (and still do) talk about budget deficits to derail conversations about programs they are opposed to but which are too popular to directly attack, but—then and now—continued to run up massive deficits on their own priorities, including shifting tax burden off of their wealthy benefactors.
It just so happen that tax breaks and military cost much more money then what they pretend save.
The middle class and poor are focused on buying food and gas, not on their stock portfolio.
Yeah, that was me last June. Thankfully the spouse is still working.
59% of Americans say Trump is making the economy worse [0]
[0] https://www.documentcloud.org/documents/25920872-rel5b-econo...
In short, it must get worse before it can get better irrespective of what happens next or when.
So when the tariffs can change every day and you don't know if they'll be around in 5 years, do you commit millions to building something that doesn't pay off until 5 years from now?
Nobody's even building them right now. CAPEX and industrial investment have declined in recent months. (!!) They may even drop further. So it seems that if the aim is to revitalize America's industrial base, the present strategy isn't working, but is having an opposite effect.
https://fred.stlouisfed.org/series/PRMFGCON
Talk to anyone in industry and they'll say "we on/near shored because Covid supply chain problems taught us a lesson" or something along those lines. Those investments were just starting to bear fruit in the past few years.
Edit: And before anyone tries to put words in my mouth, this is neither an endorsement of "Trumpenomics" nor a dispute of the prior commenter's statement about them.
Credit should go to all factors, but sorry it's foolish to think orchestration of a trillion dollars into exactly these sectors wouldn't play a huge role.
Of course. I don't think many saw coming that we wouldn't be on friendly trade terms with Mexico and Canada.
> and I'm going to bet the trillion dollars in incentives played a far, far bigger role than the delta in people's resilience estimations
Which have you seen companies respond more swiftly to, opportunities to make money, or disruptions in their existing ways of making money? Which gets the CEO on the phone faster, a potential business deal or a prod outage?
Just about everyone experienced the latter during Covid. "Yeah we'd love to do all the electrical for your covid construction boom fueled McMansion development but switchgear is back ordered 18mo, sorry", and so on and so on across many industries. And they're all real salty about it.
I'm sure the incentives added fuel to the fire, but the way the Chinese economy stayed disrupted for longer really pained a lot of people in the US who depend on stuff from there to make money here.
My point is that near-shoring is the obvious thing to do under the rationale you're talking about, but actually wouldn't show up in that chart.
Here's a comparison of the US vs Europe (which experienced similar China shocks):
https://www.atlanticcouncil.org/blogs/econographics/the-ira-...
https://www.bloomberg.com/news/articles/2025-03-31/us-busine...
The issue is that the aim clearly isn’t to revitalize the industrial base. If it were, then the tariffs wouldn’t be removed after negotiating with other countries. Since other countries can make deals to reduce the tariffs on their products, then it’s clear that the aim isn’t to get Americans to build things at home. The tariffs are clearly some kind of brinkmanship game to pressure other countries into making concessions.
But "everyone" doesn't mean everyone because everything on this list is exempt from the global 10% tariff and recriprocal tariffs (https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...). Categories have been added to the list after influential people called the President. So even the 10% for "everyone" tariff can be negotiated away if you give the President something he values.
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US has taken concrete steps in the last 100 days to reduce all three.
https://en.m.wikipedia.org/wiki/Pollution_haven_hypothesis
A political/diplomatic example is rebuilding the Japanese Steel industry after WWII so they could regain self sufficiency. Until we decide to shoot ourselves in the foot hard enough we’ve had a consistent trading partner in high quality steel ever since.
The current “strategy” is painful because it has the weight of the past 60-70 years working against it.
https://en.wikipedia.org/wiki/Marshall_Plan
https://en.wikipedia.org/wiki/Reverse_Course
This isn't some retroactive attempt to justify something. This was the actual policy at the time.
And double-digit increases are what they have been working toward the whole time, they know how to do it, that's how they have managed to get by, even though they know it will takes years. These are great business operators, they know they'll make it if they persevere, they just don't know how many years.
And these were the businesses that were shrewdly operating successfully in the USA in difficult markets with slim margins, even if they were leaning to any extent on cheap foreign materials, labor, or even weighted more toward robust domestic commerce in general.
Prevailing in situations that "average" businessmen aren't quite up to.
How do you think the less-skilled operators are going to feel? They know who they are. Lots of times their businesses are totally dependent on the majority of Americans overall being "richer" than most. And in less than 100 days really, that's been brought into question more times than in any other previous decade. With things like over-taxing and currency exchange taking their toll at the same time commerce itself as a source of prosperity is receding, this is going to make them some of them the most nervous of all.
