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The American economy soon to be inherited by U.S. president-elect Donald Trump (and GOP majorities in the House and Senate) is a mess: Bubbles abound. Job growth is anemic. Inflation is coming back. Interest on unsustainable government debt is soaring.
Everywhere one looks, recessionary alarm bells are ringing… and that’s the best-case scenario.
Worst-case? We are careening toward a cataclysmic economic collapse and protracted depression which will make the 1930s look like a proverbial day at the beach.
Trump reclaimed the White House convincingly based on voters’ faith in his ability to handle the economy. Most Americans believed they were better off financially when Trump was president, and their votes earlier this month indicated they believe they will be better off financially with him running the country for the next four years. This underlying assessment propelled Trump to victory in all seven battleground states – and led him to become the first Republican in twenty years to capture a majority of the popular vote.
Trump’s refrain on the campaign trail was that Kamala Harris “broke it” and he will “fix it.”
Can he?
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It’s possible… but the incoming administration is facing no shortage of pernicious headwinds, including an asset bubble that has equity markets poised for a significant correction in 2025. On the employment front, the final pre-election jobs report was an unmitigated disaster – with only 12,000 new positions added. This weak print came on the heels of massive downward revisions of previous employment data. Ominous signs point to a broader softening of the labor market, which could exacerbate the impact of recent price hikes.
Speaking of which, inflationary pressure is back on the rise – at a time when the politically driven Federal Reserve is cutting rates. Data released earlier this month revealed upticks in both the consumer price index (+2.6% year-over-year) and the producer price index (+2.4% year-over-year) – two key measures of inflation. Both of these indicators are on the rise for the first time since September 2022 – and for the first time since April 2023, their core metrics are above 3% year-over-year. In other words, the ongoing struggle with higher prices is getting worse, not better.
Harris proposed to fight these upticks via price controls – an idea which has failed every time it’s been implemented dating back to the reign of Roman emperor Diocletian in the late third century A.D. Trump has vowed to make inflation “vanish completely,” but it’s not immediately clear how he intends to accomplish that objective.
Can Americans borrow money until things get better? Doubtful…
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After paying down their credit cards during the Covid-19 scare, balances are back on the rise – climbing to a record $1.17 trillion in the third quarter of 2024. Student loan debt also continued to soar – adding $21 billion during the most recent quarter to hit a new record of $1.61 trillion.
Delinquency rates on all this non-household debt also continued to spike…
Speaking of borrowing, America’s stunning tidal wave of red ink hit $36 trillion earlier this month, with annual interest payments topping $892 billion in the current fiscal year (and projected to eclipse $1 trillion per year in the coming fiscal year). All told, $12.9 trillion will be spent on interest payments over the next decade.
Is any of this sustainable? No… which is precisely the challenge Trump now faces.
“Republicans” have had plenty of chances in the past to right America’s foundering fiscal ship… and failed to do so (including the last time Trump was in the White House). These failures – combined with the profligacy of the Biden-Harris administration – have put Trump 2.0 in an untenable position.
Perhaps the former/future president can navigate the minefield with all of the aforementioned boulders strapped to his back… but the far more likely outcome is a debilitating detonation.
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ABOUT THE AUTHOR …
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven children.
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2 comments
Christ on a cracker, wtf are you smoking?
The US has the best economy in the world. Every other country wishes it could have bounced back as well as the US did. All Trump has to do is not fuck it up and claim victory.
Seems like fEaRnEwS is doing a little preemptive spin so that when the economy really goes down the shitter when there are no migrants to do the work and his beautiful, amazing tariffs cause inflation to skyrocket the blame can be put retroactively on Biden.
You’re a funny dude.
Biden voted for Trump.