The Economic Fog

September 26, 2025
Doug Leyendecker

Welcome to This Week’s Leyendecker View

When things become insurmountable, some people quit, some keep going for no other reason than to continue. Because that’s all there is to do.
Robert Redford, RIP


FAVORITE READS OF THE WEEK

Why AI won’t take all our jobs
A machine can’t really navigate the human world.

The war of the future is already here
We are significantly unprepared.

FAVORITE VIDEO OF THE WEEK

The world needs music now more than ever
Singer-songwriter Sarah McLachlan has some prescient thoughts.


THINKING OUT LOUD

The Economic Fog
We need some wind to blow it away

This week’s revision of second quarter GDP from 3.2% to 3.8% growth sounds great, but bear in mind that first quarter GDP was revised down to a negative 0.6%. It is unlikely Team Trump’s policies have inspired economic growth this quickly.

Last week, the Federal Reserve reduced interest rates and suggested more reductions were coming. This tells us our economy is slipping. New employment is weak. Retail sales are still growing, but so are credit card and auto loan delinquencies. Although new home sales recently popped up, overall housing sales have been down for several years. Manufacturing and construction activity are generally stagnant. And the endless layers of policy changes from Team Trump have created a lot of uncertainty.

At the moment, it feels like a fog is hanging over our economy. We need some economic winds to blow it away. Lower interest rates are one form of wind. Others are likely on their way.

The Trump administration has been lobbying for lower rates for some time, likely because they knew an economic slowdown was coming with all the economic, government and geopolitical changes happening. Some of these changes are being led by Team Trump, but others were already in place prior to his second term.

Team Trump inherited some rather dramatic changes. They include:

The end of ever lower interest rates.

The end of ever lower labor costs via exporting jobs to cheaper-labor countries.

The end of ever more productive supply chains as globalization fractures.

The end of deflationary influences as globalization transitions into more nationalism.

The end of reasonable global geopolitics and the beginning of geopolitical realignment.

All of these trends now coming to an end, were, for about 40 years (1981-2021), positive economic influences—until they weren’t. But for those 40 years, investors, companies, workers and governments had been using those influences’ trend lines to plan and project our future. Covid laid bare how starkly these trends had outlived their purpose in a rapidly changing world and only hastened their demise. Now that those trend lines are broken, it’s becoming harder to see the future, plan and know what to expect—hence the fog hanging over our economy.

To make matters more complicated, Team Trump introduced its own set of dramatic changes to our government and economic infrastructure.

DOGE may not have eliminated mega billions of wasteful government spending, but it has set the tone for a reduction of government spending. If spending is going to shrink, we need an organic-economic-growth offset. We need some new wind to replace our ever constant fiscal deficit spending. Lower interest rates are such a wind, but they are not likely strong enough to blow away the entire economic fog.

The tariff campaign has high ambitions to level the trade playing field, raise government revenue and inspire more domestic investment in reshoring manufacturing. At the moment, though, many parties involved in trade talks are still in the negotiating process, including the 800-pound panda that is China and two of our biggest trade partners, Canada and Mexico. This tariff, trade and investment realignment process will take time to settle into a new trend line; that is, a clearer view that can help companies and people plan.

Then there’s all the geopolitical drama.

Trump came into office confident he could bring wars in Ukraine and the Middle East to a swift end. But neither Russia’s invasion of Ukraine nor Israel’s battle against extremist Iran-backed proxies look like they can be resolved easily or soon. These two wars are seriously stuck, adding to global geopolitical tension and realignment. A bi-polar geopolitical realignment is in process, with the democratic US and Western interests on one side and dictators and their sovereign leaches on the other side.

Europe may be on the side of the West, but the EU has numerous economic and political challenges. Their economies are stagnant at best. Net zero has obsessed their politics and economies for decades. Expanding social safety net costs create constant social and political tension. Immigration is tearing the national fabric apart. And their Ukraine response has done nothing to deter Russia. More fog. Don’t expect any wind from Europe, at best today a supplier of luxury goods and experiences.