Trump has always been foolish with money, after his first term the US can no longer afford lots of things that were affordable under all previous presidents, you can't make this up.
When a recognized business-bozo-in-chief can remotely do more percentage damage in one day than a business owner can make up for in one year, might as well give up now, or at least take a sabbatical. Trump can't last forever, and anybody who replaces him may not be any wiser or less misguided, but at least would be more stable & trustworthy.
Too much is in flux to make an expensive decision that won't see value for years. There'd need to be grants to jump start construction.
So if CAPEX is declining, the downturn has already started. (I mean, I guess the article's headline already told us that...)
Part of Trump's genius tarriff plan was closing trade deficits.
Except trade deficit is just mostly a measure of how much countries choose to park the returns on their goods/services in your own country as investment in capex, domestic investments, etc. It is the foreigner choosing not to take the dollar or exchanged goods back to their own country, but to invest it in your own country.
You literally kill capex by killing the trade deficit.
So, on practice, you won't find a correlation here.
I'm not sure this small price difference will continue since I assume a reduction in imports might result in greater demand domestically and those factories might not be able to easily scale to absorb the shift.
and unsurprisingly, the imported goods are the goods that are still heavily reliant on labor cost.
If automation was possible, it would be the preference of any business to use that over human labor, simply for the consistency of output and ability to control cost factors. I do believe this to be the case in most instances.
Thats why car companies have long advocated for tariffs on imported vehicles (and is one tariff we have consistently held for a long time).
If people will be happy to buy locally-made furniture for triple the price and having it last longer is a different question.
The most scary thing are medicines, medical equipment etc. Healthcare is going to become even more expensive, no?
Above everything else, why would other countries/allies/trading-partners trust the U.S govt again? I just can't comprehend how this is good for anyone, other than those with spare cash to buy up distressed assets
That might be the whole point. Look at Trump's "now is a great time to buy" post.
It's also good for America's enemies. Maybe the goal is just a weakened America overall.
Is that the most likely resolution? No, I don’t think so, I’m still holding most of my money out of the stock market. But doing lots of business with countries whose current government isn’t trustworthy isn’t an unheard of scenario.
Not a lot of domestic coffee production. I'm pretty sure there would be riots in the streets if coffee was $65/lb.
Well at least it would be a slow moving riot with lots of yawning.
We're sleepy if we need coffee. We're angry when we can't have coffee.
What would it take anyway . . . ?
Personally I'd want one hell of an insurance policy to cover the risk of all that money being wasted when I finally open my doors and have to compete with overseas manufacturing that may no longer be burdened by these tariffs.
There is simply no way to speedrun that kind of development.
I am not against repatriating manufacturing, but it's something that needs to be done with thought and strategy. This trade war is worse than Biden's Afghanistan withdrawal.
"Biden's"? That's comparing an 100%-Trump fiasco with an 80%-Trump fiasco.
If we're gonna blame Biden for not breaking the US/Taliban ceasefire agreement and drawing things out... Then we need to talk about how it was Trump who made the agreement abandoning the Afghan government, Trump who negotiated that aggressive May 2021 deadline to land at the beginning of the next term [0], and Trump who had to be stopped by his staff from triggering a far-worse instant "fuck y'all, we bail" just days after he lost the election in Nov 2020. [1]
_____
[0] https://thehill.com/opinion/national-security/568154-trumps-...
[1] https://www.militarytimes.com/news/pentagon-congress/2022/10...
Americans will learn too.
It is not black or white when there is not real [power of] law enforcement.
This is exactly the kind of short-termism that got us to where we are now. Why is it so hard to think on a 5-10 year timeline? This is country-level ADHD. Anything worth building requires long term investments. People in the past used to spend their life building cathedrals that they knew would never be finished in their lifetime, and now you're questioning whether it's worth investing in something that has an expected ROI in 5 years!
if you want people to think long term you need long term stable policies that won't change the next time someone else sits in the oval office or Congress changes hands. you need to commit to a strategy.
No comments yet
It's Risk vs Reward. Anyone who built something great took huge risks, for a huge return.
There is no return here. At best, you've sunk a ton of capital into a low-profit business that is propped up only by government subsidy.
Oh, you meant other people's money.
Because the tariff plans have changed every few days. If the tariffs were stable over 5-10 years, businesses would adapt.
> This is country-level ADHD.
Yes, these tariffs are.
Trump has control of all branches yet isn't passing any legislation. All he's doing is introducing uncertainty.
