Friday news dump - GOPs can't agree on Tax Scam 2.0, and US downgraded

Couple of big bits of fiscal and monetary news that broke Friday afternoon. Starting with the attempt to install GOP Tax Scam v 2.0, which isn't working out as the realities of the Big Beuatiful Bill set in.

The GOP-led House Budget Committee voted to reject a sweeping package for President Donald Trump's agenda on Friday, dealing an embarrassing setback to Speaker Mike Johnson, R-La., and Republican leaders.

The vote in the Budget Committee was 16-21, with a band of conservative hard-liners who are pushing for steeper spending cuts joining all Democrats in voting against the multitrillion-dollar legislation, leaving its fate uncertain...

“I have to now admonish my colleagues on this side of the aisle. This bill falls profoundly short. It does not do what we say it does with respect to deficits,” {Republican Rep. Chip] Roy said. “That’s the truth. Deficits will go up in the first half of the 10-year budget window and we all know it’s true. And we shouldn’t do that. We shouldn’t say that we’re doing something we’re not doing.”

“This bill has back-loaded savings and has front-loaded spending,” Roy added. “I am a no on this bill unless serious reforms are made today, tomorrow, Sunday. Something needs to change or you’re not gonna get my support.”

As a reminder, in order to get around a Senate filibuster and only require 50 GOP votes for Tax Scam 2.0 to go through, it needs to be under the outline of the budget resolution that was passed a month ago. That resolution gives total numbers over 10 years that total deficits and tax cuts can't exceed over that time, and if the bill goes beyond those costs, then it has to go through a Senate filibuster and the 60 vote threshold to get to the floor. And as weak and pathetic as I think Chuck Schumer is, even he won't allow 7 Senate Dems to let any Tax Scam go through.

The Committee for a Responsible Federal Budget has a good rundown of these budgetary boundaries.

But the resolution doesn't give a set amount that has to be cut in each year, and that's where Rep. Roy's complaint comes in. The CFRB also did an explainer on this topic earlier this week.

The legislation’s spending and tax cuts are quite front-loaded, while offsets are back-loaded. We estimate about 55 percent of the gross deficit increases – $2.8 trillion – would take place in the first half of the budget window. Meanwhile only 40 percent of the offsets – $970 billion – would accumulate over that period. As a result, 70 percent of the non-interest borrowing would occur in the first five years.

The tax cut and spending increase provisions are front-loaded, in large part, due to the use of “arbitrary expirations” designed to limit reported costs. A number of provisions – including the enhanced Child Tax Credit and standard deduction, no tax on tips and overtime, 100 percent bonus depreciation for equipment, and new ‘MAGA accounts’ – are scheduled to expire in 2028 or 2029. The bill also relies on one-time appropriations for defense and immigration, which must be obligated by 2029. And finally, the bill includes a large number of retroactive provisions that provide a one-time windfall for activities already undertaken.

Meanwhile, many of the offsets don’t begin or ramp up until late in the budget window. Medicaid work requirements, for example, save $300 billion through 2034 but do not take effect until 2028. In addition, while some of the Inflation Reduction Act (IRA) energy credits are repealed at the end of 2025, the most expensive ones only begin phasing out in a few years with some restrictions taking effect sooner. And the Supplemental Nutrition Assistance Program (SNAP) state matching fund requirements do not start until 2028.

It's cynical gimmickry (because it blows up the deficits short-term, and kicks the real deficit-reducing cuts and tax increases to a later date), and related to that, a problem certain Republicans like Rep. Roy have is that not enough people are being hurt by the bill right away. Among the GOPs in that crowd is Wisconsin's Senior Senator.

As House Speaker Mike Johnson, R-La., feverishly works to finalize the details of a massive package that includes major portions of President Trump's agenda, many Senate Republicans are dismissing the legislation before it is even finished in the House.

"Unfortunately, it's a sad joke," Wisconsin GOP Sen. Ron Johnson said Wednesday.....

Some conservatives in the House are pushing for $2 trillion in cuts — but that's not far enough for Johnson, who wants spending levels to revert back to what they were pre-pandemic. Sen. Johnson told reporters that he believes it was a mistake for leaders to try to pass so much of Trump's agenda in one single bill, instead of three separate pieces of legislation that could be considered individually. As a result, he said he'd oppose the House bill "as it's currently constructed."

Me and my donors took ours, fuck the rest of you.

I'll remind you that price levels have risen over 20% in the five years since COVID broke out and there are more people in this country as well. But apparently those realities mean little to RoJo and the other GOP "fiscal hawks", now does it?

And then late on Friday afternoon, after the budget bill had been shot down and the stock markets had closed, we got more bad news that connects to these rising deficit numbers.

Moody’s Ratings downgraded the United States’ debt on Friday, stripping the country of its last perfect credit rating. The move could rattle financial markets and push up interest rates, potentially creating an additional financial burden for Americans already struggling with tariffs and inflation.

Of the three major credit rating agencies, Moody’s was the lone holdout, maintaining its outstanding rating of AAA for US debt. Moody’s held a perfect credit rating for the United States since 1917.

It now ranks US creditworthiness one notch below that, at Aa1, joining Fitch Ratings and S&P, which lowered their credit ratings for US debt in 2023 and 2011, respectively.

The decision to downgrade debt was influenced by “the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” Moody’s said in a statement. Moving forward, Moody’s said it expects borrowing needs to continue to grow and for it to weigh on the US economy as a whole.

Oh? Well maybe it's not such a great time to continue the Tax Scam that blew up the deficit in the first place, eh? Especially when you consider that 60% of Tax Scam 2.0 will be going to Americans making over $200,000, and more than 1/6 of the benefits will go to millionaires.

We also know that cutting medical and food assistance for lower-income Americans is something that hurts the overall economy. And if our already-higher budget deficits and borrowing costs are a big concern, why would you want to both slow down the economy and make those deficits skyrocket in the next few years?

Well, we know why. It's the same reason Ron Johnson's "fiscal concerns" got assuaged in the last GOP Tax Scam.

GOP megadonors Diane Hendricks and Dick and Liz Uihlein were able to claim a combined $215 million in deductions in 2018 because of provisions ⁦@SenRonJohnson⁩ put into the tax cut Trump signed, according to ⁦@propublica⁩. https://t.co/mniK4o6R0I

— Patrick Marley (@patrickdmarley) August 11, 2021

And guess who put up tens of millions to get RoJo to ooze back into the Senate by 1% the next time he was up for election?

The $22 million that Wisconsin Truth PAC has spent so far places it as the sixth highest-spending super PAC in the midterms cycle and the highest-spending single race-focused super PAC, according to OpenSecrets. The group was formed earlier this year by Republican consultants to back Johnson in the battleground race.

