The Trump Boom Has Arrived
Happy Friday! Here’s the Breitbart Business Digest Weekly Wrap, summarizing a week’s worth of economic data and insights in one go. Think of it as the pinnacle of a healthy food pyramid, packed with all the vital elements at the top.
It’s a bit uncertain how we’ll navigate this situation, but we probably need to. Raising expectations for the US economy seems to be the trend, as this week’s data reveals the economy is surpassing even the rosiest predictions. Productivity is on the rise, the trade deficit is shrinking significantly, unemployment is down, and GDP growth appears to align with what we’ve come to recognize as Kudlow-style growth. It seems the Trump boom has arrived, possibly earlier than anticipated.
Supreme Court Update: No Word on Tariffs
Earlier this week, when the Supreme Court announced it would release at least one opinion on Friday, many expected it to address the Trump administration’s tariffs. The court is likely to hold oral arguments on the matter and make a ruling in November.
However, it seems oral arguments didn’t favor the administration. Various justices—including Chief Justice John Roberts, as well as Amy Coney Barrett and Neil Gorsuch—expressed doubts about the administration’s claim that the International Economic Emergency Powers Act of 1977 (or ee-pa, if you prefer) empowered the government to levy substantial import taxes. This legislation has historically been used for sanctions and embargoes, but not for tariffs. Quite notably, there’s no explicit mention of tariffs in the text. Moreover, prior to Trump, no president had ever asserted that IIEPA authorized tariff-making powers.
Consequently, many anticipate that the Supreme Court may restrict the president’s authority regarding tariffs under IIEPA and may even nullify them entirely. A pressing question remains: what comes next? While it’s improbable that the Supreme Court would mandate the return of substantial tariffs, it could lead to a complex administrative scenario, benefiting importers who have already pressured foreign suppliers to reduce prices to offset duties. Still, it might not be out of the question. The court might choose to imply that the emergency powers should have some kind of time limit. Alternatively, the tariffs may be narrowed, allowing the government to keep what it has collected, but requiring an expiration at some point.
Market Reaction to Tariff Decisions
How will markets react to any decisions on tariffs? One would think that the impact is already somewhat baked into the market, as the general consensus is that the Supreme Court will indeed lift the tariffs. This means any market risks could skew downward. If the court is more lenient on IIEPA tariffs than anticipated, asset values might take a hit. However, if the ruling aligns with expectations, the market’s reaction could be immediate, but then wane as investors realize prices already account for this outcome.
Please wait for a bit longer. No answers emerged from the Supreme Court on Friday regarding tariff decisions. Instead, the court, divided, handed down a routine ruling in a separate criminal case, but we won’t delve into that (or bother to read it). If you wish, you can check it out here.
A New Labor Market
Nevertheless, the December employment report was released as expected this week, and it showed that the unemployment rate unexpectedly dropped to 4.4%. Earlier figures for November were positively adjusted from 4.6% to 4.5%. Unfortunately, due to the government shutdown, October’s official rates will remain forever unknown, leaving a gap in our data. Black unemployment saw a notable decrease, while white and Hispanic unemployment dipped slightly, with Asian unemployment steady.
Despite these trends, the number of jobs added came in lower than anticipated, with only 50,000 jobs created. Over the year, the economy added about 584,000 jobs—an average of 49,000 monthly. The private sector contributed 654,000 jobs throughout the year, averaging around 54,500 per month, while government employment declined by 181,000.
Some traditional media outlets misrepresented this as a notably poor outcome. “2025 was the worst year for jobs since 2020,” NBC News claimed, citing December’s report on job growth.
But this interpretation is flawed. The break-even rate for employment, which reflects how many jobs need to be created to accommodate workforce growth, is lower than what has been produced. When the economy needed over 100,000 jobs a month, President Biden’s policies have led to a significant influx of illegal immigration. Now, though, we need far less—perhaps around 30,000 to 40,000 each month. An average of 49,000 signifies a solid year, not a challenging one. In reality, creating even more jobs would be “difficult” simply because there wouldn’t be enough workers available to take them.
Many economists assumed that economic growth would falter if immigration were limited and thousands of undocumented individuals were deported. What truly matters to Americans is the growth rate per capita. It’s possible to grow the economy with large investments without actually improving conditions for Americans. For instance, annexing Mexico wouldn’t enhance American living standards; growth would simply mirror the size of the Mexican economy—and may even worsen once taxes and remittances are factored in.
More importantly, the anticipated slowdown hasn’t materialized. The economy continues to grow at an unexpected pace, having clocked 3.8 percent growth in the second quarter, jumping to 4.1 percent in the third quarter, and about 5.4% in the fourth quarter, according to the Atlanta Fed’s GDPNow tracker. While some may find this overly optimistic, it’s evident that the much-anticipated economic downturn isn’t happening.
As far as we know, few other than our friend Larry Kudlow at Fox Business think the economy could expand this rapidly.
Productivity Boom Under President Trump
The primary factors driving this growth surge seem to be increased productivity. The government revealed this week that productivity climbed at an annualized rate of 4.9% in the third quarter and 4.1% in the second quarter—both above expectations.
What we’re seeing is a transformation in the economic growth model. The economy is thriving through investment and innovation rather than relying on a stream of immigrants for cheap labor. Consequently, firms are prioritizing capital expenditures to drive growth, a trend characterized by Treasury Secretary Scott Bessent as the “capex boom.”
This trend is also beneficial to workers. The average hourly wage is expected to jump by 3.8% in 2025, which is one percentage point above the inflation rate. This shift means that Americans will possess more purchasing power compared to when President Biden was in office, and the affordability issues of that era appear to be fading.
Tariffs Shrinking the Trade Deficit
Another contributing factor to the economy’s strength is the decline in the trade deficit. In October, the trade deficit fell to $29.35 billion, marking the lowest figure since June 2009’s $27.15 billion. The already low figure for September was revised down from $52.83 billion to $48.14 billion.
As Alan Tonelson points out, “As the deficit soared during the first quarter leading up to the President’s ‘Emancipation Day’ tax in April, the overall goods and services deficit reached $397.33 billion—a 24.61 percent drop compared to the pre-tariff months under the Biden administration ($527.06 billion).”
This presents a concerning development for economists. When President Trump first pledged to tackle the deficit, many predicted that achieving this goal would necessitate a shrinking economy. Numerous analysts were convinced that tariffs would do little to mitigate the trade gap and that they might even widen as other nations retaliated. Of course, what transpired was different; the anticipated trade war never took place, and instead, beneficial trade agreements were established.
Exports have risen for the fifth month in a row, reaching record levels for two consecutive months. Current goods exports are hitting all-time highs. In other words, the global response to Trump’s trade policies has been clear: Increase purchases of American goods.
Gone Fishing
On January 8, 1675, the New York Fishing Company was granted approval by the New York State Governor and City Council. Ownership was divided into shares valued at £10, and it is widely recognized as one of the first shareholder corporations in the American colonies, apart from British and European chartered companies. Happy birthday to our shareholder, America!