Tourist travel to the US has contracted, for instance. US service exports are suddenly extremely suspect and a lot of countries are finding alternatives. US goods exports are facing massive headwinds, and counter-tariffs in some other countries (China, where imports from the US have basically stopped, and Canada where $400B+ of US goods were sold last year, many of which now see a counter-tariff and boycotts/replacement).
The situation is going to get much, much worse, and there is a serious sense of denial among both the market and many participants who seem to think Trump can retreat from his economic folly and everything will be good again. It won't. There is a massive structural shift that is going to linger for decades.
I think more likely problems are small electronic PCBs used for semi-bespoke controls in whatever manufacturing that actually {happens in/moves to} the us, hvac controls etc.
The reason this line of thinking doesn't work is that these measures affect all the trade that the US does with anyone, but for any other country they affect only the trade with the US. The US relative dependence on the entire world is larger than any individual country's relative dependency on just the US.
To illustrate:
US imports seem to typically be about 15% of the US GDP. EU exports to the US are only 3% of the EU GDP. So we'd kind of expect the shock to the US to be 5x larger than the shock to the EU.
In the case of the US the result is isolation. That means loss of economic strength as well as loss of political influence. Those are more expensive than they sound because the second and third order consequences are security concerns and more powerful coalitions in opposition.
Could be. In the long term, the world needs to reckon with the fact that our implementation economic systems (capitalist, socialist, fascist) depend on population growth, and isolation could also mean removal from the chaos that ensues when the existing political systems can't cope. Assuming the US improves its situation, which believe it or not is oh so slightly better as a result of what's going on now.
You're right, I don't believe it. :)
How does losing a compensatory supply of labor across both low and high skill markets, cutting off ourselves from backup, discouraging fertility rates, and kneecapping any incentive to invest in manufacturing domestically AT ALL help the situation?
I'm on your side on the political issue, but the data do not agree with you: The states with the most restrictive reproductive laws have higher fertility rates. I'm not claiming there is a correlation -- but rather fertility is not at all governed by reproductive laws (or even motherhood support, because those states also have shit motherhood support systems).
To answer your question: Surviving into an non-population-driven-growth regime requires primarily two factors:
- reducing reliance on financialization
- reducing reliance on pure consumption
I'm not saying the US is good at either of those two (it's not) but it's better than it was, say, in 2019. I would even look at your retort -- it used the word invest. That suggests a heavily financialization-dependent mindset. If you are looking through those lenses, it is difficult to imagine what the future needs to look like.
Trump's economic and immigration and foreign labor policies do not encourage anything that mitigates the disaster of demographic collapse. We're making ourselves even more sensitive by taking away all the safety nets our economy could fall back on.
It won’t cause the economy to collapse with alarms going off everywhere.
It will instead be a quiet, slow and sustained shrinking of the economy.
The UK was the hardest hit by COVID, but it has recovered well.
Per-capita GDP has been rough in the UK post-brexit.
But compared to neighbours it's pretty close?
I was against Brexit, but I don't think the apocalyptic predictions have been borne out at all.
Agreed, this is the most likely outcome in the short term.
In the long term there are going to be unexpeted knock-on effects. Even a modest definancialization of the American economy makes it more robust to demographic changes and the end of the population-driven growth era. Lowered imports from abroad (especially china) and decreased consumption writ large means lower carbon footprint. Maintenance of airplanes getting more expensive means people fly less (already happening), again, lower carbon footprint.
How does one reconcile this with the fact that 2/3rds of the US economy is based on consumer goods? I agree with the general premise that we probably don’t need so much frivolous junk, but like it or lump it, that’s what our economy has been based on for decades. It would potentially take just as long to remake the economy into something else.
Heard an interesting analysis by a Bloomberg Radio guest, running down the advantages/disadvantages between US and China. They came out mostly balanced, but the big imbalance is the population. The US population is a LOT less tolerant of disruption, and the Chinese population is more tolerant, and less informed, e.g., no one there even knows the rates are ~145%.
I'm inclined to agree. I see the US population as fully and multi-generationally accustomed to the luxury of comfortable living with a decent safety net. When things start to get really hard, the US population will get rapidly un-governable, while the Chinese will be both more ignorant, more controlled, and more willing to take some suffering for the country's good, while the US has been all about "ME" for quite a while.
What gives you this idea, at all?
Our safety net is non existent in this country. The fact is most people in the US feel squeezed, thats why Trump was able to win with his America First attitude to begin with.
I'm looking at it from a general historic perspective. Just look back 100 years.
Of course the safety net could be a lot better and the GINI coefficient is awful, but there still has never been more wealth floating about the general population. When the people complaining loudest about their situation are having boat parades, driving $75K pickup trucks with aftermarket mods, and getting their news on 75" TVs, and their biggest complaint driving their vote is the price of eggs due to an avian flu pandemic, they are definitely comfortable.