Many businesspeople and politicians believe that a strong economy and economic growth are the solution to a wide range of economic, social and political challenges. But with all the changes happening today, it’s become hard to find that economic growth engine, or at least one that is more organic and powerful than massive government subsidies.

Lucky for us, there is an obvious one: the AI gold rush. No matter what we think AI will do to us, the massive wave of chip plant, data center and energy infrastructure construction is going to bring helpful economic wind.

OpenAI released the first test version of ChatGPT in November 2022. In 2022, the total capital expenditures of the 12 largest public technology companies was around $178B. In 2023, it grew to around $183B. In 2024, $257B. The estimate for 2025 is around $371B, and company guidance for 2026 suggests around $416B of new investment.

This direct investment is and will continue to create jobs across tech, which will cascade into jobs across construction companies, construction products suppliers, construction services providers and then to other suppliers and service companies. This, in combination with declining interest rates, will likely spur economic activity like more auto and home buying.

In addition, after this construction phase starts to mature, the theory is that implementing AI will increase the productivity of all manner of industries, companies and individuals, maybe even our government. Historically, increased productivity increased economic growth—the magic solution to economic, social and political challenges.

And then there’s the Big Beautiful Bill, which has made secure a 100% depreciation deduction on capital expenditures for business. This will inspire significantly more domestic investment into factories and other productive fixed assets.

As an example, Eli Lilly just committed to investing $27B into domestic manufacturing. David Ricks, Lilly’s chairman and CEO, said the pharmaceutical giant’s broader expansion strategy was driven by federal corporate tax cuts enacted during President Trump’s first term and made permanent in the Big Beautiful Bill.

We can expect more of this domestic company investment into our domestic economy but it will be a while before those announced investments turn their first shovel of dirt.

Given all the change that’s happened over the last decade and is happening today, that we are in an economic fog should come as no surprise. Interest rates will blow out some of the fog, as will AI, but that will take a few years. The Big Beautiful Bill’s tax policy stimulus will also take a few years to turn into obvious economic growth, but it’s almost guaranteed to happen.

If SCOTUS deems Trump’s tariff strategy legal, then we will likely start to see more domestic investment, the process to reshore manufacturing and the economic stimulus that will result. If not, then brace for a possible recession and significantly more government deficit spending and debt growth to “recover.”

Washington’s efforts to “better manage” the economy over the last few decades has proven it’s about as easy as trying to manage the weather. Today we’re in the economic fog. Significant changes are happening with economic and geopolitical policy, influences that should help blow that fog away. We just have to be a bit patient.

THE RANDOMS

Americans’ view of the United Nations’ performance is declining. This made me wonder what types of governments are represented in the UN, so I consulted AI. True liberal democracies (like the US and European countries) make up about 8% of sovereign governments. Pure autocracies make up about 72%. The 20% balance are countries that hold elections but lack the institutional constraints, civil liberties protections, and/or rule of law that characterize full liberal democracy. If this is accurate, why the heck would anyone in a liberal democracy believe the UN is vital to the global conversation about economic and social policy? The UN is full of autocrats! Whose best interest do we think they have in mind?

What does Russia think they are going to accomplish by taunting the United States and Europe with their drones and fighter planes?

It may be an uncomfortable notion to accept, but it seems the only way to defeat a terrorist is to out-terrorize them. You have to make them more afraid of you than you are of them. If that’s the correct strategy, then how should Russia and Iran be dealt with?

Why are more countries advocating for a Palestinian state when the prospect of it is virtually impossible? Is this just virtue signaling? If so, are these leaders showing their hands? That they’re shallow and care more about appearing morally superior than being effective leaders capable of achieving practical solutions?

What does it tell us when California backtracks on their war against hydrocarbons? Was climate change the ultimate grift, with bureaucrats seeking more power and self-interested scientists seeking economic handouts? Or has the need for hydrocarbons become more obvious? Or maybe both?

Many books tell us to find a purpose. But it could take a lifetime to find one. So just pick anything, and go all in.

