The pRice tag for simple solUtions to coMPlicated problems

Time moves on, and Trump continues to do what Trump usually does: loud announcements, bold promises, and lame execution. The pre-election promises to reduce budget spending? The DOGE (Department of Government Efficiency) went belly-up and had a nasty split-up with Elon Musk. I suppose that in the latter, Trump has the upper hand, since he has a large pool of various advisers, including Elon's ex:

What did I mean by a fiscally weak budget? Let's compare it with the fiscally less disciplined countries of Europe – so-called the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). The infamous story of the European Union. All the world's media were shouting how everything was so horrible at some point.

Why is that?

Systematically large budget deficits.

Systematically high public debt (relative to GDP).

Against the backdrop of PIIGS, America looks pretty scary….

The European Union, at some point, introduced the European Union's Excessive Deficit Procedure (EDP) to help countries like Italy deal with their budget deficits, while Trump is proud to present his Big Beautiful Bill Act in the United States.

Not to mention the tariffs, which are currently being challenged in court. So, for Trump, outlooks look rather grim. Still, Trump is not going to listen to anybody, for that matter (well, except perhaps Putin) and insists on his rightness. Considering all that, no wonder that the markets start to resemble a roller coaster.

Images like these we will see more often from now on. The human imagination and mockery will run wild if this continues like that.

Consumers are watching all this and expressing their opinions and emotions. For the fourth consecutive month, the mood is rather grim in surveys. Coincidentally, the consumer sentiment has been deteriorating every month since Trump’s return.

In general, looking at consumer sentiment in the longer perspective, we are currently at one of the lowest points in recent history.

Additionally, consumers’ expectations about their future economic situation have decreased by 32% since January of 2025. Such a sharp decline in consumer sentiment about the country’s economic situation has not been experienced since the 1990 recession! It’s rather clear that Trump is really “up to the task” with his policies. Well done!

Manufacturing reports show an identical picture: 3 months in a row showing a decrease. Tariffs and the policy direction taken are not helping the manufacturing sector at all. And the manufacturers' comments and insights reveal quite a lot as well:

• “Tariff variability has thrown residential construction supply chains into chaos. Many items are still manufactured in Southeast Asia, and suppliers are beginning to test the waters for increases. Major heating, ventilation, and air conditioning equipment manufacturers are passing on their cost increases due to higher refrigerant and steel commodity prices. Planning is difficult for community projects that could be scheduled for the next 22 to 30 months.” [Construction]

• “Tariffs remain a challenge, as it is not clear what duties apply. The best plan is still to delay decisions to purchase where possible.” [Information]

And these are just some of the comments, but the trend is more than clear. A similar picture is also in the services sector. The insights and overall assessment of the situation are similar. Although the services sector is much more resilient to this type of shock, this time (the May 2025 report), this indicator has also fallen below the 50-point mark. Such a situation has not been experienced since June 2024.

Looking at all this from the outside, the United States midterm elections will be very interesting to watch!

Stay tuned!

Agris