When that changes in a matter of weeks, we'll see what happens.
I just found the analyst's observations valuable and worth sharing.
This isn't reflective of the median reality for most people. Simply put, the strata divide is growing even though there is a lot of wealth in US society, it is spread incredibly unevenly.
The US isn't well prepared to handle a trade war, never mind that this trade war is really cover for a class war because big businesses felt labor made too many gains from late 2020 through early 2023
I won't dispute that the median reality for most people is far less than ideal. Yet from a historical perspective the overall life in the US is of historically unparalleled safety with overall peace and low crime rates, health with more ppl covered by insurance (but yes, less than 32 other developed nations, but higher top-quality care), and plenty of historically cheap goods imported from low-wage nations.
Yes, it can all be far better, the top 0.001% are stealing vast wealth that could literally transform lives, and there is a homeless problem from inadequate psych care. But we do not have massive poverty, unemployment is at record lows for decades, and so forth.
It appears we are about to find out what it is like to see breadlines and brutality.
And yes, I 100% agree the "trade war" is about cementing more gains for the top class because labor had it too good. They can only see a business model where they prosper only if everyone else suffers. They don't see the greater prosperity possible if everyone participates in building the prosperity.
Which in context of the conversation, means nothing. I'm not disputing the fact that relative to historical circumstances, entire swaths of the world have it better than ever, but that doesn't end poverty or meaningfully increase stability under the current regime, and whatever comes of this - and its not going to be good - will last far longer than the regime is likely to be in power[0]. Addressing current and future concerns is what counts here, regardless of how good anyone has it.
[0]: I hope the US can maintain free and fair elections. Remains to be seen if this administration, its cronies, and its followers running congress and SCOTUS won't dismantle elections
The US being the centre of trade is basically the entire foundation of its GDP. It is the reason the US $ is the global reserve. It is the reason the world holds t-bills. It's the reason silicon valley is in San Francisco and the centre of the music and movie industry is in LA. It's the reason the financial capital of the world is in NY. It's why science revolves...revolved...around the US.
If you're living in the richest large country in the world, it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub. The geographically-safe, still wealthy friendly power.
That is all dissolving at an astonishing pace, and the reality will be a harsh one. Like the other post said, the US isn't going to suddenly be poor, but instead it's just going to be an endless drain as the world reorients.
And I mean you can say "oh well we'll do without!", and...okay? I guess it's just the new minimalist world!
As to the "the US will be harmed less than others", while I actually believe the US will be one of the hardest hit countries of all, because most of the US economy relies upon an illusion, it's a silly self-comfort anyways because the US is the cause of all of this. It's like salting the land and then gloating because your crops weren't grow well anyways.
That may have been the design case, but the reason it is now is just TINA. No other currency can absorb the volumes necessary. Let's go over the alternatives:
- Euro - has less than half the volume of the US. A possible contender, but remember each member state does get to dictate its own printing rules, so the
- Yen - one tenth the reserve volume, but pegged to a country that has been in several "lost" decades.
- Yuan - country has massive capital controls and you could get completely fucked if the government fears revolt and lets people move their money out of china. And yet, international reserves are LESS than the CAD.
> it's worth contemplating why that is. Is it US exceptionalism? No, it's that the US came out relative untouched from two world wars that seriously harmed most of the world, so it become basically the central hub.
I think you've got the causal arrow wrong on this. The US is geographically well situated. It touches both oceans, and has a huge gap between it and most of the rest of the world. It's ~energy independent, and has robust agricultural center. That's why it was untouched from both world wars and that's why it became the central hub of commerce in the postwar era. The US can afford to fuck up a lot of domestic and international policy and still generally speaking not worry about existential threats.
Not really. At least in terms of oil, the majority of what’s extracted cannot be refined in the US because all of the refineries were built for non-shale oil. Basically all of the oil gets sent abroad to be refined and then sent back.
Why this isn’t talked about more, especially under the context of “drill baby drill”, I don’t understand. If anything the slogan should be “refine, baby, refine”
i would not be surprised if being ready for such a scenario + knowlege of shale reserve limitations is why those plants aren't kicked over so long as the trannsshipment for refining doesnt remain cost prohibitive.
My point was precisely that the US benefitted by geographical happenstance. Not sure how I got this wrong.
Regarding existential threats, nuclear proliferation is going to go through its worst period in human history. We are going to end this decade with a number of new nuclear bomb participants, and it's a profoundly obvious, inevitable outcome of the current US administration's myopic policies. And with that the probability that some American cities become glassed keeps spiralling ever upwards.
