The Trump Recession Begins

The Current Economic Downturn is All On Trump

Last Thursday, economic news sent the stock market indexes notably downward, continuing a trend that had started since Trump unleashed Elon Musk on his internal war with competent governance: the US Job market had seen its greatest increase in job layoffs since February 2009 (amidst the Housing Collapse). Since the firm releasing the report had begun tracking job hirings and firings there had been only 11 previous occassions where job losses outpaced hiring, and all 11 of them had occurred in recessions. This one was the worst since people were wondering if we’d even have an economy in a month.

That’s not even considering that Republicans have control over both houses of Congress and the White House, and are complaining about a potential government shutdown pending later this week. This is Republican (incompetent) Governance in a nutshell; get complete control and still fail at doing the most basic of tasks.¹

Which is to say, we are very likely going to experience a recession, if we are not already in one.²

It’s typically rare that recessions only have one cause; it’s usually a stew of a number of things going wrong simultaneously that cause the entire market to soften and go negative. And so it is with this one as well:

• Bird Flu has once again spiked the cost of eggs.³

  • One of the reasons egg prices can be so contributory to inflation is that eggs are often put into make all sorts of food products. Many bakery items and restaurant dishes require them. An increase in costs here, increases the costs downsteream as well.

  • The other thing about egg prices is that there was already a shortage of them before bird flu hit. Why you may ask? Because the current health food trend is focused primarily on eating eggs as protein regularly, and with so many people doing it at the same time, the supply has not kept with demand.

• On the other side of the economic ledger from inflation is employment. We were already facing a round of mass layoffs in the job market due to efficiencies caused by A.I. The quality of LLMs/AI have achieved a level that attains and surpasses that of human workers in many different areas, and it is easier, cheaper and of better quality than employing individuals. As the economy recedes and businesses look to cut costs further, it compounds itself, speeding up AI adoption and causing even greater layoffs.

Regardless of what happens, Trump is going to blame it on Biden, saying his policies are at fault for the recent collapse. This is absolutely bullshit. Biden kept the economy under control right up until he handed the White House over to MAGAGodCheetoCrazyPants. Ever since then, every economic decision Trump has made has had huge ramifications (beyond his comprehension) and what he is doing, and continues to do, is only exacerbating the economic problems resulting.

Now, you may think to yourself that taking into consideration the market of the past six years, understanding inflation was pernicious but had largely come under control as shipping retutned to normal, one would not be so quick to spook the markets in any particular way. Likewise, the idea of anticipating the coming A.I. transition, a smart legislator (say, a President) would begin to promote AI job education programs to move people from manual roles to more advanced technological roles where they could be put to better use. Alas, neither of these happened. Neither of these things are GOING to happen.

Instead, President Donald Trump decided to take a wrecking ball to our government and fire pretty much everybody, then decided to initiate nonsensical trade wars with our three biggest trade partners, Canada, Mexico and China. The bulk of the jobs lost in February were in the government sector, but that has a cascading effect as it permeates through local economies; e.g. when you fire everyone at the National Hurricane Center in Miami, that results in less money there and the damage spreads. The stupid, ruinous trade wars resulted in retaliatory tarriffs that only further hurt American consumers. If you were John Meynard Keynes trying to plan a way to break a good economy in a month you could not have devised a better plan really. Every action that Trump has done since coming to office has been to increase BOTH inflation and unemployment. We haven’t seen a situation like this brewing since the Carter years, when both peaked in double digits.⁴

What’s particularly troubling about what Trump and Musk are doing, is that when the economy does turn south, one of the easiest, quickest ways to stem the bleeding and turn it around is…government hiring. But that’s NOT what these two are about. I’m pretty sure that if things went really bad and the pressure was building to do something about it, Trump would rather go the Hoover route and say something akin to “You’re on your own, get a job!’ as opposed to actually doing something to promote job creation. Because that is the way he thinks. Because he doesn’t get how all these interrelated things work and its just easier to blame those that have been harmed than fix a problem. During the Depression, makeshift camps of homeless in parks were dersively referred to as “Hoovervilles”; Trump, always the real estate person, and never wanting to be outdone, could be on his way toward making “TrumpTowns.”

And folks, this is why when you are in a polling both in November, and you are considering two candidates, your first priority in determining who to pull the lever for is “Is this person competent enough to do the job?” It’s not always easy or evident, but as most everyone who worked previously in the past Trump administration professed, he was NOT competent for the job and was in fact dangerous.

This self imposed sabotaged economy of his demonstrates that perfectly.

PurpleAmerica’s Cultural Corner

One of the best movies about the Housing Collapse in 2008 was Too Big to Fail, based on the Aaron Ross Sorkin book. It covers the period from when Bear Stearns collapsed to the passage of the TARP bill in which the government leveraged the Big Banks to keep them afloat.

The scene that always sticks out to me though is this scene, based on an event that really happened. The Chinese Finance Minister mentions the Russians approached them with a scheme to begin dumping U.S. FannieMae and FreedieMac Bond debt onto the market without warning all at once. The results of that would be catastrophic to the US economy putting us in a position worse than the Great Depression.

The kicker line though is “The amount of debt your country carries is a terrible vulnerability.”

A reminder, this is the country Trump started a trade war with last week.

PurpleAmerica’s Obscure Fact of the Day

PurpleAmerica’s Final Word on the Subject

“What the fuck is he doing?”

—John Meynard Keynes on Donald Trump⁵

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Footnotes and Fun Stuff

1. The last part of this is to point to the other side and say it’s all their fault, but that doesn’t work as well when Democrats have absolutely zero power in Washington right now and there is no real leadership to demonize on their side at the moment.

2. Economic statistics are always an odd thing in that they often lag so much behind the actuality. It takes time to organize, compile the data, analyze it and get it out there. Usually, reports are only put out regularly (monthly in most cases) so by the time the report is public, a notable amount of time has already transpired. This gets into another point in that the technical term for a recession is two consecutive quarters with negative growth. We had positive growth the last quarter of 2024, so a recession would not conceivably be called until after the June 30th numbers come in at the earliest.

3. People blamed Biden for the inflation caused last time, but it may be sinking in that he didn’t actually have that much to do with it. The question is if consumers choose to blame Trump or give Joe more of a “our bad” kind of response.

4. Hopefully, it won’t get that bad.

5. OK. This is a made up quote considering Keynes has been dead for a really long time. Nonetheless, Trump, who is supposedly some business genius, does not seem to understand the various basics of Keynesian Economics.