Building materials company CEO Diane Hendricks has contributed at least $6.5 million so far this year to the Wisconsin Truth PAC. Shipping and packaging supplies company CEO Richard Uihlein and his wife Elizabeth have given the PAC at least $3.5 million. Those figures are as of the most recent disclosures covering through the end of July, so it is possible they have donated more or that additional wealthy donors have contributed to the PAC since then.

The Big Beautiful Theft bill is far from dead at this point, and requires strong vigilance for the next few months as GOPs try to come up with something that fits within their tight margins and massive deficits. But at least as of now, it's clear that there isn't enough agreement on how to pull off the next Scam within the GOP's caucus, let alone how hated this thing will be from a public who got a taste of strong government supports during the early 2020s, and liked it.

Trumpian economic idiocy lowers Wis revenues, delays Wis budget moves

Late Thursday, the Legislative Fiscal Bureau gave its always-important update to revenue estimates, which tells Wisconsin lawmakers how much money is available for the last 6 weeks of this fiscal year, as well as the next 2-year budget.

Let’s start with how things look for the rest of Fiscal Year 2025.

In addition to the $22.0 million in increased tax collections, it is estimated that departmental revenues will be $8.7 million above the January 29 projection and net appropriations will be $39.5 million below the earlier estimates.

The net result of these estimates is that the projected gross balance in the general fund will be $4,337.7 million, which is $70.2 million above the January projection of $4,267.5 million.

Well that’s good! There will be plenty of money to carry over to the next budget. How’s the outlook for the 2-years that this budget will be in effect?

Based on our review of collections data and the economic forecast, general fund taxes will be higher than previous estimates by $22 million in 2024-25, and lower than the previous estimates by $321 million in 2025-26 and $36 million in 2026-27. The three-year decrease is $335 million, or 0.49%, reflecting a lower forecast for individual income taxes ($370 million) and corporate income/franchise taxes ($90 million). These reductions are partly offset by an increased forecast over the three-year period for general sales and use taxes ($65 million), insurance premiums taxes ($46 million), and miscellaneous taxes ($14 million). The estimates for utility taxes and excise taxes have not been changed since January.

Oh, not good, especially in the next Fiscal Year.

The LFB says the main reason for the lower revenue numbers is because of the economic outlook has dimmed since Donald Trump returned to the White House in January.

S&P Global's May, 2025, economic forecast projects weaker economic growth than the January forecast, which was used in preparing the earlier tax revenue estimates. Nominal and real (inflation-adjusted) gross domestic product (GDP), personal income, and sales of light vehicles are expected to be lower in 2025 through 2027, compared to the January forecast. Inflation, as measured by the consumer price index (CPI), is expected to grow at a faster rate in 2025, but at lower rates in 2026 and 2027, compared to the January forecast. Similarly, nominal personal consumption expenditures (PCE) are expected to be higher in 2025, but lower in 2026 and 2027, compared to the January forecast. The Attachment outlines the May, 2025, economic forecast by S&P Global, as well as changes to the forecast since January, for 2025 through 2027.

That said, the revenue picture is still a bit better than what the Evers Administration estimated 6 months ago. We just don’t have the amount of additional revenue that the LFB projected in January, which Gov Evers based the budget off of.

Rep. Mark Born and Sen. Howard Marklein Chair the Joint Finance Committee and say these lower revenue numbers mean that there isn’t as much of a cushion as the $4.3 billion in the bank would indicate.

“While we are not surprised by these new estimates, we remain cautious as we work to craft a budget that invests in our priorities, funds our obligations, and puts the State of Wisconsin in a strong fiscal position for the future.

“The cost-to-continue remains high and our collections are down slightly compared to January estimates, therefore we must continue the success of Republican budgets of the past in order to ensure that we can meet our ongoing obligations. (So the last 6 years of having Evers stop tax giveaways but not following Evers’ plans to re-invest in public schools are “Republican budgets”? You go on with that, guys)

“We are calling on Governor Evers to take these revenue re-estimates seriously. Come to the table with legislative leaders and work with us to craft a reasonable budget that works for Wisconsin.”

Does that mean Howie and Mark and the rest of the GOP are also are going to take the revenue estimates and slowing economy seriously, and not throw away funds and future budgets on tax cuts to the rich? Especially when the GOP in DC is trying to put in even more tax cuts for those who get plenty of breaks already?

Whaddya think, guys?

The JFC’s Democrats had a similar theme to Born and Marklein. But it was from a different direction, recommending that Wisconsin’s budget has the flexibility to withstand the next 2 years of Trumpian economic idiocy.

“Now, more than ever, Wisconsinites are struggling to put food on the table and maintain a roof over their heads. This projection shows it’s going to get even worse, especially when our communities start to feel the direct impact of the Trump regime’s trade war around the globe.

“Together, we need to ensure Wisconsinites have the resources to get through the chaos and uncertainty that lies ahead.”

And uncertainty seems to be the cloud that hangs over whatever might happen with this budget. That’s true for the prospect of possible tariff-induced inflation or a recession caused by cutbacks, and it’s also true when it comes to whatever cuts and thefts come from DC’s funding of services that the state also helps to pay for.

Those uncertainties especially makes the thought of large-scale, permanent tax cuts a risky (if not outright reckless) proposition, because we might well need to use more state tax dollars to pay for the same services due to the shenanigans playing out in DC. And given that the Federal debate on taxing and spending may have several weeks or even months left to play out, will that hold up Wisconsin’s budget beyond the July 1st start of the biennium as well?

Not much inflation yet from tariffs other than coffee

After Donald Trump announced widespread tariffs in early April, this week's inflation reports would tell us if prices were rising as a result. Well, Tuesday's CPI report seemed pretty good. And interestingly, what kept the CPI down in April was a sizable expense that had been rising in previous months – groceries.

Food at home declined by 0.4% after a 0.5% increase in March, and leading the way down was a product that had risen by nearly 1/6 in the 2 months prior to April.

…Five of the six major grocery store food group indexes decreased in April. Driven primarily by a 12.7-percent decrease in the index for eggs, the index for meats, poultry, fish, and eggs fell 1.6 percent in April after rising in recent months. The fruits and vegetables index decreased 0.4 percent over the month and the cereals and bakery products index declined 0.5 percent. The index for other food at home decreased 0.1 percent in April and the index for dairy and related products fell 0.2 percent. In contrast, the nonalcoholic beverages index increased 0.7 percent over the month.

Yes, eggs are still up nearly 50% in the last 12 months, but at least we got a month of declines to retrace what we’d been seeing at the start of 2025.

The biggest notable increase in grocery prices for April came with another product that often gets consumed in the morning. Coffee went up 2.4% last month, and has gone up more than 5% in the last 3 months. Some of this is due to droughts and floods in coffee-producing countries that has caused a shortage of supply, but we are also likely starting to see the effects of Trump tariffs, as most coffee in America has to be imported from other places.

The tariff hit is even coming to coffee places in Wisconsin, as shown in this Wisconsin Public Radio article from this week.

