In 2023 the US GDP grew at a 2.5% rate. In 2024, that rate was 2.8%. After the first full year of the new regime, GDP growth in 1Q 2025 was a -0.5% (!).
The Fed currently projects GDP in 2025 to be 1.4%. The Fed projects inflation at the end of 2025 to 3%, well above the 2% target.
In 2025, the Congressional Budget Office (CBO) projects the federal debt held by the public to rise to 100% of GDP (!), and deficits to be 6.2% of GDP. Interest on the debt is also projected to reach a near-record 3.2% of GDP.
So the economic report card for this administration for 2025 is declining GDP growth, increasing inflation, and increasing debt.
To finish the title of this post, Iâm no economist but this all seems like a massive failure to me.
It looks to me like we are headed to a Japan-style recession/stagnation exemplified by high debt, low unemployment, and little economic growth due to tepid domestic consumer demand. Here is what I donât understand about the current policy.
One might be able to bring manufacturing back to the US with high enough tariffs. But if the cell phone or flat screen TV is going to be made by American workers being paid American wages, who is going to buy them at the much higher price?
Iâm no economist, but it seems to me that even a successful tariff strategy is going to lead to a smaller economy and lower standard of living with people buying fewer products because of higher prices.
On the other hand, this is great for slowing global warming but seems to be an unnecessarily destructive way to accomplish this.
I recall a govt official years ago saying he had half a dozen numbers to choose from as seasonal corrections. This allows numbers to move from month to month. Of course you can only use each one once.
Bottom line. The numbers are tentative until fit into the series and confirmed. They are a bit fuzzy at least initially.
Debt and deficits by themselves are not necessarily bad. In theory, if deficit spending puts more money in the pockets of citizens, or increases productivity through infrastructure improvements, deficit spending may be worth the investment because it increases GDP.
The problem is that our current model incentivizes the top to hoard wealth. That money is not working to strengthen the economy. This is compounded by the cutting of social safety programs. Taking money from people who need it and will spend it, to give tax breaks to people who donât need it and will not spend it seems counterproductive to a healthy economy.
If we want to avoid techno-feudalism, which I think we do, we need to pay workers more so they can support a sustainable economy, and we need to tax the wealthy more so we can maintain the systems of a modern society.
Easy to say, hard to do, but we still have to do it.
Since you mentioned JapanâŠlet me remind you that Japan had twin real estate and stock market bubbles which burst in 1992.
While these bubbles were inflating the Japanese were happy because (on paper) everyone was getting richer. When the bubbles suddenly deflated a huge amount of value suddenly evaporated because much of it was based on debt. The Japanese stock market didnât recover its 1989 peak until February 2021.
Now, letâs switch to the U.S. in the present day. The amount of debt in the system is simply breathtaking.
You mentioned government debt which the CBO warns will grow massively.
Letâs also look at household debt which underpins the value of assets like homes, cars, stocks and education.
As of the first quarter of 2025, American households owe a total of $18.203 trillion in debt. ($12 Trillion of this is mortgage debt.) As of June 2025, the total margin debt owed by Americans is $1.007 trillion (or $1,007,961 million).
I mention bitcoin because an astonishing $2 Trillion is invested in this purely speculative item ($4 Trillion including all cryptocurrencies). This chart shows a classic bubble formation.
The Japanese bubble destroyed many investors even while Japan had a positive trade balance because they were able to manufacture and sell superior products at competitive prices internationally.
Conversely, the U.S. has a massive trade deficit. Note the huge deficit in early 2025 as importers bought to build inventory before the Trump tariffs would hit.
As you wrote, the U.S. might be able to manufacture and sell domestically at the higher prices of American labor and regulatory costs â but only if protected by tariffs. This will cause inflation.
The huge U.S. trade deficit wonât improve because our foreign competitors will undercut us in international trade.
I agree with everything you said. But I would like to add the real potential for a Japan-like market crash which could last for decades, like Japanâs.
The Smoot-Hawley Tariff Act, passed in June 1930, significantly worsened the Great Depression by triggering a trade war and decreasing international trade. Domestic prices rose â inflation resulted.
You wrote, âIâm no economist, but it seems to me that even a successful tariff strategy is going to lead to a smaller economy and lower standard of living with people buying fewer products because of higher prices.â
You are exactly right. Thatâs what happened in 1930.
But the more immediate threat to METARs is our own financial security. What will happen to asset prices in this scenario? What happened before â in both the U.S. and Japan?
My hunch is the typical fruit picker/hotel maid isnât paid enough to consume much. What spending they do, is probably more in the barrio, than on Rodeo Drive, so businesses losing revenue would also be Hispanic owned.
I have speculated on Muslims being targeted for expulsion from Shiny-land,. Many Muslims around metro Detroit are people with considerable assets, that the regime can seize. I have noticed âhimselfâ putting in the âHusseinâ, when speaking of his predecessor, recently. This was a device also used by Ann Coulter, who always referred to âB Hussein Obamaâ, to feed the âcloset Muslimâ narrative.
The spending doesnât need to be on Rodeo Drive. In fact, I would suspect thatâs insignificant to the larger economy.
I can only speak for Phoenix. There are several markets that cater to non-white shoppers (not just Latino). Whites also go there, of course. At least one big one locally is owned by white people (non-public). They have three different brands, including the Latino-oriented store. That money is all going to the same pockets.
And even if we take smaller mom/pop stores, the money is still flowing through the economy. Those stores have to pay rent, pay taxes, get supplies and merchandise, etc. Itâs not like thereâs an invisible wall around South Phoenix that money doesnât pass through.
It doesnât really matter how the money flows through the economy, as long as it flows. Preferably through business/consumer spending.
I donât even think it is about the spending (which can be very much location based). I think it is about the lost tax revenue - which impacts most if not all communities.
Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. Most of that amount, $59.4 billion, was paid to the federal government while the remaining $37.3 billion was paid to state and local governments.
Undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022. In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue.
That is a lot of lost local, state, and federal revenue - that now has to come from the rest of us.
AndâŠthey pay SS taxes, but will never receive any benefits. I donât think thatâs right, ethically, and we should have some sort of migrant worker visa system that addresses this. But as it stands, they pay SS taxes and will not receive benefits. That is huge for those of us who will be receiving benefits.
