The Transition Economy

January 9, 2026

Doug Leyendecker

Welcome to This Week’s Leyendecker View

We will replace the frigidity of rugged individualism with the warmth of collectivism.
– NYC’s new mayor, Zohran Mamdani, at his inauguration

Everyone gets a trophy for participation!

POTENTIAL ENERGY GAME CHANGER

Valar Atomics
These guys are Elon Musk-ing nuclear energy.

FAVORITE READS OF THE WEEK

Good view on the Maduro extraction
America is back!

Another view on the Maduro extraction
There’s more than meets the eye.

FAVORITE WATCH OF THE WEEK

Fortune interviews María Corina Machado
The Venezuelan opposition leader speaks her mind.

THINKING OUT LOUD

The Transition Economy
There’s no turning back

One year into his second term, President Trump has advanced an ambitious set of economic policies rooted in his MAGA agenda. Trump’s new policy initiatives emphasize deregulating industries that are feeling the boot of government on their neck, influencing robust private-sector expansion, inspiring more energy output to help keep inflation down, and using tariffs to negotiate better deals with our global trade partners.

Trump has pushed to make the 2017 tax cuts permanent and introduced new deductions and tax incentives aimed at boosting take-home pay and capital available for investment. Recent reforms include permanent retention of many individual tax cuts, new deductions for older Americans, and measures to support small business take-home income.

These changes aim to stimulate private investment and consumption without direct fiscal stimulus, instead using the tax code to leave more money in private hands. In the short term, these policies may not reduce the growth of our annual budget deficit, but the Trump team believes longer term they will lead to more robust domestic economic growth, more employment, and higher federal tax revenues.

Trump’s aggressive deregulatory initiative requires that agencies cut ten existing rules for every new regulation proposed. Early reports suggest billions in projected future cost savings, which the administration argues will lower business costs and spur economic activity.

Perhaps the most defining economic action of Trump’s second term has been widespread use of tariffs. Through policies such as the so-called “Liberation Day” tariffs, the administration imposed baseline tariffs on all imports and higher reciprocal rates on goods from countries with large trade surpluses. The goal is to reduce the US trade deficit, incentivize reshoring of manufacturing, and strengthen domestic industrial capacity.

By late 2025, the tariff strategy dramatically reshaped global trade relationships, with tariffs reaching the highest effective rates since the 1930s. While these levies generated significant new federal revenue, they may have increased costs for consumers and introduced volatility in markets, complicating the narrative that this strategy will trigger robust private-sector expansion. Eventually it may. The recent reduction in our trade deficit suggests the strategy may be helping. But, in the short run, it may feel more like a burden.

The Trump administration has actively reduced the size and scope of the federal government as a structural component of shifting economic leadership to the private sector. Workforce reductions and executive orders aimed at decentralizing responsibilities (such as efforts to shift power from the Department of Education to states) reflect a deliberate attempt to reduce federal overhead.

Despite the Trump team’s policy initiatives so far, we remain in the midst of a transition, not yet fully shifted from a government stimulus-anchored economy to a self-sustaining private-sector-led expansion. To think such a shift could be complete in just one year is to ignore the massive inertia created from decades of fiscal and monetary irresponsibility.

Trump’s goals are ambitious. It will take time to see even early wins and years to realize total success. And the path may be bumpy and full of pushback from legacy institutions that benefited from the now bygone era of post-WWII globalization. So the question to ask is: What’s the alternative?

The most likely alternative would be yet one more government-led and -funded study, attempting to “understand” our economic circumstances and then identify a solution to what ails us.

For those who don’t remember, we completed such a government-led and -funded study in 2010 with the bipartisan Simpson-Bowles, in which a national commission sought to “identify policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” None of the conclusions put forth by this committee were politically attractive, so nothing happened. Since then, our debt to GDP has risen from 64% to 120%. So much for thinking government can rein in government.

President Trump’s MAGA agenda represents a bold attempt to recalibrate the US economy from a government-subsidized economy toward private-sector-led growth. Through tax reform, deregulation, trade policy, and government downsizing, this strategy is reshaping economic incentives. Yet the transition is ongoing. While elements of private-sector stimulation are evident, uncertainties and short-term pressures persist.

We’re in the early days of this economic transition, but odds seem good that no matter which political party controls Washington over the next decade or so, the party will follow through with the MAGA seed Trump has planted. There really is no other productive path.

THE RANDOMS

Europe is upset that Trump wants Greenland. How about we trade the years…decades…of Europe’s lack of meeting its agreed NATO commitments? An AI analysis of 2014 to 2024 suggests Europe’s contribution compared to their commitment is short $800B. What about prior to 2014? How many billions or trillions has Europe short-changed the US? How much is Greenland worth?

Look at the Marshall Plan after WWII. How much did the US give Europe to rebuild itself? How much debt did the US provide Europe and then forgive after WWII?

And how many American soldiers died in WWI and WWII liberating Europe compared to the number of European soldiers who have died protecting the US?

Auto companies can’t find enough skilled labor. Maybe it’s because dealers are taking too much profit. Ever read a news story about a struggling auto dealer?

In case you’re missing out on the awesome AI tools now available, consider checking out Shortwave, Willow Voice, MindMap AI, Akiflow, Otter, Summate, Notion, and maybe

ChatGPT Personal Productivity Coach. Don’t worry, more “productivity tools” are coming soon. Imagine all the time you’re going to save using all these new cool AI tools.

Did the US invade Venezuela, or did we strategically remove a political cancer?

Time will tell, but I’m guessing OpenAI’s Sam Altman is no Steve Jobs.

What would happen to our world if people replaced social media with microlearning?

ECONOMIC NEWS

Economy

We have a low-hire/low-fire economy
Two encouraging economic signs
US trade deficit at 2009 level
82% of Americans concerned with our debt
US debt clock

Labor

What workers want to see in the workplace
Ivy League degrees aren’t good enough
“Critical ignoring” is the top skill for 2026

Our Health

ChatGPT Health is ready to help you
New federal dietary guidelines
One more story of hospitals cheating patients
GLP-1 pill hits the market

The Lone Star

H-E-B top grocery store in the country
Texas is top domestic migration state
Big-time VC moves to Austin