TJ Semanchin is a co-owner of Wonderstate Coffee, a Viroqua-based company with four locations throughout Wisconsin. He told WPR’s “Wisconsin Today” that recently-imposed tariffs from the Trump administration could spike the price the company pays for beans from countries like Nicaragua by as much as 28 percent.

The Trump administration has currently imposed 10 percent tariffs on goods from most countries. As part of a package of “reciprocal tariffs,” it also proposed a range of different tariffs on individual countries, including an 18 percent tariff on Nicaragua…

Coffee can only be grown in tropical environments, limiting the ability for farmers to grow coffee beans at scale in the United States. More than 99 percent of coffee consumed in America is imported, according to the National Coffee Association of USA.

Wonderstate Coffee purchases beans from Peru, Colombia, Guatemala and Mexico among other countries. Semanchin said even a 10 percent tariff is a significant dollar figure for his business to pay.

“For us, a container of coffee might cost around $200,000. So that tariff tax, if it stays at 10 percent, will be $20,000. That’s an additional $20,000 that we need to come up with. I’m literally borrowing that money from our bank to pay that tax,” Semanchin said. “We get hit with that upfront, and then as we absorb those costs, eventually we are going to have to look at increasing prices again.”

But I awaited Thursday’s report on the Producer Price Index to see if the tariffs were boosting prices for other businesses. And that was certainly NOT the case.

The Producer Price Index for final demand fell 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices were unchanged in March and increased 0.2 percent in February. On an unadjusted basis, the index for final demand rose 2.4 percent for the 12 months ended in April.

The April decline in the index for final demand is attributable to prices for final demand services, which decreased 0.7 percent. The index for final demand goods was unchanged.

Prices for final demand less foods, energy, and trade services edged down 0.1 percent in April, the first decline since falling 0.8 percent in April 2020. For the 12 months ended April 2025, the index for final demand less foods, energy, and trade services advanced 2.9 percent.

Now a lot of the drop in services is due to a drop in margins for wholesalers and retailers, and maybe that’s a tariff effect due to an inability to pass on higher costs. But I’ll also note that there was a second straight month of declines in the PPI’s index of food prices, which has unwound increases in producer costs of food for the first 2 months of 2025.

Eggs led the way in the decline, with a drop of more than 39%, and the added spike in egg prices that we had at the start of 2025 has now faded, at least for producers.

However, I’ll note that PPI for coffee went up another 1.9% in April after rising 2.0% in March, and coffee is up more than 20% for producers in the last 12 months. So don’t be expecting any relief from higher coffee prices at the store or in restaurants any time soon.

The only other places I’m seeing significant jumps in Producer Prices is for steel mill products (up 5.9% in April and 16.5% in the last 3 months), and various other types of metals (several have had price increased between 7-10% in the last 3 months). But the bigger economic concern I draw from the PPI may be the fact that the prices of several unprocessed farm products are dropping, and the declines are speeding up.

That’s an awful lot like when Trump had his last trade war in 2018 and 2019, which led to large increases in farm bankruptcies due to lower prices and an inability to sell to other countries. And likely helps explain why Trump/GOP are trying to sneak through $60 billion in farm subsidies in their “big, beautiful” scam of a tax bill.

Maybe it’ll be tomorrow’s release of the import/export prices that definitely show an effect on product prices after Trump announced his tariffs. But at least for April, prices seemed to remain in check for many parts of the economy, even if the expectation of price increases was there.

Fed keeps rates the same, and Trumpian idiocy keeps them from making moves

No surprise that the Federal Reserve Open Markets Committee kept interest rates at the same level today. The underlying economy hasn't gone into recession as far as we can tell, and the full effect of inflationary tariffs hasn't hit store shelves. But what was worth looking at was if the Fed statement would give clues about what they thought might happen with the economy in the near future.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.

Mostly a non-statement, although "higher uncertainty" is not something Wall Streeters usually like to hear from central bankers. So there was a post-meeting wobble in the stock market after the 2pm Eastern release of the Fed statement, but it mostly recovered to the pre-2pm level by the time the market closed.

And Fed Chair Jerome Powell repeated that theme when he met with the media a 1/2 hour after the rate decision.

Fed Chair Jerome Powell knocked down any notion of taking preemptive rate cuts as inflation is still running above target. “It’s not a situation where we can be preemptive, because we actually don’t know what the right responses to the data will be until we see more data,” Powell said.

The Fed has been on hold since its last cut in December as it waits to evaluate the tariff impact....

“What looks likely — given the scope and scale of the tariffs — is that we will see certainly the risks to higher inflation, higher unemployment have increased. And if that’s what we do see — if the tariffs are ultimately put in place at those levels, which we don’t know — then we won’t see further progress toward our goals,” he said. “We might see a delay in that.”

Powell specified that this could delay the Fed’s timeline for the next year or so.

“In our thinking, we would never do anything but keep achieving those goals. But we would at least for the next, let’s say year, we would not be making progress toward those goals — again, if that’s the way the tariffs shake out,” he added. “The thing is, we don’t know that. There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs.”

And let's be honest, if Powell took longer than he should have to lower rates from 23-year highs when inflation was lower than it is now, why would he drop rates and encourage more speculation and higher prices in other areas of the economy? I believe in jobs >>>> inflation, but there's no way we can tell at this time whether inflation or unemployment (or both!) will be heading toward 5% in the coming months, so no changes can or should be done today, and likely for a few months.

Which means that the fault in keeping rates elevated (by 2000s standards, anyway) lies entirely with Donald Trump's big mouth and the GOP Congress that won't reign him in. And I don't think we get this resolved when the Fed next meets in 6 weeks.

The only side that now wants to cut property taxes in Wisconsin? Gov Evers and Dems!

Every budget cycle, the Legislative Fiscal Bureau releases an analysis of what would happen to property taxes on a median-priced Wisconsin home if the Governor’s budget would go through. The 2025-27 budget’s version on that breakdown of property tax bills was recently released by the LFB, and it goes over the main factors in the budget that would affect how much Wisconsin homeowners would pay.

For school districts, the Governor's budget bill (SB 45/AB 50) would make several changes that would affect statewide school levies, including: (a) indexing the current law $325 per pupil adjustment under revenue limits to inflation starting in 2025-26 (estimated by the Administration at $334 in 2025-26 and $345 in 2026-27); (b) increasing the low revenue adjustment under revenue limits from $11,000 per pupil in 2024-25 to $12,000 per pupil in 2025-26 and $12,400 per pupil in 2026-27; and (c) providing $494 million in 2025-26 and $700 million in 2026-27 for state aid under general school aids. SB 45/AB 50 would also make a modification to the definition of revenue limits so that the personal property aid payment associated with the 2023 full exemption of all personal property from taxation would be under revenue limits, which would decrease school district levies by an estimated $57.4 million annually…..

