It is 2 years into the President Trump economy and some parts are doing well and others not so well, particularly with regards to government policies.

In an article by Tony Romm of the New York Times News Service, when President Trump was elected his priorities were to defeat the scourge of inflation and slash government spending which Republicans saw as the root of the problem.

The problem is the President’s policies have worsened the problem.

The first policy that did not help inflation was the tariffs or the trade war. When the Treasury was told by the Supreme Court to repay those who paid the tariffs, the money did not go to foreign countries it went to companies because the company that imports the goods has to pay the tariff or consumers were paying the tariffs. In addition, the President might have given companies incentives to make more of the goods in America but they did not, for one of the things the President’s Big Beautiful Bill did was lower corporate income taxes. He could have lower corporate income taxes if the good was made in America, but there was not restrictions and companies examined how much would it take to make in America or outside of America? They paid the tariff. In addition, if you watch You Tube clips on manufacturing, you will see more and more robots or automation being used, what jobs were coming back?

The war in Iran resulted in the closure of the Strait of Hormuz which oil and gas flowed from the Gulf of Arbia. All the countries in the Gulf have developed a variety of value-added products which were shipped through the Gulf. The movement stopped and prices went up and have stayed up. The value-added products have gone through the supply chain and there are real shortages, so prices are higher.

Inflation is running at 3.7%, the President whose business was in real estate was looking for interest rates to fall to 2%.

Sarah House, a senior economist at Wells Fargo, projects inflation will end the year at 3.5%. There is a gap between what consumers are taking in and how fast the money is going out the door.

Consumers are using credit cards more or there is more credit card debt which is good for VISA and Mastercard. Consumers are using credit cards for groceries and at some point the cards need to be repaid or groceries become even more expensive.

Kevin Warsh, the Chair of the Federal Reserve wants to cut interest rates, but fighting inflation is more important so he has not cut rates.

It turns of the deficit, the national debt went over $40 trillion. The Republicans used to be about cutting deficits but everyone in Washington likes to spend and wars are expensive. 2 years into the administration and Wall Street is reacting by pushing bond yields higher. Secretary of Treasury Scott Bessent announced a rare move to buy more longer-term government bonds and issue short term bonds in the hopes interest rates fall. He believes the administration is creating productive assets for future growth, which will paying taxes all the way down the line. I like to think that more of pulling the back of slingshot and creating potential energy that becomes kinetic.

Linking to dividend paying stocks, the economy stupid is the issue of the midterms, and the President has issued more executive orders than any President in history. He has also seen the bulk of them shut down from the courts because they overstep his ability, the courts want Congress to pass legislation to change and the Senate to ratify the changes. That takes time and we will see what happens in the midterms. Meanwhile companies are trying to keep a reasonably low profile so politicians on both sides have no opinion of their good work.

There are more questions than answers, till the next time – to raising questions.