Sigh, Chaos Continues (4)

The crisis continues, following existing trends. Musk is destroying state capacity (and looting) while simultaneously reducing spending very little, and Trump is doing his best to undermine previously allied international relationships while actually accomplishing very little.

On the domestic front, the administration is doing its utmost to destroy confidence and force a recession. Perhaps the plan is that the economy will emerge from the wreckage by around the midterms, so the business press can gush about growth prospects. Although the House managed to get a budget plan passed, it is still not clear that they will agree on anything once the scale of economic damage is clear.

On the foreign front, it appears that Ukraine agreed to sign a meaningless development agreement. The real question is whether the Russians will even slightly moderate their maximalist demands to give Trump a fig leaf to abandon Ukraine. Update: It appears that Trump and Vance decided to join Russia, Iran, and North Korea in their war on Ukraine. Otherwise, Tariff Week content has returned.

Once again, my view is that the odds of something big breaking is high, so past trends as embedded in economic data releases are much less meaningful about future prospects.