….Beginning in 2026, counties and municipalities would be eligible to receive an aid payment from this newly-created program if their property tax levies in the year of the payment are less than or equal to their levies in the prior year (for the first year of payments, 2025(26) tax levies would be compared to 2024(25) levies). The amount of the payment would be equal to 3% of the county or municipality's payment year levy. After the first year of the program, if the county or municipality had received a payment in the prior year, the amount of its payment would be equal to 3% of its payment year tax levy, plus 1.03 multiplied by the payment it received in the prior year. The Administration estimates that this program would distribute $111.8 million in 2025-26 and $227.0 million in 2026-27. This aid program would be expected to reduce statewide county and municipal levies by an estimated $49.4 million in 2025(26) and by $108.5 million in 2026(27), compared to estimates of those levies under current law….

In addition to the changes that may affect the gross levies for local taxing jurisdictions, SB 45/AB 50 includes additional funding for the school levy tax credit. The bill would provide an additional $125.3 million in 2025-26 and $249.7 million in 2026-27, resulting in total funding for the credit of $1,400.3 million in 2025-26 and $1,524.7 million in 2026-27. Compared to current law, this would decrease net statewide property tax levies by the amount of the additional funding for the credit in each year.

So put it together with some relatively minor adjustments, and what do we get?

Total equalized values are expected to increase faster than the statewide median home value in both 2025(26) and 2026(27). As a result, the estimated property tax on a median-valued home will increase by less than the rate of change in overall levies in both years. Under the bills, statewide net property tax levies are estimated to increase by 1.3% in 2025(26) and by 2.4% in 2026(27). In comparison, the estimated net tax bill on a median-valued home is estimated to increase by 0.1% in 2025(26) and by 1.3% in 2026(27). Net tax bills are estimated at $3,421 for 2025(26) and $3,467 for 2026(27) under SB 45/AB 50, compared to $3,600 for 2025(26) and $3,761 for 2026(27) under current law.

And given that the LFB projects the median Wisconsin home value to go up by 6.5% this year and 3.0% in 2026, this means that the tax rates would continue to fall if Governor Evers’ property tax-related plans would be adopted.

The school funding plans aren't among the items that will be removed from Gov Evers' budget by Republicans on the Joint Finance Committee later this week (click here for the list) , but the incentive program for communities to freeze their taxes is on the chopping block.

Another item on that removal list is Evers; proposal to expand the state's Homestead Credit to catch up to inflation and higher Social Security incomes. The Homestead Credit offsets property taxes, and the income limits for it have not been increased since the Republicans took power in the State Legislature in 2011. Not surprisingly, this has cut the number of Homestead Credit recipients by nearly 2/3 in the state since then, and the LFB says that the amount of Homestead Credit paid out has gone down by an estimated $87.5 million.

So if Wisconsin Republicans want to keep property taxes from rising by another $344 in the next 2 years, keep tax rates from going up, and allow more Wisconsinites to get back some of their property tax payments with the Homestead Credit, they can go along with Governor Evers’ plans in the state budget. The GOPs should vote to increase resources for our community schools while limiting the taxes that pay for those K-12 schools, and can go along with Evers’ incentive payment for local governments that don’t raise property taxes.

Increasing state funding and reducing the burden of property taxes on Wisconsinites seems like a great way to use some of the $4 billion we have in the bank, and a much better idea than using those funds to cut income taxes for the rich. If the GOPs don’t go along with limiting property taxes while maintaining investments, every Dem across the state should directly blame Republicans next Winter if/when those tax bills go out to Wisconsin households.

April jobs report - not losing yet, but the danger is far from over

While the Trump Administration has ignited panic and fears of recession due to its arbitrary, punitive and often outright stupid economic policies, we have yet to see much that indicates the underlying economy has indeed started to retract. Yes, we had 1st Quarter GDP come in at -0.3%, but that was due to a surge in imports to get ahead of Trump-imposed tariffs, a surge that caused GDP itself to go down by 5%, and inventories to rise (and add to GDP) by more than 2%.

But while we keep getting news of announced layoffs in the federal government and layoffs starting to be announced in manufacturing as a reaction to the tariffs, we still have not seen much change in US unemployment. And the April jobs report released on Friday indicated that we were still in the same steady job growth trend as Q2 2025 began.

The US economy added a surprisingly strong 177,000 jobs in April, a slight slowdown from March’s downwardly revised 185,000 gains, according to Bureau of Labor Statistics data released Friday. April’s gain was stronger than the average pace of monthly job growth in the prior three months.

Meanwhile, the unemployment rate was unchanged at 4.2%, a historically low level....

April’s jobs report marks another solid month of employment gains and a continuation of a historic expansion of the labor market, but that’s on the backdrop of growing recession fears. And the April jobs report released on Friday indicated that we were still in a job growth trend as Q2 2025 began. It might have downshifted from the big finish to 2024 and start of 2025, but it's in line with what we were doing a year ago, and beating the lower gains we were seeing last Spring and Summer.

As usual, it was health care leading the way in job growth, with just over 50,000 jobs added in April. That takes the overall gains for 2025 in that sector to 195,000, and over 2.1 million Health Care jobs have been added in America since January 2022.

Seems like quite the growth industry. Why would we ever do something stupid like cut billions in medical research and treatment initiatives?

The White House on Friday revealed President Trump’s budget request for fiscal 2026, which includes cutting a quarter of the discretionary funding designated to the Department of Health and Human Services (HHS)....

The 2026 proposal is seeking to cut $33.3 billion in discretionary funding for HHS, representing a 26.2 percent reduction compared to the fiscal 2025 budget.

This includes a $3.6 billion reduction in discretionary funding for the Centers for Disease Control and Prevention (CDC), an $18 billion reduction for the National Institutes of Health (NIH), a $674 million reduction for the Centers for Medicare and Medicaid Services (CMS) Program Management and a $240 million reduction for Administration for Strategic Preparedness and Response (ASPR) Hospital Preparedness Program.

The only health program that gains discretionary funding in the proposal is HHS Secretary Robert F. Kennedy Jr.’s Make America Healthy Again (MAHA) Commission, for which the budget provides $500 million.

The budget claims these funds would “allow the Secretary to tackle nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety across HHS.”

Hey, why rely on data and invest in the biggest job growth sector in America when we can rely on feelings and quack remedies we made up to grift money on heard about on the Internet?

Back on the jobs report, UW-Madison's Menzie Chinn looked into the numbers underneath the jobs report, and found some strange items that aren't going to hold up in future months.

What about taking out transportation and warehousing employment, presumably booming relative to what post-tariff levels will be, look to be on a lower trajectory. Taking into account the fact that Federal workers on leave/furloughed and taking buyouts will eventually be counted as not employed suggests a lackluster employment growth rate since January.

The low estimate from CNN is 121K, while the high estimate of Federal government workers on leave, furloughed, fired or took buyouts is 280K. Some portion of the workers are probably not counted as jobs, so the red square is a guess.

Taken literally, using the red square, underlying net job creation is on the order of 100K — rather than 155K — over the last three months.

