I have a high level behavioral rule that I should act to maximize participation in gift-giving holidays. So this is a great time of year for me. I wish the same for you.
I turned on Bloomberg radio in my car on the way into town. The A team wasn’t broadcasting. …instead, the bench, both interviewers and guests. The latter is usually a good thing, since my experience is that publicizing yourself and your firm–although an important task–gradually wears away any edge over the competition that you might have.
Anyway, the interviewee was particularly interesting on current consumer behavior in the US. What I took away is that people are doing what they always do during bad economic times (and “bad” here doesn’t necessarily mean the economy is already contracting, although that’s a real possibility). It may mean instead that if the trend rate of nominal GDP growth, pre-Trump II, was 5%, consisting in 1% productivity growth, +1% growth in the domestic workforce, +1% immigration +2% inflation, it’s now 4.5%.
That doesn’t sound so bad, except that the figure now consists of 1% productivity growth, .5% growth in the workforce, -1% immigration + 4% inflation. So real growth, meaning factoring inflation out, has fallen from +3% to +1%. And that’s making the heroic assumption that the figures the government is releasing haven’t been tinkered with too much. I’m acting on the assumption that the economy is basically flat in real terms, with prices rising much more steeply than we’ve been used to over, say, the past twenty years.
So people are adjusting to harder times. Back to the Bloomberg interview, this means less patronage of bars and restaurants, more eating at home. Less alcohol, too, with trading down and shopping harder for discounts.
I’m beginning to entertain the thought that the real 2026 issue for the domestic economy will be less the tariffs–the harm to the economy likely won’t get worse–but rather Trump’s desire to do things that erode the value of the dollar (whether he understands this is the outcome of his policies or not).
According to Gemini, “actual economic output (Real GDP) grew significantly faster than prices, with Q3 2024 at ~23.48T and Q3 2025 hitting ~24.02T (billions)”. This is a 2.3% increase. (I have been on your email list for years, and think you are brilliant).
Thanks for your readership and for your always on-point comments.
In a somewhat similar fashion, Michael Hiltzik, business reporter for the LA times, aptly criticizes the lack of government data collection and the “generous” use of implied numbers in the GDP and inflation figures: https://shorturl.at/Llbdi
Although the popular media generally ignores or glosses over critical analysis of the government’s numbers, real people feel the real impact of the weakening economy.