Uncertainty, the New Normal

Welcome to This Week’s Leyendecker View

The price good men pay for indifference to public affairs is to be ruled by evil men.
–Plato

FAVORITE READS OF THE WEEK

$15B in profit, 200 employees
Will Tether be the next…country?

How AI will test humanity
Anthropic CEO’s vision.

FAVORITE WATCH OF THE WEEK

Teaching your kids about wealth
From The Knowledge Project.

THINKING OUT LOUD

Uncertainty, the New Normal
One era ends, another begins

From around 1981 to 2021, our economy developed a kind of predictability. Interest rates were consistently falling as the Federal Reserve sought to stimulate our economy one crisis after another, until rates were almost zero in 2021. Labor costs were consistently falling as cheap overseas, and chiefly Asian, labor replaced more expensive Western labor in the making of stuff. As globalization expanded, supply chains became ever more productive, and the price of stuff continued to fall.

For decades, the costs of clothing, toys, furniture, televisions, home appliances, tools, and more either stagnated or fell. With ever cheaper goods, Western economies enjoyed a consumption Mardi Gras. So much so that for many people, wants became needs. During this time, the American economy appeared robust and resilient. Stuff was cheap and plentiful. Money was, too.

While everyone celebrated the fruits of globalization, few people were paying attention to the massive fiscal and monetary stimulus that was required to keep the American economy on track. Debt to GDP in 1980 was around 32%. Today, it is around 120%. Now we are over $38 trillion in debt, and growing. And now people are noticing.

Why did we get so indebted? Why did it take an enormous amount of government stimulus to keep our economy “growing”?

Globalization’s gutting of American manufacturing didn’t help. Nor did the technological boom that began in the 1980s, which, history may show, failed to create as many better paying jobs as it destroyed. But another culprit was the government’s increasing influence over so many parts of our economy and society. 

During this 40-ish year period, the government asserted itself over our important infrastructures, including health care, education, and energy. We let the government do so because life felt easy. When life feels easy, people scrutinize the government less. And the government prefers not to be scrutinized. So at any hint of economic weakness, our government would throw more money into the economy. When at a potential economic cliff, our government would bail us out.

Not only have we watched Americans become obese over this 40ish year period, the government itself also became obese—on debt.

Then came Covid to grind the trend lines of the prior 40 years to a halt. No more ever lower interest rates. No more ever cheaper labor. No more ever productive supply chains. No more trusting that countries around the world were playing fair or had our backs. And no more blindly trusting our institutions and the expert class who runs them.

Covid had the effect of exposing layers upon layers upon layers of bureaucratic dysfunction. The pandemic pulled people out of our consumption slumber to discover that maybe our economy wasn’t on as stable ground as we thought. Maybe our debt was potentially existential. Maybe our elites don’t actually know better and deserve our outsourced decision-making. Maybe experts aren’t always experts, after all. 

The dysfunction had been brewing for decades…slowly broadening and deepening…like the story of the boiling frog. Eventually, inevitably some cathartic event would expose it.

Today, we are living in the aftermath of the cathartic event that was Covid. No wonder everything feels so upended and unsure. Once dysfunction is exposed, it cannot be ignored.

Whether or not you agree with President Trump’s approach to fixing the dysfunction, it is a fact that we are in uncharted territory for our lifetimes. The trend lines that dictated decisions for the past 40-ish years have been rendered irrelevant. They got us here, so they will not get us out.

The truth is that any president in this moment would have to do some trial and error as we attempt to fix the mistakes of the last 40 years and rebuild our economy and society on more solid footing. The truth is that some of Trump’s efforts will help, others might not, and many might take years to decades to get it right.

And now we have AI, a force of significant disruptive potential.

Welcome to the new normal of uncertainty. Rebuilding after 40 years of escalating dysfunction will not be easy. Adapting to the possible earthquake that is AI will not be easy. Dramatic changes to our economic and social infrastructures are likely coming. New trend lines won’t likely be obvious for a good while.

Our path, like those of other Western economies that globalization gobbled up, was unsustainable. Europe’s path has arguably been worse; dogmatic net-zero policies forced them to buy Russian oil, stripping them of any worthwhile leverage to manage the Ukraine situation.

America has led the world back from the abyss before, and we can do it again. We’ll have to learn to tolerate and navigate dramatic change, which is inherently uncomfortable.

But more than anything, our task must be figuring out how to again work together, not against each other. Maybe we all need to remember those wise words from President John F. Kennedy…

“Ask not what your country can do for you. Ask what you can do for your country.”

THE RANDOMS

For some reason, I woke up recently and thought “We need to be more frivolous.”

Already the highest in the nation, California’s gasoline prices are about to soar. When will this state finally say enough is enough from its bureaucratic morass? As Forest Gump said, “Stupid is as stupid does.”

On Tuesday, the Wall Street Journal posted an article that said US manufacturing is “in retreat” and that tariffs have not yet brought back manufacturing.” Well, since those tariffs are only a year old or less, does the Journal think it takes a year or less to construct a new manufacturing plant?

Just a day earlier, the Wall Street Journal posted an article saying US manufacturing activity saw its fastest gains since 2022. What gives with the Wall Street Journal?