Those transportation and warehousing jobs went up by 29,000 in April, and include the trucking, rail, and air travel and transport industries. Given the collapse in foreign travel to the US and the major falloff in traffic and orders to US ports, you'd think those job gains reverse rather quickly. And as Prof. Chinn notes, at some point soon, we will see the amount of federal government and fed funding-related layoffs hit the jobs numbers full force.

In addition, the jobs numbers of February and March were revised down by a total of 58,000, which means that with the April report, we really were only up 119,000 compared to what was reported before that report. Which makes me wonder why the Wall Street traders have been jumping back into this market in the last 2 weeks, including a 564 point gain in the DOW Jones yesterday. It's like these coked-up fools don't understand that the tariff effects are mostly yet to come, along with the slowdowns in consumer spending, higher prices and possible shortages of some products, and the piling up of inventories in some others.

I'll also note that there is a lot of post-"Liberation (from your wallet) Day" economic data to be released, and if we started to see a consumer reaction as the stock market tanked in the first half of April. Just because the jobs report that reflects how things looked 3 weeks ago didn't have a lot of people newly out of work, it doesn't mean that it's all good and clear for the rest of Q2, or for that matter, 2025.

March was good for incomes, and tariffs sped up spending. But it's worse for now and the future

It got swallowed up by news of the decline in GDP, but yesterday also had strong spending figures in March, to try to front-run what was to come.

A car-buying frenzy, stoked by tariff fears, drove US consumer spending in March to its biggest monthly gain in more than two years, new data showed Wednesday.

Consumer spending leapt 0.7% from February, according to a Commerce Department report released Wednesday that showed Americans shelled out last month for durable goods, particularly automobiles.

The Commerce Department’s Personal Income and Outlays report — which provides the most comprehensive federal data on spending, income as well as the Federal Reserve’s preferred inflation gauge — further reinforced what the recent retail sales data and anecdotal evidence have been indicating: Americans picked up their spending and likely pulled forward some purchases out of fear that President Donald Trump’s tariffs will raise prices in the months to come.

You can see the big jump in autos leading the $134.5 billion (annualized) increase in spending from March.

On the other hand, the drop in gasoline prices for March cut into the spending increases, and overall I’d say it was a pretty good month for spending.

On top of the strong numbers, January’s decline in Personal Consumption Expenditures wasn’t as bad as originally reported, revised to a drop of just over $1 billion (annualized) instead of a decline of $56.6 billion. And February’s increase in spending was revised up, increasing by more than $112 billion instead of the originally reported increase of less than $88 billion. It would indicate that consumption in GDP might be revised up as well, when we see the 2nd release of those numbers at the end of May.

On the other side, incomes were revised down by $14 billion for January and $6.5 billion for February. That downward revision was driven by a lower-than-originally estimated amount of Medicaid benefit payments, while income from wage and salaries didn't change much at all, and continued with decent growth of 0.5% for March and 1.1% for Q1.

For the inflation part of that report, the positive news is that March’s figures flattened out, with total PCE inflation going down by 0.04% and “core” (non-food and energy) inflation rising by a puny 0.03%. The jumps in the previous 2 months meant that the Q1 rate of inflation was up by 3.6% overall and 3.5% of core, and it makes the Federal Reserve have to make a tough call as to whether inflation is picking up in 2025 because companies were trying to grab profits ahead of tariffs, and the underlying situation was stable (as flat March inflation would indicate).

Conversely, if the higher inflation of January or February meant overall prices were heading up even before the tariffs hit, and that the economy is going to slow down even further to avoid an inflationary cycle of 5-6% or higher – which would set the stage for ongoing stagflation and discourage rate cuts in the short term.

The income and spending report reiterates that if it wasn’t for all the distortions brought on by Tariff Man, we’d probably have seen the 2024 trend of decent economic and income growth continuing in Q1 2025. But because of the randomness and general idiocy coming from the White House, it led to a surge of imports throughout the first 3 months of the year, and likely pulled forward some purchases of autos and other large items into March that would have happened at a later time.

It tells me that when the imports stop coming here and the prices go up from the tariffs, we will likely have a larger cutback in spending for April and future months than we’d otherwise would have had. And that’s before we account for the lack of new orders that’ll be coming due to so much inventory piling up, and the job losses pick up.

And the verdict is...a slight drop in GDP

Well, we got the numbers on the GDP for the first quarter of Trump 2.0. And they were as wacky as we thought they might be.

So our final sales were even stronger than expected, but we had a drop in GDP? How does this happen?

Mostly because there was a lot of front-running of Trump's "Liberation Day" tariffs of April 2. Both in the surge of imports to avoid the cost of tariffs on the business side (which subtracts from GDP), and in a surge of non-residential business investment and inventories.

Imports dropped GDP by more than 5% but nearly half of that loss was recovered due to a large increase in inventories, likely related to that surge of imports not yet being sold. But what's the "non-residential investment" growth?

All computer/tech-related stuff.

Change in non-residential business investment, Q1 2025 (annualized)
Information processing equipment +$73.6 billion
Software +$16.1 billion
All other sectors -$8.8 billion

That could well be a tariff effect with technology components and foreign-made products in those 2 sectors, and it also likely includes purchases and investments for AI development (in a Bubble that's going to pop sooner than later) . Doesn't seem like an amount of growth that's going to be repeated for the future.

Also note that consumer spending growth got cut in half from the amount of boost it gave to economic growth in the last 3 quarter of 2024. We got indications that this might happen due to the bad retail sales and spending numbers we'd seen for the first 2 months of 2025. But March had a surge of retail sales that also got reflected in strong consumer spending figures released today, driven by a jump in (pre-tariffed) car sales.

While that might cause an upward revision in consumer spending when the next look at Q1 numbers comes next month, it also makes it less likely that March's spending increase sustains through Q2. I would guess the economic data for April and beyond will show what the new post-tariff spending baseline might look like, and it won't be as good as the numbers we had in March.

To me, there's one other big item in the GDP report that is going to have an effect on future numbers and policies.

Yeah, that higher inflation in the Fed's preferred index isn't going to lead them to want rate cuts any time soon. And much of that Q1 price increase has nothing to do with tariffs, since those products were already inside of the country before Trump imposed those duties. Sure, the same PCE number indicated prices flattened in March after 2 months of 0.4% increases to start the year, but do you think things will stay flat in April and the rest of Q2 with the tariffs taking effect (and businesses more than happy to blame tariffs to raise prices for extra profit)?

To me, the GDP report tells us that Trumpian chaos has already distorted Americans' spending choices for both consumers and businesses. The stage is set for a drop in demand from both businesses and consumers at the same time that there is more inventory to sell, and I can see a scenario where we see less economic activity and final sales dropping well below the 3% growth we saw in Q1, but we might not end up with a second straight negative number because the import surge ends and goes back to pre-2025 levels.