You will see panic in two weeks. I was talking to two truck drivers here in Lincoln, Nebraska I met at a Flying J. They are already talking about layoffs and job insecurity and they are wondering why no one cares. One of them asked where his bail out was.
The market, I think, is driven by AI and will be reactive, not predictive. All you need to do is be the quickest person out. All the under millionaire suckers will be wondering what happened to their 401k's.
"only about 12% of U.S. households have a net worth over $1 million."
https://finance.yahoo.com/news/guess-percent-people-1-millio...
Just curious why you would think this? Markets react fairly quickly to major events...
The GDP is the result of what markets (not the stock market, but actual markets for goods and services) do, if markets react quickly so does the GDP. And markets were reacting to tariff threats and other issues early in the term, Atlanta Fed GDPNow Q1 projection rapidly turned from strongly positive to negative in February, IIRC.
It feels like this was the natural progression of stuffing trillions of dollars into the economy, along with ZIRP, and the free ride has ended. Tariffs will magnify the problem.
The whole bullwhip effect never occurred, prices never returned to pre-covid levels, as everyone claimed they would. So now we have years of stacking inflation that happened because of bloating the money supply, then ZIRP goes away, throw the tariff fears/uncertainty on top, and here we are. I have very little to no faith this administration will help the situation. Playing a game of chicken with the other global superpower is a losing proposition.
This problem has been years in the making, big ships don't turn on a dime.
No one who knows anything about economics or inflation claimed that prices would return to their pre-covid levels. However, inflation has gone way down from its peak.
Prices have basically only gone up on almost everything for the past 5 years. Going up slower does little good.
No, consumer prices trending downward is called deflation and the economy has been actively managed to try to prevent that for a very long time. Mild inflation has been the target and rule for a very long time, with the deviations being high inflation outside of a few major economic collapses. This is not a new trend of the last 5 years.
I don't care if we blame the current economic policy, I don't like the current economic policy at all. I think the problem is much bigger than that.
I still would like to know where all that money went. I can't figure that out.
That's how inflation works.
> I don't care if we blame the current economic policy
You mean the previous one until January, that stopped the inflation, or the current one that is making a lot of it for the next months?
> I still would like to know where all that money went.
The money is cycling around people and companies. That's what money almost always do, the US was an exception until recently, but exceptions to that never last.
It is? Why have wages been so stagnant for so long? Isn't that one of the leading theories/reasons Trump was elected, people are completely strapped for cash. I had read recently that loans are being increasingly being paid late, credit card debt has grown massively, home prices and through the roof, and the job market is a disaster.
Where is all that money again?
https://www.forbes.com/sites/eriksherman/2025/04/25/why-corp...
I get Covid was a mess in real time and it was used as a political pawn, which really sucks. Trillions of dollars went into the US economy, and most of the country feels broke.
I don’t care how the market did, fuck the market, it’s a bubble that’s been waiting to pop for years.
Obviously (real) wages did take a hit like everywhere but have been recovering, too.
My working theory is that noticeable inflations makes people go crazy and trumps anything else. Completely closes people off to rational thought and that’s what sunk Biden. Despite awesome economic recovery given the circumstances.
Trump’s been unusually active, so you’d expect to see direct impact in Q1 numbers.
> tariff day was less than a month ago.
Even desiring the current economic policy doesn’t mean uncertainty is beneficial. My mother for example was confused about when the tariffs took effect and therefore delayed a major purchase. The economy is simply the aggregate of many such choices.
I really think this is a huge elephant in the room that seems to be ignored.
The velocity of money is informative here, basically a dollar can only be part of so many transactions over a year. If rent is 1000$ and you get paid 4 days before rent is due you need to set aside 1000$. Bump that by 30% and now you need to set aside 1300$ and for those 4 days + however long it takes for the transaction to finish that extra 300$ isn’t part of the economy. Bank lending is a multiplier, but that runs into similar issues.
Then what do you call it when nobody has much money left, but it's declining in purchasing power no differently than if more money was being created?
It doesn’t really make sense to say that “nobody has it left” overall because money gets transferred in a transaction. So most people “not having money” could mean it’s someone else’s not gone.
However, money is only a signifier. It you mean the overall economy is declining long term, which is hasn’t been, that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant but the their income declines alongside their spending.
As to what you’re experiencing, in 2024 people where still a shock even if prices weren’t increasing people seem to expect them to fall. Falling prices would be deflation which is a negative outside commodities.
Prices going up when the money in peoples' pockets is not.
>money is only a signifier.
I agree, signifies how rich or poor you are, as an individual or a nation.
