We Need Growth, Bigly!

Welcome to This Week’s Leyendecker View

The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence.
– Charles Bukowski, German-American poet and novelist

FAVORITE READ OF THE WEEK

Why JD Vance Offends Us
From political editor and Brit Tom McTague

FAVORITE VIDEO OF THE WEEK

Putin’s Weakness, Trump’s Strategy, and NATO’s Future
From geopolitical analyst George Friedman

THINKING OUT LOUD

We Need Growth, Bigly!

Is there enough economic and geopolitical confusion out there these days? As I suggested in TLV’s Randoms section a couple weeks ago…

Inflation, interest rates, the federal debt, the deep state, a politicized judiciary, cancel culture, free speech, globalization, nationalism, populism, climate change, immigration, abortion, woke culture, artificial intelligence, jobs, the economy, the stock market, crypto, Ukraine, the Middle East, NATO, Russia, China, Iran, North Korea, Venezuela, and what else? How in the world can anyone fix all these broken worlds? Yet Trump is actually trying to fix all of them at once. Good luck with that.

Yes, good luck with that. The bad news is there’s a ton of change going on simultaneously. The risks of something “breaking” from moving too fast seem high. The good news, if we can get it, there’s one way to plow ourselves productively forward: We need economic growth.

Given that we are facing potential challenges from domestic fiscal tightening, tariff policies and inflation pressures, unraveling illegal immigration and wage pressures and deteriorating global economic conditions, the U.S. economy is fragile.

Federal expenditure contraction under DOGE’s initiatives represents a significant shift in fiscal policy. If we want to cut government spending by $1T—or more, please—to alter the explosion of government debt, then the private sector has to take up the slack.

While DOGE does its “magic,” the expanded tariff regime may introduce new inflationary pressures. While intended to protect domestic industries and workers, tariffs increase input costs for American manufacturers and consumer prices for households.

Unraveling immigration could also push wages up, particularly in the universe of lower-paying jobs, risking a wage-price inflationary spiral.

Against this backdrop, global economic activity shows signs of deceleration. Major trading partners are experiencing their own challenges, from Europe’s energy transition to Ukraine’s ongoing war fallout to China’s property sector and deflationary setbacks. This global slowdown threatens U.S. export markets at precisely the moment when domestic fiscal contraction and inflationary pressures might strain the economy.

In this challenging environment, targeted economic growth strategies become essential—not just for prosperity but also for economic stability. Although tax cuts would put more money into the pockets of consumers and businesses, which may help short-term consumption, productivity enhancing investments likely represent the most promising longer-term path forward.

Technological innovation—particularly in emerging fields like artificial intelligence, energy production, advanced manufacturing, healthcare and biotechnology—offers opportunities to increase output without increasing inflation. Innovation in the defense industry also has the potential to reduce our defense spending. Advancements in these markets could grow higher-paying jobs, create new jobs, reduce government spending and reduce inflation.

Infrastructure development and upgrades present another avenue for economic fuel. Beyond traditional transportation and utility networks, digital infrastructure expansion could create jobs, enhance economic efficiency and create new opportunities for rural and underserved communities—the voters behind a lot of today’s populism. 

Supporting small business dynamism deserves attention. Small enterprises historically drive most job creation, yet today they face particular challenges given higher interest rates, more restricted access to credit, regulatory burdens and uncertain demand.

The labor market presents both challenges and opportunities for growth. Programs that facilitate worker transitions between industries, upgrade skills for emerging fields and increase labor force participation could simultaneously address employer needs and worker prosperity. Particular needs are an increase in worker skills to build new and maintain existing infrastructure.

Finally, economic growth strategies should acknowledge the reality of trade tensions while working to optimize outcomes. This means supporting domestic industries in becoming more competitive rather than merely protected, helping businesses develop resilient supply chains and pursuing strategic trade relationships that diversify market access.

Will Trump’s proposed tax cuts on domestic oil and gas and regulatory retrenchment lead to lower fuel and electricity costs and, in turn, bolster consumption and corporate investment? Will Trump’s tax cuts for individuals increase consumption? Will structural tax change inspire more companies to increase their capital investments? Will a reduction in overall regulation inspire more investment? Will Trump’s tariff threats both raise federal revenues while also catalyzing more international investment into the US?

The current economic moment requires nuanced policy that recognizes both the legitimate desire for government efficiency and the essential role of economic growth in national prosperity. Tax cuts could help. But we will also need productivity enhancement, infrastructure development, small business support, workforce development and strategic trade approaches.

As if there isn’t already too much to do, policymakers need to ensure there’s economic upside coming besides just tax cuts. We don’t just need a better functioning government and economic system in the next four years; we also need actual structural changes that can fuel our economy for many years after.

THE RANDOMS

Has all the free Covid money from Washington, plus the multiplier effect it created, finally run out? Is that why consumers are retrenching?

Trump is threatening to put large tariffs on Europe’s beverage industries. The story is making headlines in mainstream media. But maybe we need to realize most of what we buy from Europe are luxury products, so in a way Trump would be taxing rich Americans.

Lots of critics thought Elon Musk was dumb for buying Twitter for $44B. Immediate backlash caused Twitter’s value to drop considerably. But X is back to full value, if not more. Now Musk bashers are calling him dumb for abandoning Tesla for DOGE. You think the critics will be right this time?

Trump pulled $400MM in public funding from Columbia over its ongoing anti-Israel protests, citing allegations of antisemitism, and he put 60 other colleges on notice. How disingenuous is it for universities to cry foul over free money from taxpayers when so many have mega-billion-dollar endowments?

When considering the various tariff wars underway, keep this in mind: The US imports way more from the EU than the EU imports from the US. Canada also enjoys sending more exports to America than what it imports from us, although the difference is much smaller compared to the EU.