But make no mistake, it'll probably feel a lot more like recession than what we saw in a first quarter that had -0.3% for GDP. And there isn't going to be much in the real economy to change that direction once the layoffs and consumer cutbacks pick up.

Import surge continued in March. Which drops GDP for Q1, and makes Q2 slowdown worse

Today we found out that March was yet another month with a massive amounts of imports to America, as businesses tried to beat the “Liberation Day” tariffs declared by Donald Trump on April 2.

The international trade deficit was $162.0 billion in March, up $14.1 billion from $147.8 billion in February. Exports of goods for March were $180.8 billion, $2.2 billion more than February exports. Imports of goods for March were $342.7 billion, $16.3 billion more than February imports.

That’s quite the Trump effect for the first 3 months of 2025, isn’t it?

That explosion in imports will show up in tomorrow’s first look at Q1 GDP, as imports subtract from total domestic product. Now to be fair, this decline gets recovered when a final product that results from those imports is made and/or sold in the US, plus whatever profit the businesses pull.

But for Q1, it’s likely to take away from the totals, and March’s continued surge of imports dropped more than 1% from the final projection of GDPNow from the Atlanta Fed, which came out this morning.

After this morning’s Advance Economic Indicators release from the US Census Bureau, the standard and alternative model nowcasts of the contribution of net exports to first-quarter real GDP growth declined from -4.90 percentage points and -2.85 percentage points, respectively, to -5.26 percentage points and -4.05 percentage points.

Woof. But on the flip side, take out that import surge as well as increases in government purchases and overall inventories (which add to GDP), and the underlying economy generally has held up in the first three months of the year. As UW-Madison professor Menzie Chinn notes in Econbrowser.

Lastly, I also wanted to mention this part of the Census Bureau’s release, which to me includes a warning about things going forward.

Wholesale inventories for March, adjusted for seasonal variations and trading day differences, but not for price changes, were estimated at an end-of-month level of $908.0 billion, up 0.5 percent (±0.2 percent) from February 2025, and were up 2.3 percent (±0.7 percent) from March 2024. The January 2025 to February 2025 percentage change was revised from the preliminary estimate of up 0.3 percent (±0.2 percent) to up 0.5 percent (±0.2 percent).

So that’s two straight months of 0.5% increases in the value of inventories for businesses. Combine this increase in inventory with the rush of imports, and I don’t see much of a need to have much more to order in the coming months, do you?

Which helps explain why we’ve been seeing reports like this in recent weeks.

What makes the drop in consumer confidence in 2025 so remarkable to me is that the really bad stuff of layoffs (from a lack of orders) and higher prices (from tariffs) has largely yet to happen. But Americans seem to recognize that it’s coming soon enough, and if consumers start to cut back on their spending because of those well-founded worries about the future of the economy, then the recessionary cycle that we are likely to enter in Q2 will continue and deepen over time.

The real sign from Supreme Court election - Wis Dems show up all the time now

Saw an interesting analysis about our state's elections recently. It came from Lakshya Jain and Armin Thomas at Split Ticket, who say Susan Crawford’s sizable win in the Supreme Court election 3 weeks ago wasn't all that surprising. And they say it comes down to one simple factor – Dems turn out in Wisconsin.

Our estimate is that the voters who voted in the 2025 Supreme Court election backed Kamala Harris by 7 points in 2024. In other words, roughly 70% of Susan Crawford’s win margin was attributable to changes in who was voting, rather than changes in how people voted. While the persuasion she got would still have been enough to flip the state with a November 2024 electorate (which was Trump +1), the landslide victory largely came down to a big turnout advantage.

Intuitively, this makes a lot of sense — the voters who show up in off-cycle elections tend to be far more educated and engaged, which also means they’re more partisan and thus significantly less prone to persuasion. This generally gives Democrats an inherent coalition boost in special elections, because their voters (especially in whiter areas) are more educated and thus more likely to turn out. On top of that, the party also enjoys an intra-demographic advantage, as high-engagement Democrats turn out at higher rates than high-engagement Republicans do in every demographic category, per The New York Times.

The net result was a massive edge for Democrats, even in a race that had record-setting turnout for an April election. All across Wisconsin, whether in big cities or the tiniest rural villages, Democrats mostly did a much better job of showing up than Republicans did.

And the authors say the biggest change in who was turning out in that Supreme Court election happened in Western Wisconsin’s Driftless Region, which slid hard towards Republicans in the November 2024 election.

And which Wisconsin Congressman ends up being the biggest loser with that change in electorate? The guy who was already a GOP underperformer.

For example, Derrick Van Orden’s WI-03 is high on Democratic target lists. Much of the Republican base in this seat does not vote when Donald Trump is not on the ballot — though it was R +8 in 2024, our estimates suggest that Kamala Harris comfortably won the electorate that actually showed up in April 2025. A bluer electorate relative to 2024 would put him in the electoral crosshairs, especially considering he only won by 2% against Rebecca Cooke, who is gunning for a rematch against him….

While we certainly don’t expect an 8-point gap between the partisanships of the 2024 and 2026 electorates, we wouldn’t be surprised by a 4-5 point gap (placing 2026’s electorate at Harris +2 or +3). It’s important to remember that the 2022 electorate was probably Harris +1 by 2024 vote — considering how the realignment in engagement has only accelerated since then, and given that Democrats are now more enthusiastic to vote because they are out of power, we’d expect 2026 to be worse in turnout for the GOP.

So if WI-3 is going to have an near-even electorate in 2026, how is Small-D VO going to stay in office in that scenario? Especially when he will continue to make an ass of himself by doing things like trying to impeach judges for demanding that DOGE dweebs follow the law?

Elon Musk may have rewarded Van Orden by giving him a max donation for the upcoming election cycle. But as we saw 3 weeks ago, when people hate you in this state, all the money you throw out there is a negative for the candidate you prop up, not a positive.

I also noted in the wake of Crawford's election that there seemed to be a disapperance and/or change in the voting habits of the college bros that helped lift Trump to victory by less than 1% in this state in November. That didn't just show in sizable shifts towards Dems in college counties around La Crosse, Eau Claire, Stevens Point and Oshkosh, but it was especially obvious in the parts of Madison that were on and next to the UW-Madison campus, where there was a massive drop in the votes for the GOP-backed candidate in April vs a small decline in votes for the Dem-supported candidate.

The way Trump has been tanking, the GOPs are probably in line to lose anyway in 2026. But if the better-educated and better-aware Dem voters in Wisconsin continue to have off-year turnout advantages, that won’t just put Derrick Van Orden out of Congress, but also increases the chances that some other WisGOP Congress-slug like Bryan Steil or Tony Wied gets the boot in November 2026. And it makes flipping the State Legislature a strong possibility.

Maybe these Congress GOPs should do something other than cowering in a corner and blindly supporting a President who the majority Wisconsin voters won't be in support of in November 2026. Just a thought.