Might the low-fire/low-hire job market be telling us that an economic shift is underway? AI is already tempering job growth in services, while the effort to reshore manufacturing and its potential job growth is lagging, as new plants are not built overnight. But one thing seems certain. We desperately need more blue-collar workers.

Ford’s CEO says they need to hire 5,000 mechanics but can’t find them. Could this be because, as more Americans have pursued white-collar and service work, illegal immigrants are filling the blue-collar void? And they don’t want jobs that require paperwork, like a Ford job would, and instead favor low-paperwork and low-paper-trail jobs like construction?

Since Covid, the private credit boom has allowed who knows how many companies to keep the lights on thanks to trillions of financially engineered deals. But some investors are pulling out of the private credit sector, and BlackRock just wrote down a private credit fund by 19%. With PE fundraising on a steady decline since 2019, there is now less capital to take out the older capital, which means PE needs to find strategic buyers for their companies. Could all this be evidence that the 40-year financial engineering cycle is now behind us?

We all have our challenges. What would we learn without them?

ECONOMIC NEWS

Economy

ADP sees weak job growth but stable pay growth
January job cuts are concerning
The government-causes-inflation graph
The rich get richer, the rest not so much
A solo worker 401K may be coming

Labor

VW UAW workers get 20% pay hike
CEOs may be turning over more often
The state of moral leadership is abysmal
We desperately need more blue-collar labor

The Lone Star

Austin aerospace company raises $470MM
The largest gas power project in history

BUSINESS

Finance

Private credit has started to crack
US PE firms need a different approach
Crypto is having a lousy year
PE has a new and big problem

Real Estate

Chicago office tower goes for 87% discount
Homebuilders seek Trump’s support
Housing market gets more buyer friendly

Tech

Is software-mageddom coming?
Google goes even bigger on AI
Will AI kill Microsoft?
Musk merges SpaceX and xAI
SpaceX has a space data center plan

AI

An AI agent goes rogue
AI is now eating traditional tech companies
Why teens are saying no to AI
Nvidia backs off OpenAI investment
AI bots create their own community

Energy

We are about to overbuild power capacity
US pipeline capacity set to expand significantly
The West has lost $114B chasing EVs

THE NATION

Politics

Republicans have an economy problem
Democrats have a demographic problem
Trump wants to nationalize elections
Republicans get a wake-up call in Texas

Policy

Trump still trying to cut federal costs
ACA subsidies look dead
Trump’s school choice gaining Democrat support
Trump creates strategic mineral reserve

Trade

US to cut Indian tariffs to 18%

Culture

Minivan sales surge
Staggering number of Americans can’t read
US birth-to-death ratio by state
Cities can’t afford to keep losing families

GEOPOLITICS

Global

Cuba ready to talk to the US…as equals
Japan’s Iron Lady challenges China
Venezuela tries to keep China happy
Guatemala goes to war with gangs

Europe

German factories are humming
Spain to ban youth social media
Other countries consider doing same
Russia is already attacking Europe
Luxury brands can’t count on China

Ukraine

Russian intelligence general shot
Starlink blocks Russian internet access
Zelensky asks Trump for more arms
Trump squeezes Russia via India
Russia back to hammering Ukraine’s energy

Middle East

Israel retaliates for Palestinian attack
US shoots down Iranian drone
Yet US-Iran talks are still expected
Iran rebuilding nuke and missile sites

China

Xi wants renminbi to be reserve currency
China losing ground in the Middle East
China PMI index drops

War Creep

US-Russian nuclear pact to expire
A war game uncovers Europe’s vulnerability
Russia penetrates European satellite comms

MAKING A BETTER YOU

Health

Chinese medicine coming to the world
What you eat affects cancer risk
The secret to a healthy snack

Mind

How to get unstuck from a thinking rut
Tips for dealing with anxiety
Will AI rearrange our attention span?

Body

How Olympians avoid getting ill
Your most important sleep habit
Eat meat to live longer

FUN STUFF

The Extraordinary

Insightful photos of humanity
Going from competent to extraordinary
Alabama has a super cool bookstore

Music That Found Us

Bobby McFerrin creates a common chorus
Curtis Mayfield’s “The Makings of You.”
Chet Baker’s “Almost Blue.”

Worth a Watch

Park Chan-wook’s black comedy No Other Choice.
Arnett-Dern comedy, Is This Thing On?
A Dev Patel horror story, Rabbit Trap.

The Yum Yums

Some Super Bowl recipes.
27 wings recipes
Awesome salsa
Skyline chili dip
Bacon cheeseburger dip
Spinach artichoke dip
Rotel dip
Pulled pork tacos
Cheeseburger sliders
Cowboy spaghetti

PARTING THOUGHTS

In politics, we presume that everyone who knows how to get votes knows how to administer a city or a state. When we are ill, we do not ask for the handsomest physician or the most eloquent one.
– Plato

IN CASE YOU MISSED IT

Our Politics Can Be Brutal
January 30, 2026

Why Economic Growth Matters
January 23, 2205

Why Bubbles and Busts Happen
January 16, 2026