Not the numeric amount, but what it will buy instead.
>that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant
That would be true sooner or later even for those who rapidly decline to zero, think about those to which it would not have happened otherwise. Not to mention so many citizens not having a viable bank account to begin with these days.
By that definition those unfortunates would be suffering much worse than an "economic collapse", and there is great likelihood they would be overlooked until it is too late because everyone else has it so much worse-than-before themselves. Trump is not even as honest as Nixon, there's going to be a lot more businesses and families ruined before this is over. In times of triage for survival, only so many can be saved, and it can be kind of a crap shoot.
>Falling prices would be deflation
Got it. So rising prices are inflation.
IOW whatever it is beyond your control that makes it more difficult or impossible to afford what you once could. Or what was once almost within reach but can no longer be sure it's even on the horizon any more.
Got it. Not really the amount of money in "circulation", but what people are actually able to buy with it. Especially compared to what it was "before inflation".
People generally always figured this anyway, lots of them are not easy to fool.
Regardless of any fancy equations.
For the US you are really describing income inequality. Most individuals got fucked over a few are doing wildly better than ever. On net the overall economic output has been going up overall and per person since the country was founded, it’s simply not ending up in regular people’s hands.
Don’t forget the inherent march of technology where indoor plumbing > radio > TV > AC > cable > internet > cellphones > smartphones have all slowly been assumed to be something most people can afford. Similarly the standards for education, healthcare, homes, etc are rising faster than inflation because the standards keep rising. People aren’t buying modest 1bathroom 2 bedroom homes like they used to so yes those mini mansions cost more.
> deflation
Inflation becomes the new nominal.
If everyone has 2x as much money and things cost 2x as much forever that’s not deflation that’s just the new normal. For prices to fall you’d either need more economic output or less money in the economy.
Of course the extra money wasn’t evenly distributed, but again that’s income inequality…
No, but Trump is trying to turn the US ship in a dime, and like this aircraft carrier, we are about to drop a ton of money into the ocean...
https://www.nbcnews.com/news/us-news/us-navy-lost-67-million...
The chorus was slower growth in Q1, boosted by frontloading of purchases, with the real consequences only emerging in Q2 or Q3.
You may have expected this (and if so, I hope you bought some good PUT options), but most economists certainly did not expect this already for the first quarter. On the contrary, there was more the expectation that because of the looming tariffs, people planning to buy larger goods this year would rather expedite the purchase and do it now to avoid rising prices later, leading to a boost in orders. It is quite probable that this has actually happened, and that makes this number even worse.
Yes, they did, and the Atlanta Fed GDPNow estimate for Q1 has been negative since, IIRC, mid-February. That in Q1 we were likely in the first quarter of a significant recession that would get worse if some way out of the planned tariff apocalypse wasn't found was a widespread perception.
For me personally, I've largely stopped buying non-required stuff. Not because of price increases, but because I'd rather have the cash on hand to help me & my friends to survive the next few years. Two of my friends lost their jobs in the Trump job cuts, and many of my friends are in less secure financial positions than I am. I'd rather be able to give them some cash than buy stuff I don't need, so I'm hanging on to my savings for now. Dark times ahead, and cash will be more useful than another guitar or whatever.
But long term degradation of economy absolutely.
https://www.youtube.com/watch?v=KkMP328eU5Q
[0] https://www.youtube.com/@FallofCivilizations
I suppose one silver lining is people ordering less crap? Might be good for the environment, just like during COVID. But a lot of businesses and people are going to be hurting :( As usual, people with cash will end up buying properties, businesses and other assets for pennies on the dollar.
Yes, there have been photos of empty ports. But there number of ships headed into the US hasn't fallen yet¹, and tax changes take a up to a few months to reflect on the arriving trans-continental traffic.
So, are those some ports specialized in short distance commerce? Maybe domestic commerce?
1 - They notoriously have recently started to leave half-full. What means they'll need less time at the ports by June. That shouldn't make a difference now.
By government decree. What other decisions should government make on our behalf?
Governments exist so that we can coordinate doing things that individually we couldn't do or wouldn't wish to do. It's us.
The problem with the tariffs is not that they're decreed by the government that your fellow citizens elected, it's that they're counterproductive to the extent that they're causing a recession.
Even if the situation was reversed tomorrow, ships cannot arrive until weeks later. I've seen "60 to 90 days" given, but I think this is time for the whole supply chain, not just port-to-port ship time.
And the situation won't reverse tomorrow. It's now at a place where neither US or Chinese leadership can change tactic without "losing face" badly.
This bad 2nd quarter is locked in. Likely much longer than that.
