Tag: economy

TRUMP SAVINGS ACCOUNTS AND OTHER ECONOMIC MATTERS

President Trump has been responsible for a myriad of accomplishments in his short tenure, for example, closing the border, deporting illegal immigrants, reducing crime in cities that welcomed his assistance, passing the “Big Beautiful Bill (the effects of which will kick in commencing in 2026), reducing inflation, and eliminating Iran’s nuclear capabilities, among others.

To be sure, those accomplishments are laudable, however, a large portion of the electorate is still dissatisfied with the state of the economy, particularly the rate of inflation, the price of gas, the cost of healthcare and the unaffordability of buying a first home. Home ownership is and always has been an endemic part of the “American Dream.” Since Trump is the president, rightly or wrongly, most of them are blaming him.

According to the latest Economist/YouGov survey despite all of the above positives President Trump’s approval rating has been in a steady decline for the last seven weeks. His latest approval rating was 38%, and his disapproval rating was 57%. The latest Reuters/Ipsos survey yielded similar results. Even more ominous the same polls disclosed that 55% of the respondents were more likely to vote for the Democrat candidate in their district, compared to 41% who said they would vote for the Republican candidate. This does not augur well for Republicans in the 2026 midterm elections. If they lose control of the legislature Trump’s ambitious agenda is likely to be thwarted.

Also, history is not on his side. Normally, the party in power loses a goodly number of House and Senate seats in the off-year elections.

Of course, Trump is cognizant of all that. Consequently, he is beginning to focus more on the economy. Historically, absent a monumental catastrophe, such as a world war or a 9-11 style terror attack, the most important issue to voters is always the economy. Yes, people care about other issues such as crime, healthcare, security and immigration, but they care more about a good job, the cost of food, being able to afford a nice place to live, supporting their family, the cost of gas, the cost of healthcare, their retirement, and their children’s and grandchildren’s future. Hence, the well-worn expression: “It’s the economy, stupid!”

Below please find some of the recent Trump initiatives regarding the aforementioned, which are designed to lower the cost of living and enhance the quality of life for all Americans. Some of these are already in process; others are just proposals, some of which may require the approval of Congress.

  1. Ramping up drilling for oil and gas, which, due to the fundamental law of supply and demand, should lower the prices of fuel both in the home and at the pump. Lower energy prices lead to lower prices on all goods and services, most notably food. According to AAA the national average of a gallon of regular gas at the pump is $2.999.  Of course, this will vary from state to state depending on state and local taxes and other factors. By comparison, according to the US Energy Information Administration the cost in 2022 and 2023, the last two years of the Biden Administration, was $3.52 and $3.95, respectively. In my view, Biden’s woke, green energy policies drove prices up, whereas Trump’s “drill baby drill” policy is driving them down. Therefore, it is unfair to blame the current cost of energy on Trump.  According to the more recent data available (“blue woke”) California has the highest average gas price at around $4.65 per gallon for regular, while (“red”) Oklahoma has the lowest at approximately $2.53 per gallon.  Make of that what you will.
  2. For most social security recipients one of the provisions of the “Big Beautiful Bill” will enable them to offset their federal income tax liability with a special federal income tax deduction.
  3. The BBB also authorizes the creation of the so-called “Trump Accounts,” which essentially are a tax-deferred investment account for qualifying newborns into which the Treasury Department of the federal government will deposit $1,000. The account will grow tax-deferred until the newborn turns 18. Then, the account will function as a traditional IRA. Briefly, to qualify babies must have been born to American citizens from January 1, 2025 through December 31, 2028 and have a valid social security number. In addition, the Dell family has pledged to utilize the “Trump Accounts” infrastructure to give $250 to each qualified child under 11. These initiatives are designed to encourage American citizen families to have babies by easing the financial burden of raising a family and helping to provide for them as they grow into adulthood. (For various reasons many families are postponing having children or deciding not to at all.)
  4. The BBB extended the 2017 “Trump Tax Cuts,” which will provide massive federal tax cuts for most taxpayers.
  5.  The so-called “Trump Tariffs” have been very controversial. The question is are they currently and will they prospectively have a positive or negative effect on the economy? Recent studies indicate that generally the impact of tariffs is to raise prices and reduce available quantities of goods and services for US businesses and consumers in the short run. According to the Tax Foundation the Trump tariffs will equate to an average tax increase of $1,100 per US household in 2025. On the other hand, the Trump tariffs, both threatened and imposed, have forced other countries who had been taking advantage of us in international trade for many years to lower their own tariffs substantially. Furthermore, the tariffs have been raising tens of billions, some claim trillions, of dollars for the federal government. Perhaps, more significantly, many foreign companies have invested or pledged to invest trillions of dollars to build or expand their businesses and/or build new factories in the US in order to avoid these tariffs. This will translate into good, high-paying permanent jobs and reduce the unemployment rate, which is currently slightly up at 4.4%. In summary, are these tariffs good or bad? In my opinion, it is still too early to tell. It may take years to determine. At the of risk oversimplifying matters I believe the answer is probably predicated on whether one is pro-Trump or anti-Trump.