ECONOMIC NEWS

Economy

US economy growing faster than expected
Small business optimism soars
Yet Starbucks economic indicator is not good
A chart of August’s inflation breakdown

Labor

US jobless claims fall
Working remote is not going away
It’s not AI eating away Gen Z jobs

A Little Health Care

The Obamacare grift
The healthcare expenditure explosion chart
A better approach to health insurance
Legacy healthcare industry goes around RFK, Jr.

The Lone Star

The Texas AI boom
700-acre data center about to go live
$6.5B pharma factory coming to Houston
Houston leads nation in clean energy job growth

BUSINESS

Finance

Has there been funny business in the debt market?
Canary in the coal mine for private credit?
High flying PE is now flying low

Real Estate

US new home sales pop up
While overall home sales fall
Mortgage refinancing surges
Young people are flocking to these cities

Tech

UN telecom threat looms large
Google in the antitrust hot seat
Amazon, too
Google search is now AI search

AI

China’s data center boom is now a bust
Nvidia to invest big in OpenAI
What people use ChatGPT for

Energy Transition

Natural gas is our carbon hero
World fossil fuel pledges are meaningless
SMR is coming to Texas
Nuclear energy projects being fast-tracked

THE NATION

The Washing-Tone

Trump seeks to reshore pharma manufacturing
Turkey signs 20-year deal for US natural gas
White House threatens mass firings
Trump says Antifa is a terrorist organization
Trump wants US to get a TikTok fee
And wants us to have a piece of domestic lithium
As he looks for more ways to raise federal money

Social Trends

When Democrats censored speech
We need H1-B visas because our schools suck
Colleges are failing kids, says Fed Chair
More schools shutting down DEI initiatives

GEOPOLITICS

Global

US to help rescue Argentina
Trump blasts the UN
Who is ready for a global wealth tax?
Disney plans Middle East theme park

Europe

Germany starts to think more about defense
Trump blames Europe for Ukraine situation
MAGA is coming to Europe
European airports hit by cyber attack
Europe thinks they are the moral high ground

Ukraine

Russia has NATO confused
Is Trump ready to play offense?
Russian fighters enter NATO airspace
Russia goes all in on drone production
Ukraine and Poland to cooperate on drones

Middle East

Trump presents new Gaza peace plan
Iran to stop cooperating with IAEA
Islam may be weakening in Iran
US plans $6B arms sale to Israel

China

China rethinks Mexico relationship
Xi applauds authoritarian rule
Xi lauds its climate commitment
But it’s a sham
China is subsidizing Iran

War Creep

Everyone wants to match Iranian drones
North Korea advances drone capabilities
Denmark to buy long-range missiles
Russia calls it “pure madness”

MAKING A BETTER YOU

Mind
Get more quiet time.

How to keep your attention and focus
The happiness curve
How to plan a pilgrimage

Body
Get more outside time.

Your sense of smell and brain health
The insomnia curing eye trick
The Norwegian 4×4 protocol

FUN STUFF

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

The Extraordinary

2025 Audubon Photo Awards
2025 World Nature Photo Awards
2025 World Press Photo Awards
2025 Ocean Photos of the Year

Music That Found Us

Scottish “Free Bird” by Mia and Ally, WHOA!
The Warshanna Sextet does “Blackbird
Sarah McLachlan’s “Better Broken

Worth a Watch

McConaughey’s The Lost Bus.
The sweet, wacky A Big Bold Beautiful Journey.
DiCaprio in One Battle After Another.
Richard Linklater’s Nouvelle Vague shines.

The Yum Yums

Salad season ain’t over yet!
Classic Caesar salad
Tomato, peach and burrata salad
BLT pasta salad
Chicken Cobb salad with avocado ranch
Thai crunch chicken salad
Tomato and cucumber salad
End of summer salad

PARTING THOUGHTS

Life is essentially sad. Happiness is sporadic. It comes in moments and that’s it. Extract the blood from every moment.

If you could do more, you should.
Robert Redford, RIP

IN CASE YOU MISSED IT

Headhunter’s Secrets: A Bell-Curve World
September 24, 2025

An Economic Inflection Point
September 12, 2025

Headhunter’s Secrets: Eating Crow
September 10, 2025

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