As for China, I mentioned that it's now that they feel disrespected, and it's about "face".
That's why I'm sceptical of the USA leadership's claims that China is calling up now to negotiate trade, which China denies (1). Why would they call? The ships not arriving is the negotiating statement. That message has to first sink in, in clear terms. Which it should in May and June
1) https://edition.cnn.com/2025/04/29/business/china-video-trum...
I also think China recognizes that Trump negotiations are largely about dominance and Trump’s ability to convey a narrative that he “out-negotiated” the other guy, rather than an attempt to get the optimal deal for the US. When you’re negotiating with someone like that, maintaining “face” (ie preserving your position of respect within the negotiation) isn’t some mysterious Chinese concept: it’s just addressing Trump on his own terms, ie understanding that he only respects strength.
It isn't logic, it's emotion.
"disrespectful" is a term that the Chinese officials have used to describe US officials statements (1). I'm not reasoning my way to that term, I'm noting that the Chinese are there.
That and "Bowing to a bully is like drinking poison to quench thirst" (2)
I agree with sibling comment that saving face is it's "addressing Trump on his own terms" but I wouldn't say it's "just" that. It's also universal human psychology to react defiantly, expressed in regional idioms.
I agree that it's bizarre that it ended up there, nevertheless this is the USA's "art of the deal" working out as well as it's going to. With China calling the bluff.
1) https://www.youtube.com/watch?v=xNUs9G0sCFc
2) https://www.mediaite.com/news/china-responds-to-trump-tariff...
Reddit is extremely biased toward being anti-Trump and anti-tariffs to a comical degree, so I would take anything written there with a grain of salt.
The economy would be doing better if the previous admin's relatively hands off policy was continued.
The mantra of some folks response to his more reckless statements has always been "it's just talk", but it seems to not be talk.
That would fit the "can't alter my business that much..." mindset you're referencing I think.
(Though this version is dumber with the President trying to do it through EOs, which is probably illegal and Congress should probably be much more upset their powers to be stupid are being usurped before their eyes.)
[1] https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Ac...
People should have paid more attention
They just don't want to be left holding the bag.
It also leaves more with uncertainty so they get stuck at their current jobs for longer rather than leaving, giving more control back to employers.
Everything implemented seems to be intentionally pushing even more economic inequality and divide between the top and the bottom, and to push the diminishing middle class even lower down on the totem pole.
I expect a wave of bad economic news, followed by a wave of consolidation, all the while prices rising, and toward the end of all this, the tariffs will be fully removed, but the prices will not meaningfully (if at all) come down, and the consolidation will have only further entrenched power at the top
It's possible everything is just going to be bad.
What bonds? There is an almost zero chance that the expenses of the US government decrease while there is a good chance that their revenue takes a hit. At some point you can't pay your dues (and no, printing currency is not paying your dues, you are getting hit on your basis).
I'm leaving my diversified retirement mutual funds as they are, because that's why they are diversified; but otherwise yeah, I sold all my other holdings during the rebound earlier this month. Not interested in participating in this wild ride.
I am not. This is almost entirely an emotional decision. The "smart" thing to do from a purely algorithmic statistical point of view would be hold and wait. But I'll happily take my 5% for now, rather than waking up to crippling anxiety every morning about what the orange man is going to do next.
Also did you take a huge take hit to reallocate to bonds or was it all in tax advantage accounts? Seems more crazy to sell all equities when you have to pay tax on the gains.
What will happen in the market if Trump keeps blinking and folds further, congress takes back the tariff power, Trump loses big in the midterms, GOP loses big in 28, AI ends up being a big thing, etc?
You will eventually have to buy back in and you don't know where the bottom is.
Speaking entirely to retirement accounts. Taxables are pretty much screwed either way.
>"What will happen in the market if Trump keeps blinking and folds further, congress takes back the tariff power, Trump loses big in the midterms, GOP loses big in 28, AI ends up being a big thing, etc?"
Maybe I will miss some growth. But watching my life's work evaporate on this wild ride is too much to stomach.
>"You will eventually have to buy back in and you don't know where the bottom is."
Indeed, and I don't intend to time it. Not waiting for a rebound. Waiting for sanity.
It's currently -2.7 percent.
1. Who pays for ads?
2. And if their business is being disrupted, what is the first budget that gets cut?
Imports surged in q1 to front-run tariffs. Imports are subtracted from GDP. Therefore GDP shrank.
C + I + G + NX = GDP https://www.bea.gov/system/files/2020-04/GDP-Education-by-BE...
https://www.bea.gov/sites/default/files/2025-04/gdp1q25-adv....