Conclusion

As I said above, Trump is cognizant of the voters’ concerns regarding the economy. Accordingly, he has and will continue to develop policies to improve it. Many, if not most, of the problems with respect to the economy are holdovers from the Biden Administration and his woke/green policies. Data shows the economy is improving. Inflation is down. Gas is down. The positive impact of the BBB should be effective starting in 2026. The question is will the voters give Trump’s policies time to work or not.

The cost of healthcare remains a thorny, complicated and highly politicized problem that Trump and the Congress will have to address together. One can only hope that they resolve it expeditiously.

White House: Trump




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DO YOU TRUST TRUMP?

Trump’s tariff policy has caused much controversy. His critics have been claiming it will lead to retaliation, increase inflation, cause the financial markets to “crash,” and lead to a recession. In the short run that appears to be a distinct possibility, but I, for one, am not concerned.

Whereas some countries have rolled back their tariffs and/or signaled they will move some manufacturing facilities to the US, others, notably China, have signaled they would retaliate by raising their tariffs on US exports. I am not perturbed by the possibility of a trade war with China or any other country for that matter. The US is the largest and most lucrative market, and they all need access to it to support their economies. In short, they need us more we need them. Deals will be made. There will be no trade wars.

The prices of some goods, such as foreign-made automobiles, have increased; and the financial markets have declined precipitously. On April 2, the day that Trump’s tariff policy commenced, the Dow was valued at $41,736. As I write this it stands at $37,734, a decrease of $4,000 or 9.5 %. We are about halfway to a bear market, which is defined by Wall Street as a 20% or more decrease from a recent high for a sustained period of time. Moreover, Fed Chairman Jerome Powell has reiterated that the Fed is not inclined to lower benchmark interest rates at this time. Furthermore, JP Morgan announced that it believes there is a 60% chance that the US will enter into a recession.

On the other hand, in fairness, it is inappropriate and misleading to judge Trump’s tariff policy by these short-term results. Even he has acknowledged that his tariff policy would result in “short-term pain but long-term gain.” Also, much of the inflation is a holdover from the Biden Administration’s excessive spending. I’m preaching patience. Give it a chance.

On the plus side (1) according to Freddie Mac mortgage interest rates have declined from 7% in January to 6.64% currently; (2) the Bureau of Labor Statistics announced that 228,000 jobs were added in, March, which was a stronger result than anticipated; (3) automakers GM and Nissan announced plans to boost production in the US which, according to UAW chairman Rich Le Tourneau will create “225-250 new jobs.”; and (4) Ford and Stellantis announced that they will be offering discounts to boost sales.

Treasury Secretary Scott Bessent has cautioned countries not to overreact. He told reporters “my advice is not to retaliate. If you do there will be [‘further] escalation. If you don’t retaliate this is the high-water mark.”

In my opinion, Trump is right, and America will benefit in the long run, perhaps substantially, for the following reasons:

  1. Our trading partners, both allies and enemies, have been taking advantage of us for decades. Their tariffs on our exports have been substantially higher than ours on theirs. Some tariffs have exceeded 100%. They have been flooding our markets with their cheap goods while we have been inhibited from selling our goods in their markets.
  2. Our manufacturing industries have been hollowed out. Currently, we manufacture virtually nothing; we have to import even the most basic goods, such as steel, aluminum, computer chips, and rare metals. This is an existential threat, because in the event of war or another pandemic or unforeseen disaster we would be vulnerable to supply chain disruptions, quotas or boycotts.
  3. Over the years we have lost tens of thousands of good paying jobs. Our middle class has been impacted especially hard. This policy is yet another instance of Trump’s staunch advocacy for the middle and working classes.
  4. Trump’s goal is to have “reciprocal tariffs” so we can compete on a level playing field.
  5. These tariffs that have been portrayed in the media are not final. They are the basis for further negotiation. The objective is to warn our trading partners that the days of being their “suckers” are over. As we have seen Trump is a master negotiator.
  6. In just one week many countries have negotiated lower tariffs, and many companies have committed to investing money in the US and/or manufacturing their products in the US to avoid tariffs. Fox News has reported that as many as 70 countries are seeking to make agreements to equalize tariffs.
  7. Do not focus on the declines in the financial markets. Remember, investors hate two things most of all – inflation and uncertainty. At the moment we have both. Big investors who engage in short-term trading tend to overreact to conditions, both bad and good. Long-term investors should not panic as some tend to do. I expect that at some point the markets will settle down. If Trump’s policy works, they will come roaring back as they have many times in the past. If you doubt me, you could, as Casey Stengel was fond of saying, “look it up.” Trust in America and trust your history.
  8. Ignore all these demonstrators we all see in the media. These people have been gaslighted by professional agitators. They are ignorant and uninformed. For example, many of them have claimed in interviews that Trump and Musk want to cut social security, Medicare and Medicaid benefits. That is patently false. In fact, the opposite is true. Those programs are teetering on bankruptcy due to rampant waste, fraud and abuse. In point of fact, they want to save them.

According to the BBC various countries such as Saudi Arabia, the United Kingdom, Singapore, Brazil, Australia, New Zealand, Turkey, and the United Arab Emirates will be assessed the “base rate” of 10%. The most egregious offenders, such as Taiwan (32%), the European Union (20%), China (54%) (which includes earlier tariffs), Vietnam (46%), Thailand (36%), Japan (24%), Cambodia (49%), and South Africa (30%) will be assessed “customized” tariffs (unless they negotiate). Some of the tariffs these countries impose on the US are egregious. My favorite is the 778% tariff Japan imposes on rice imported from the US, which obviates us from selling any rice there. Other countries, most notably China protect their industries from competition from abroad. They impose such stringent restrictions that it is virtually impossible to sell products there.

Conclusion

In my view, it all boils down to whether or not you have faith in Trump. I say, we elected him to institute reforms to put the country on the right track. The purpose of the tariffs is to reverse the trade imbalance that has existed for decades that has wreaked havoc on our manufacturing, farming, electronics and beef industries, among others. It has left us vulnerable in the event of another war, pandemic, or other catastrophe.

Trump is taking the long view. He has acknowledged there will be short-term pain but long-term gain. Trump has been successful in all his endeavors, such as immigration, dealing with terrorists, and crime. Furthermore, he has a well-deserved reputation as a superb negotiator. He has earned the right to the benefit of the doubt. Let’s give his tariff policy a chance.

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ARE YOU BETTER OFF TODAY THAN YOU WERE FOUR YEARS AGO?

In my opinion, this election is very simple and straightforward. No need to make it more complicated than it is. No need to overthink it. It comes down to one basic question. It’s an old expression, almost a cliche, but it is just as relevant today as it was 45 years ago when I first heard it. “Are you better off today than you were four years ago?”

I’m talking about you and your family. In my opinion, no part of most Americans’ lives is better than it was four years ago. Some people cite the rising values of their IRA and 401K accounts as the result of “bull” financial markets. Good for you if that is the case, but chances are inflation has eaten away most or all of those gains.

Inflation is eating most of us alive. Inflation is pervasive and relentless. Once it grabs hold of a country’s economy it is tenacious. When unchecked it has destroyed many a country’s economy, for example, post-WWI Germany and present-day Venezuela.

Our current inflation is manifesting in every aspect of our lives, sometimes obviously, sometimes more subtly. According to multiple media reports some 2/3 of households are living paycheck to paycheck. Many families have been paying for necessities with borrowed money, incurring credit card debt or by withdrawing funds from their IRA or 401k accounts. Their income increases, if any, have not kept pace with the rate of inflation due to reduced hours, layoffs or their employer closing or relocating. This is not sustainable.

According to the Bureau of Labor Statistics (“BLS”) the Consumer Price Index (“CPI”) has risen nearly 20% in the last three years. Of course, some categories have risen more than others, but I will highlight a few of the more significant ones.

For example, let’s look at food. According to the BLS the CPI for food has increased slightly more than 20% over the last three years. Some products have risen more than others; but that is the average. In addition, some products and brands of products have experienced supply chain interruptions for various reasons. There can be many causes of supply chain interruptions, but rising costs are generally a contributory factor.