More Trumpian losing, both on Wall Street and with the Fed

So after the DOW Jones lost nearly 1,400 points over the last 3 trading days of last week, how did stocks respond today after a long 3-day holiday weekend? With more losing.

And stocks weren't the only financial items that were in decline today.

Major U.S. stock indexes dropped and the dollar index slid to a three-year low on Monday as U.S. President Donald Trump's continued attacks on the Federal Reserve chair and the bank's monetary policy rattled investors.

Investors flocked to safe-haven assets including gold, which hit another record high, and the Swiss franc.

Trump has been complaining about Fed Chair Jerome Powell and Powell’s continued “wait and see” approach on any changes in interest rates, as the Chair says he wants to wait for data on inflation and the economy as a whole in the wake of Trump’s tariff announcements at the start of this month.

That’s not good enough for Trump, who wants to see interest rates go down because he and Elon Musk are strung out on debt . And investors are getting spooked as a result of the President's rantings.

[Trump's] comments about Powell fueled worries about the Fed's independence in setting a monetary policy path and about the outlook for U.S. assets. Most markets were closed on Friday and some, including most of Europe, remained on holiday for Easter Monday, leading to thinner-than-usual liquidity.

Powell is "a steady hand, he's a known entity, he's stability in a world of uncertainty. He brings that calmness to the market, something people can rely on that hasn't changed stability while all this chaos is going on," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

In other words, Mr. President...

Hilariously, the biggest barrier to interest rate cuts right now IS DONALD TRUMP. Putting tariffs on a widespread range of products are highly likely to raise prices for consumers no matter where the products come from. Dollar devaluation is also inflationary, even as it helps US exports due to more competitive prices overseas. But those exports now can’t get sold in other places because those other countries have been putting on retaliatory tariffs against US goods.

So if demand doesn’t fall off a cliff while prices are going up, there’s no reason for the Fed to cut rates further, because why would they want to encourage even more borrowing and more inflation? And with many US manufacturing businesses are already facing higher costs as the components and parts for their products cost more due to tariffs, that would likely counteract any help those firms might get on the interest rate front.

The only way an interest rate cut makes a lick of sense is if we get information that the economy is in free fall, with large amounts of layoffs and order cutbacks. While I can see a scenario why the recessionary free fall might happen soon, there’s no evidence of it happening today, as unemployment claims have remained low and there was a surge in new manufacturing orders and imports in Q1 to get ahead of the tariffs.

So I think the markets continued to tank today because there’s a sense from Wall Street traders about 2 things:

1. The Fed is stuck between trying to limit tariff-induced inflation, and trying to fend off a Q2 recession that is nearing inevitability. But also...

2. It feels like the wheels are completely off the Trump Train, between the Old Man's ranting against the Fed Chair and general idiocy on his tariff policy, to the drunken, careless, one-sideburn Fox News host that is in charge of the Department of Defense,, to the dimwitted Homeland Security Secretary that just had her purse stolen from a DC restaurant this weekend with $3,000 in cash and who-knows-what kinds of confidential information.

The Money Men are apparently realizing that having a GOPpuppet in charge to give away tax cuts and allow corruption isn’t as important as having people with a clue in charge. Especially if the person calling the shots is a senile rich kid that has only worked at Daddy's business, doesn’t know anything about how and why the real economy works or how and why real jobs grow and improve.

Evers veto won't raise property taxes....unless GOP Legislature wants it to

Susan Crawford has yet to take her seat at the Wisconsin Supreme Court, and there are cases from last year that the prior majority have to clean up. One of the big cases had their decision rendered yesterday.

And here's how we got to yesterday's decision.

The budget lawmakers sent to Evers in the previous two-year session called for a spending increase of $325 a year per student in both 2023-24 and 2024-25. Evers struck the “20” and a dash from the reference for “2024-25.” That changed the end date to “2425.”

Two taxpayers challenged the move with the backing of Wisconsin Manufacturers & Commerce, the state’s largest business group. Among other things, the suit argued Evers’ move was barred by a prohibition on guvs creating new words by striking out individual letters.

Do I think what Gov Evers did is kind of BS? Yes, and if you put this type of move to a constituional amendment, I'd consider voting for it, because of what it could lead to if the wrong governor was in charge (see Washington DC these days for more insight).

But it's a good outcome for Wisconsin, as it raises the revenue limits for public K-12 schools, allowing for more resources to go into the classroom. And that's badly needing after 15 years of Republicans choking off the schools with voucher theft and many years of $0 for revenue limit increases, even as inflation raised costs for those same schools.

Not surprisingly, Republicans really didn't like the idea of more taxpayer resources being able to be invested in Wisconsin's public schools.

Senate Majority Leader Devin LeMahieu, R-Oostburg, and Assembly Speaker Robin Vos, R-Rochester, focused their attention today on the court’s liberal majority. LeMahieu said the court ruled “based on partisanship and politics rather than the rule of law,” and fellow GOP lawmakers predicted the ruling would lead to massive property tax increases for the next 400 years....

“The Supreme Court’s partisan decision today should worry every Wisconsinite. The Governor can now raise property taxes – unchecked by any other branch of government – for hundreds of years,” [Vos] said.

Except it's not true that property taxes have to go up. And somebody should tell Robbin' that "other branches of government" can keep that from happening.

The per pupil cap Evers reworked applies to what schools can spend between state aid and property taxes. In addition to the option of changing the language Evers wrote through future legislation, the amount of state aid put into the formula will heavily influence property taxes.

In his 2025-27 budget, Evers proposed tying the per-pupil spending increase to inflation going forward. Under his proposal, the limit would go up $334 in 2025-26 and $345 in 2026-27. The $3.4 billion in additional state spending on K-12 education he proposed in the budget would largely eat up that increase.

RIGHT. The Legislature could agree with the Governor to increase state aids and/or property tax write-offs to make sure Wisconsinites don't pay more in property taxes toward K-12 schools. In addition, just because the revenue limit is going up by $325, it doesn't mean that local school boards have to sign off on an increase in their revenues by $325, and they can choose not to increase property taxes if they don't want to.

Bottom line is that if property taxes for K-12 schools go up because of the higher revenue limits that is the fault of the GOP Legislature. Both in failing to use enough of our $4 billion+ surplus to use state funds to cover the extra 2-3% per student that the $325 increase in revenue limits account for, and because they put K-12 community schools in position to need these extra funds to try to catch up to 15 years of insufficient funding.

But that would require the GOP Legislature to do something other than try to squander our surplus on the rich and give away our tax dollars to the donors in the school voucher industry. And I bet they won't change those tactics in this budget, even as voter anger rises against the GOP in general, and against the Republican hatred of education in particular.

Front-running tariffs likely will stave off recession for Q1. But makes it more likely in Q2?

I'd been looking to see if consumer spending was holding up through the beginnings of our stock market decline in March, and we got an indication with this morning's release of retail sales numbers.