If the stock market crashes 20% or more, is that the president’s fault? Is it the president’s responsibility to make sure the stock market keeps rising, or is his responsibility to help make the country’s economy more resilient and of value to a broader number of citizens?

Since America’s wealthiest 10% own 93% of stocks, how is Trump actually supporting the rich?

If the government fire-sales a bunch of office buildings, won’t that put even more pressure on the already beleaguered office market? I guess the upside is that office rent prices should be coming down for business owners.

This video of Havana’s street-racing kids proves that no matter their socioeconomic or political circumstances, children can still find joy.

Because of its insatiable demand for energy, AI could be an inflationary influence until it reduces labor costs, which will of course reduce wages available for consumption.

Does being educated correlate with being intelligent?

ECONOMIC NEWS

Economy
Is it finally time for a recession?

The various recession signs to look out for
Consumer angst is everywhere
Inflation is falling, for now
Small business optimism recedes
Airlines and retailers give bleak forecast
The pain before the gain
Our economy depends on rich people

Labor
How long can the labor market hold up?

The labor market looks resilient
Jobless claims fall
Avoiding the people-pleaser trap

BUSINESS

Finance
It’s skinned-knee time.

Gold price hits $3,000
Blackstone and Goldman like Trump
The top 10% own two-thirds of US wealth
Asset-backed securities are back BIG
$950MM fees for a bankruptcy?!?!

Real Estate
Is housing set to follow the stock market?

Manhattan rents set record
25% in NYC can’t afford the essentials
Mortgage rates keep dropping
Redfin brokerage and Rocket mortgage to merge
Office vacancies at 30-year high

Tech
Who in big tech will AI tumble?

Meta fears you knowing its bad behavior
Can Intel be saved?
Scientists say they’ve achieved quantum teleportation
Chinese phone has deepfake detection tech

AI
How do we handle step change?

Here comes another Chinese AI, Manus
AI can now predict dementia
The hidden cost of AI
AI solves million-step math problem

Energy
The climate change backtrack continues.

Gates-backed climate group cuts staff
EU battery champion goes bankrupt
Banks back away from climate goals
Sweden’s wind farm bust

THE NATION

The Washing-Tone
More step change to manage.

Government shutdown coming?
The Democrats cave
Trump’s FTC probes Microsoft
Trump wants cheaper energy for all
Education department cuts half of workforce

DOGE

Post Office chief supports DOGE
DOGE’s effort has yet to change spending
Musk seeks PE help with Social Security

The Tariff Wars
The great negotiation.

Trumps wants to hit European alcohol
China hits US ag
China worries about Mexican tariffs
Europe hits US motorcycles and whiskey
Is the growing US trade deficit a problem?

Social Trends
We are not all the same, nor should be.

The health care albatross
High school girls feel equal to boys, boys feel inferior
The return of accountability
A moment of silence before school starts?
Rich colleges are starting to worry

GEOPOLITICS

Global
Change, change, change.

Oil is giant boost to Argentina’s economy
What happened to all the rice in Japan?
Canada looks for a political reboot
Hey, Mexico! Please create more jobs!
Mexican fentanyl seizures are dropping

Europe
Can luxury goods and services save them?

Trump is making Europe great again
Gas prices plunge on possible peace deal
German Greens object to economic stimulus
Forcing more wasted capital
Germans don’t want to be soldiers

Ukraine
Let the negotiations begin!

Ukraine agrees to a ceasefire
Russia of course rejects it
Or has he?
Putin talks tough
Will Trump talk tough back?
The US quietly increases sanctions

Middle East
Don’t expect a step change here.

Israel strikes Syrian capital
Syrian conflict is on the rise
While the new government works to share power
Houthis ready to battle again
Israel and Lebanon agree to border talks
Israel puts the squeeze on Hamas

China
Can DeepSeek save them?

China seeks stronger Africa ties
DeepSeek has re-invigorated China
Deflation hits China
Chinese investors take stakes in Musk companies

War Creep
Are we already exhausted with it?

Poland would welcome US nukes
Russian captain plows ship into US tanker
Chinese warships circle Australia
US wants to buy Ukrainian drones
Russia, China and Iran hold joint drills

MAKING A BETTER YOU

Mind
Get more quiet time.

Walking the path of everyday enlightenment
Simple smartphone detox
Want to have deeper conversations? Be an asshole

Body
Get more outside time.

How do we really age?
Make squats easier on your knees
Want a strong body? Build strong feet

FUN STUFF

Let your hair down, baby! Even if you’re all alone.

The Extraordinary

She’s lived without money since 2015
1 in 3 households in the US has a cat
UK scientists create superbugs fix

I Wanted to Be an Archeologist

Archeologists discover 1,600-year-old ritual bath
Humans made bone tools 1.5MM yrs ago
Archeologists find 3,000-year-old mine

Music That Found Us

The Vegetable Orchestra

“It Could be the First Day”
Rumer channels Karen Carpenter.

The 1964 classic from Joan Baez and Bob Dylan.
“It Ain’t Me Babe”

Worth a Watch

Big stars in Black Bag trailer.
Galactic absurdity, The Empire.
Evil Hugh Grant in Heretic.

The Yum Yums

Lemony orzo with asparagus
Japan’s interesting take on Italian food
Classic yummy hamburger soup
Eleven Madison Park granola

PARTING THOUGHTS

Obviously, you would give your life for your children, or give them the last biscuit on the plate. But to me, the trick in life is to take that sense of generosity between kin, make it apply to the extended family and to your neighbor, your village and beyond.

– Playwright Tom Stoppard

IN CASE YOU MISSED IT

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