When you buy groceries are you able to afford what you did four years ago, or do you find yourself having to cut back? Are you able to buy the same quality or quantity of meat? Are you able to buy meat at all, or do you have to settle for a cheaper substitute? Can you even find the foods or the particular brands you prefer? How about the prices of staples like milk, eggs, and cheese to name a few examples? Have you noticed that packages of food are smaller? Have you noticed that rolls of paper towels and toilet paper don’t last as long as they used to? No one actually counts the pieces, but it’s obvious there are fewer. These are but a few examples. When you eat out have you noticed the smaller portions and higher prices? In case you were wondering these are rhetorical questions.

How about gas at the pump? Even though prices have decreased recently, that is misleading since gas prices can and do fluctuate widely in the short term due to a variety of external factors. According to AAA the average price of a gallon of regular gas at the pump was $2.41 in January 2021 when Biden-Harris took office. The latest price is $3.23. That is a 34% increase. The price of fuel permeates every aspect of the economy.

The story is similar for other products such as clothing, shelter, loans, and virtually any and all other goods or services.

The quality of life has been deteriorating significantly. We are being overwhelmed by illegal aliens. No one knows how many of them have entered our country, but the most reliable estimate is 20 million. An untold number of them are terrorists, gang members, drug smugglers, women and children traffickers, and others who would do us harm. They have been distributed all throughout the country. Gangs have virtually overwhelmed and taken over some small cities, such as Aurora, CO. Not coincidentally, the rate of crime has skyrocketed, and it has become random and unpredictable. It’s not just in large cities like NYC, Chicago and LA. No area is safe. Many of us are afraid to venture out. We take our kids to school or the bus stop and pick them up lest they be harmed.

Whose fault is all this? Well, ask yourself, who has been in power for the last four years? Which party’s policies have been the root cause of the current situation? Those are rhetorical questions. We know the answer; it’s the Dems.

Don’t be deceived by the spin doctors and bloviators in the Dem Party or their allies in the media. They can try to deflect blame onto Trump or whomever else all they want. The simple, inescapable fact is they been in charge. They have called the shots. They have gotten us into this mess. What in the world would make you think that they can extricate us from it?

Harris has been trying to distance herself from the highly unpopular Joe Biden and his highly unpopular policies. She cannot. The inescapable fact is she has been his vice president. She has bragged that she was “the last person in the room” when decisions were made. She is equally culpable.

Don’t pay any attention to the celebrities and media mouthpieces who politicians use to bombard you with their “expert” opinions (favorable to them, of course). Celebrities may be very good at what they do – acting, singing, sports or whatever – but most of them know less than you about economics, personal finance or anything else outside of their limited area of expertise.

They don’t live in the real world. They preach to us about illegal immigration, sanctuary cities, and crime, but most of them live in a protected bubble. Most of them live in gated communities protected by security guards or in luxury apartments with doormen. When they venture out many of them have personal security to insulate them from the public.

They don’t buy food at the grocery store. They don’t buy gas at the pump. Many of them don’t even drive a car, fly commercial, or personally buy any of life’s necessities. They have other people for that. Many of them fly in private airplanes. They don’t have the same life experiences as you do.

Moreover, most of them are not objective. They are supporters or donors or have their own agenda. For example, remember the 51 ex-government officials who signed a letter that the Biden Campaign produced in 2020 stating that the contents of Hunter Biden’s laptop were Russian disinformation? That was debunked but, of course, after the election. Those signatories should be embarrassed to have put their name to such a document.

Don’t be distracted by extraneous issues. Who cares if this candidate was a womanizer 20 years ago? Who cares if that candidate was mean to a child on the playground when he was ten years old, or was wild in college? Don’t be distracted. Most of us were involved in stupid or embarrassing incidents when we were younger. That is irrelevant now. What matters is the present and the future.

CONCLUSION

In my view, the number one issue in this election is the same one it always is. I believe renowned Dem strategist James Carville said it first, and it has been repeated many times and in every election. “IT’S THE ECONOMY, STUPID.”

Regardless of how the Dems try to spin it, they are the party that is responsible for the present state of our economy and everything else. Don’t be distracted or gaslighted by other issues. They may be important, but they are secondary to the economy. They don’t matter if you cannot feed and shelter your family.

Don’t be distracted about what the Dems and their supporters say about Trump or your personal feelings for him. Vote for number one. Vote for you and your family. Your kids and grandkids will thank you.

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