Retail sales climbed 1.4% in March from the prior month, the Commerce Department said Wednesday, up from February’s 0.2% gain and the highest monthly gain since January 2023. The figures are adjusted for seasonal swings but not inflation.

The strong showing in March was largely driven by sales of cars and auto parts. Excluding those purchases, retail sales were up a more modest 0.5%.

The big driver of the increase was due to a jump in the automobile sector, as it seems that American consumers took the advice of a recent Madison-area car dealer ad that I saw, and tried to “beat the tariffs”. Sales of autos and auto parts were up 5.3% in March after a 1.6% drop in February and a 3.4% drop in January.

So the increase merely gets us back to the (seasonally-adjusted) heights in auto and parts sales that we had at the end of 2024, and it's at a higher level of activity compared to the slumping times of 2023.

I will add that even if you take out autos and the volatile amount of spending on gasoline, March was a solid month for retail sales after a slow start to 2025. So-called “core” retail sales went up by 0.8% in March, and lifted the quarterly average for Q1 2025 to +0.6% compared to Q4 2024. That’s beating the rate of inflation in most areas for the first 3 months of 2025, so we seem likely to see consumer spending be positive for Q1 GDP.

But that doesn’t mean we aren't seeing distortions due to the antics of Tariff Man and his enablers in DC. While it’s good to see vehicles get cleared off of lots in March, there were large numbers of auto components ordered and imported in the last 2 months to beat the extra duties, and if the tariff threat encouraged people to buy sooner than later, there might not be the demand to follow up for the vehicles that are coming out of the factory now.

Likewise, the S&P has fallen another 5% since the end of March after dropping 8% in the 6 weeks leading up to March 31. At some point, you have to think that and the collapse in consumer sentiment is going to lead to cutbacks in consumer spending. And while we’ve seen announcements of layoffs, we have yet to see that show up with higher unemployment claims or drops in income in other reports.

With that in mind, I’m going to guess we eke out a slight gain in GDP for Q1, or at least growth once you remove the massive amount of imports in January and February which came in to beat the tariffs (imports subtract from GDP, remember). The underlying economy seems to have held up in these first three months, even if people don’t like what’s going on.

But there isn’t much positive to carry over into April, and it’s pretty clear that we are more likely to see things get worse than get better. And as we know in non-COVID recessions, once things turn downward, it takes a while to pull out of the downturn, because the job losses and lack of need to invest in businesses start to build on each other.

In addition, I wouldn’t expect much help from the federal government, especially as long as the DOGE dweebs are stealing data and the Trump trash are pulling funds from anything that might be good for society. And then trade seems to be drying up, especially as China cuts off American exports of food and energy in large numbers.

So yes, the US economy survived through March, but it’s not a good outlook for Q2, is it?

Sunday reading on the Fools of April in the White House

Wanted to forward a couple of columns to you. The first is from economist Paul Krugman, who says that President Trump's erratic, seemingly random decisions on tariffs have made the large investors lose trust US assets at this point. And that it is indisputable that higher prices are coming due to the President's decisions.

In fact, savvy traders have realized that there’s no coherent economic strategy. There’s an old line about military analysis: “Amateurs talk about tactics, but professionals talk about logistics.” Well, when it comes to taking the pulse of financial markets, amateurs talk about stocks, but professionals talk about bond and currency markets. That’s because bond and currency markets are generally less driven by emotion. There’s no “meme gambling investing” in bond and currency markets. And these markets are both signaling major loss of faith in America.

First, about tariffs: It’s true that for the time being Trump has scaled back some of the tariffs displayed on his big piece of cardboard last week. For example, unless we have another policy swerve, the European Union will now face a 10 percent tariff over the next three months rather than a 20 percent tariff. But the tariff on China, our third-biggest trading partner after Canada and Mexico, has gone from 34 percent to more than 130 percent. And we still have high tariffs on steel, aluminum and so on. In effect, observers who claim that tariffs have gone down are missing the biggest part of the story.

Economists who have actually run the numbers, like those at the Yale Budget Lab, estimate that the April 9 tariff regime will raise consumer prices more than the April 2 regime because of the extraordinarily high tariff rate on Chinese imports. Specifically, the budget lab estimates that the latest version of Trump’s trade war will raise consumer prices by 2.9 percent. This is roughly ten times the probable impact of the infamous Smoot-Hawley tariff of 1930.

Krugman goes on to note that this loss of confidence is the real problem, and is making the pros to treat America as a Banana Republic.

For example, economic theory and history both say that the imposition of tariffs normally leads to a stronger currency unless other countries retaliate. During his confirmation hearing Scott Bessent, the incoming Treasury secretary, argued that a 10 percent tariff would lead to something like a 4 percent rise in the dollar. But not this time. Instead of going up, the dollar has plunged....

The common thread in currency and bond markets is that, thanks to Trump, dollar assets — traditionally the foundation of the global financial system — are no longer perceived as safe.

The combination of interest rates soaring amid a slump and the currency plunging despite rising interest rates isn’t what we normally expect for advanced countries, let alone the owner of the world’s leading reserve currency. It is, however, what we often see in emerging-market economies. That is, investors have started treating the United States like a third-world economy.

That's the nice way of saying "TRUMP IS A F'ING MORON." Drew Magary of Defector put up a screed that reiterates that point, and sums up what I think a lot of us want to say to Trump and the group of kiss-up grifters that surrounds him.

The whole thing is great, and here's how it ends.

None of you people were built for this. You’re all unqualified, overwhelmed, and dumber than a post. And you think that standing behind a mic and going Hurrr durrr every other country has a smaller dick than us because of these policies will make you Patton. Well, President Kidney Failure, telling everyone you’re the greatest leader who ever led doesn’t make it so. Quite the contrary. People voted for you because they were bored. Now you’re gonna bleed them dry, all while small-talking them to death. Don’t you ever get tired of talking? Don’t you run out of saliva? Is there a strategic gland reserve that you and your cronies are skimming from to keep your maws properly lubricated? You pieces of shit are wasting words, and that offends me as a professional wordsmith. I choose my words carefully before writing them down, because that’s what people are supposed to do. They are not meant to be sentient word clouds, crying "FREEDOM!" the second a process server knocks on their door.

But that’s what you morons do, because spouting off is the only thing you know how to do. You’re destroying the English language, a feat that not even Ryan Murphy himself could manage despite his tireless efforts. So, before you’ve successfully rendered both America and basic human communication extinct, allow me to talk for just one moment. I only need eight words, and here they are:

Everyone, everywhere, would be better off without you.

This is what you get when you have a President who tells his aides to "treat each day as a TV episode", with no connection between past events and current developments. And where the "results" have little to do with economic outcomes, and more to do with what gets headlines and keeps the rubes stirred up so they don't ask questions.

But why is it the writers that have to tell this truth? Where are the Dems nationwide saying the simple fact that "THESE IDIOTS DON'T HAVE A CLUE". You really don't need to go further than that, because a strong majority of Americans already agree.