Economic Roulette & Tone-Deaf Democrats – Top 3 Takeaways – March 12th, 2025
Takeaway #1: Will This Get Worse Before It Gets Better?
Since the onset of ‘Bidenflation the most important monthly economic information has been the Consumer Price Index Report. That remains especially true today as the Trump administration is facing its first major economic test amid growing economic anxiety surrounding the administration's tariff policies. The bottom line is this. The stock market is already in correction mode, many businesses have taken to sitting on their hands (as they wait to see where the administration's tariff policies shake out) and the question is what exactly is happening economically. Today’s CPI report will help paint the picture. One thing is clear, economic growth is almost certainly slowing. As I mentioned yesterday, 91% of economic forecasts for the first quarter are lower today than they were in January. And it’s not that 91% of economists couldn’t be wrong, it’s happened before, a la what we were told was only to be “transitory” inflation four years ago. You know the inflation that’s been so untranistory that we still haven’t recovered from. Nevertheless, the odds are that the 91% of economists aren’t wrong this time – especially since the stock market tends to be a leading economic indicator. So, if indeed economic growth is slowing, that’s not necessarily a bad thing because it could aid in providing better affordability going forward, provided that there’s one thing that doesn’t happen. Inflation reacceleration. President Trump masterfully used tariffs to achieve his desired economic policies during his first administration. That was also during a period of historically low inflation. That’s not the case this time around with the inflation rate checking in at 3% in January- or already 1% higher than what the Federal Reserve considers to be sustainable. If today’s report shows a declining rate of inflation during President Trump’s first full month in office, which included the implementation of tariffs; he’s in business and the Federal Reserve would be in a position to cut interest rates sooner than later. Should that happen, it would not only aid in providing greater affordability for most Americans, but could also help protect against a potential recession. If however, we see that Trump’s tariffs aided in increasing inflation in February, not only is the previous scenario off the table, but the concerns would also immediately grow about inflation reacceleration given that President Trump was raising the rate of tariffs as recently as yesterday.
Takeaway #2: A heck of a lot hinges economically on what we’ll hear at 8:30 this morning.
The expectations are for the headline inflation rate to have fallen to 2.9% annually in February. 2.9% or lower and Trump’s in business. 3% or higher and what you’ve being seeing in the markets and potentially with the economy is likely to get worse before it gets better.
Takeaway #3: Tone Deaf
When you hear Democrats talking about “extreme MAGA Republicans” what comes to mind? Is that something that resonates with you? Is that something that sounds tone deaf to you? The closest thing to a leader that the Democrat Party currently has is House Minority Leader Hakeem Jeffries – the man who’d be the next speaker of the House if Democrats were to take control in next year’s midterm elections – which they’re currently favored to do as Republicans have a super narrow House majority and the President’s Party typically losses congressional seats in midterm elections. Anyway, in the ultimate sign that Democrats have learned nothing from last November’s elections, and at present stand for nothing other than opposing Republicans, Jeffries is running it back with the same playbook. Quoting Jeffries, as congressional Republicans were set to pass the “continuing resolution” to fund the federal government through the end of the current fiscal year in September... The CR is aimed at avoiding a partial government shutdown while they work on President Trump’s budget agenda... Extreme MAGA Republicans want to shut down the government. The House Republican so-called spending bill does nothing to protect Social Security, Medicare and Medicaid. Quite the opposite. The Republican bill dramatically cuts health care, nutritional assistance for children and families and veterans benefits. It is not something we could ever support. House Democrats will not be complicit in the Republican effort to hurt the American people. Now, apparently Jeffries didn’t get the memo that A) The president of the United States, who won a commanding victory and maintains a positive approval rating, is the MAGA leader. And I’m not sure Hakeem or his team have stopped to think about what “extreme MAGA” is supposed to mean. I mean quite literally it implies people who are extremely supportive of making America great again. Are you extremely supportive of making America great again? I certainly am. Clearly Democrats were not when they had power and are not as they’re now out of power. But anyway, I’m not sure who the people are supposed to be who want our country to be just a little less crappy... you know, the MALC’s, or the politicians looking to make America less crappy... Perhaps they’re the Mitch McConnell’s and Lindsey Grahams? Anyway, Democrats remain tone deaf but also out of ideas. They’re back to literally saying that elected Republicans are intentionally trying to hurt you. Which btw, even if true is moot because voters would give them the boot. And as for what’s actually in the bill? Almost everything that we’ve been doing. The CR only cuts $13 billion in non-defense discretionary spending while increasing $6 billion in defense spending...out of a six-month spending plan of $3.375 trillion. Or in other words, the cuts are 0.003% of already planned discretionary spending- less than what DOGE has been able to save in a week. Perhaps that’s why a Democrat from Maine voted with all Republicans not named Thomas Massie in the House to pass it yesterday.