A reasonable question here is "did companies spend down petty cash to import goods in Q1" (no change to GDP), or "did companies stop investing and producing domestically in order to afford to import more goods in Q1" (reduced GDP).
Whether or not that's true in reality, it is true in the report that caused the headline.
From the article:
> A logistical consideration makes Wednesday’s report difficult to interpret: Imports subtract from the Commerce Department’s calculation of GDP, since they represent spending on foreign-made goods and services.
Because imports are only subtracted from the higher spending on imports in the first place.
Conceptually, imports are not part of GDP. Imports are never subtracted from GDP. But to calculate GDP, part of that is to take total spending (a number larger than GDP) and then subtract spending on imports.
So the 0.3% contraction in GDP has to be a real thing. Unless there's some other deeper technical discrepancy, or some kind of time lag where spending on imports and the import subtraction are being counted in different quarters?
Noah Smith is a galaxy-scale idiot, by the way.
So when imports are subtracted that doesn’t mean gdp is “short” imports. It means it isn’t affected either way by imports.
Trump blames Biden ‘overhang’ after GDP shrinks in first quarter, says growth will ‘take a while’
https://www.cnbc.com/2025/04/30/trump-gdp-tariffs-biden-over...
Funny, I did not hear him talk about how the economy would tank and people would have to "sacrifice" or growth would "take a while" when he was running for president.
Can we please stop this insanity? We had a great economy before this guy messed with it.
This is why we keep economic policy in an independent agency instead of giving it to politicians.
That’s how the system works given that legislation is high-level, often vague and sometimes riddled with errors. Congress sets the goals and Executive i.e. public sector makes the decisions about how to implement it.
All the big corporations & big Money also have not challenged the president.
This is People’s & Money’s will.
Very true, however,
1) it does slow the process somewhat and therefore also reduces total throughput, this keeps government more stable and also gives more time to respond. Slow and stable may or may not be the best way to run a company, but the government is not a company.
2) It would put the individual congresspeople on record, and they are somewhat more dependent on/accountable to their local population. If for example all the farmers realized that the tariffs would destroy the farmer's livelihood, we could see Iowa withdrawing suport.
The US goverment was set up the way it is for reasons.
I thought the whole video is good watch too.
https://www.fisherinvestments.com/en-us/insights/market-comm...
Edit: here's a breakdown. It looks like imports (gold and tariff front running) were big negatives.
https://www.zerohedge.com/economics/us-q1-gdp-contracts-reco...
This is the actual calculation.
The uncorrected gdpnow number was too pessimistic while the human consensus was too optimistic. The corrected gdpnow number was pretty close (though last week nosedived too much). The early April gdpnow corrected number was bang on.
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Any disagreement is a "hostile and political" act subjecting you to deportation without due process.
ps: article link https://www.thedailybeast.com/donald-trump-melts-down-at-bei...
direct youtube link https://www.youtube.com/watch?v=am-Xs4Dug1o
What do you expect to happen when you have a compulsive liar say whatever is on his mind and then an entire ecosystem repeating what he said as if it were fact.
Now we know what circumstances led to his position and performance. Now we Americans are familiar with the new situation.
While it's true that both 10 != 0 and 100 != 0, you are certainly off track trying to equate 10 and 100.
You can claim that my assumed intent behind how the CPI is adjusted over time is a false equivalence. I'd argue with you there, but what absolutely is false equivalence is a pound of steak and a pound of ground beef.
No, you're not being fair.
You're being disingenuous trying to equate changing the CPI with a dictator firing people for presenting numbers not consistent with his lies.
The earlier you course-correct, or OTOH deviate, the more outsized the effect on your destination.
Remember when GNP was fired and replaced with GDP? And how it got that way?
That should be easy to pinpoint.
If not, you pretty much had to be there, and it would take some math back then that wouldn't do you any good at this point now.
Making a better product than last year is also a strange way to claim growth.
What would be a better measure?
[1] https://flatworldknowledge.lardbucket.org/books/beginning-ec... (Note that "Food" is "food as a percentage of income", and "eating out" is "eating out as a percentage of food" which makes the chart look weird. This means that the 11% number below includes the cost of the private taxi for your burrito.)
[2] https://www.axios.com/2024/02/27/price-food-us-inflation-dat...
[3] https://fred.stlouisfed.org/graph/?g=18H2H
[4] https://fred.stlouisfed.org/series/CIVPART
I feel like I just got pranked by SEO somehow
https://www.bls.gov/opub/mlr/2022/article/improving-estimate...
To your measure of food and work hours, here's 70 years of progress in less work buying more food-- https://cepr.net/publications/in-the-good-old-days-one-fourt...
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