- Held aloft on hope…
- When bliss and ignorance combine…
- April 15 is tomorrow! If you haven’t filed yet, you need to learn about this loophole that can LEGALLY save you thousands in taxes this year
Dear Reader,
As a youth the Road Runner cartoon show amused me vastly.
The Road Runner character would deceive his murderous pursuer — Wile E. Coyote — over a cliff edge.
Yet this Coyote figure would continue his chase for incredible seconds… disobeying gravity’s iron laws… unaware of his precarious peril.
At this point he would glance groundward — and receive an updated intelligence report.
Alarmed and stripped of his delusion, he would succumb to reality and to gravity.
He took the inevitable plummet.
May I liken the economy of the United States to Mr. Wile E. Coyote?
What Cliff?
The chairman of the Federal Reserve has moaned about the president’s tariffs. He informs us nonetheless that the economy of the United States bounds along on good, hard earth.
It is miles and miles from any cliff:
- The economy is strong overall and has made significant progress toward our goals over the past two years… We look at inflation which is the change in prices and we’re seeing that it has come down quite a bit and unemployment is actually low, it’s very close to measures of maximum employment and the economy is growing.
Just so. Yet I hazard the economy of the United States is already over cliff’s edge.
As the deluded Coyote… I believe it is aloft on a false assumption.
It has yet to glance groundward. When it does reality and gravity will perform their pitiless roles.
I fear the economy of the United States will follow the tragic trajectory of Wile E. Coyote.
The Great Levitation
What has held the economy of the United States suspended skyward?
The previous administration’s policies form the likely answer.
Mr. Lance Roberts of Real Investment Advice:
Three factors kept the economy from declining.
- Massive federal spending via the Inflation Reduction and CHIPs acts
- Accelerated immigration provides companies with cheaper labor
- Massive expansion in Government hiring.
- The amount of federal spending injected into the economy was enormous. Therefore, the economy’s strength was unsurprising, given the ongoing financial stimulus from the Inflation Reduction Act and the CHIPS Act and a surge in deficit spending.
Thus Wile E. Coyote stepped across the cliff… in mistaken pursuit of his prey.
It’s All About the Lag
Remaining aloft, he does not yet realize his deluded situation:
- That surge in spending has a relatively long “lag effect,” as it takes time from the passage of the fiscal spending bills to distribution to economic utilization. Billions of dollars remain in those bills, seeping into the economy. However, budgetary support for the economy is declining as the amount of M2 as a percentage of GDP reverses…
- While recent economic reports, like the latest employment report, still show robust growth, those data points run with a lag that hasn’t yet caught up with reality.
Thus Wile E. Coyote has yet to glance downward. Yet negative aerodynamics, presently conspiring against him, may compel him to lower his chin:
- The current Administration is now keenly focused on reducing immigration, cutting the size of government, and reducing the deficit… The risk of a recession may now increase as the Trump Administration attacks the three previous economic supports.
Debt Is Now Necessary to Survive
Harrowing disappointment awaits this fiendish canine variant:
- More consumers are falling behind on their monthly card payments…
- Recent surveys show that more consumers are increasingly relying on installment payment platforms like Klarna and Affirm to afford meals. Initially, the design of the BNPL model was for luxury or semi-durable goods. However, its expansion into groceries signals deep-rooted affordability issues.
- Debt is no longer just a tool for convenience; it’s a necessity for millions’ survival.
Did you catch that?
“Debt is no longer just a tool for convenience; it’s a necessity for millions’ survival.”
Thus I refer to the Wile E. Coyote economy.
No economy structured upon debt — in my telling — can sustain itself.
It must go one day over the cliff.
When? As I am fond to say, I do not know.
Bliss, Combined With Ignorance
Yet I fear the United States economy is presently over the cliff… airborne… shedding momentum… full of bliss… and ignorance.
You may blame the sitting president. You may blame the former president.
It does not matter once you contact terra firma.
Brian Maher
for Freedom Financial News
