We have previously written about Donald Trump’s desire to cause a recession in the US. The poor state of the economy, for which his predecessor and the Fed’s policies were largely responsible, will be made even worse by his policies and tariffs. Here are just a few factors that prove this:
① The property market. The bubble in the property market, which has been going on for years, means that fewer and fewer Americans can afford to buy a house. The chart below shows that acquisition costs of a home at the median price are as high as for an American’s 15-year income! We haven’t seen levels this high since 2017, and we know what happened then. The chart also shows that this price trend has already materialized. Now it’s time for an appropriate correction (the next crisis).
② Cross-Atlantic travel has always been the best source of revenue for travel agencies and airlines. But now Americans are limiting their spending on travel to Europe and Asia due to the economic situation at home, and Europeans are no longer as willing to fly to the US and spend their money there. Canadians feel they have been treated unfairly by Trump: Air Canada reports a 10% drop in flights to the US. Canadians, who accounted for 13% of property purchases by foreigners in the land of the free last year, are now selling their homes in Florida and Arizona on a massive scale.
③ Trump has also cancelled the exemption on imports of goods worth less than 800 dollars. Americans are now rushing to place orders with the Chinese platforms Temu and Shin to stockpile their purchases before 25 April (the date on which the tariffs on goods under 800 dollars come into force). A bitter pill for US giants like Amazon.
④ The sentiment index calculated by Goldman Sachs, taking into account the most important investor groups, recently proved to be fairly low, although not extreme. The path from extreme optimism to pessimism, on the other hand, was long, but it came about fairly quickly. The key question now is whether this figure has fallen and will recover fairly quickly or whether it will remain as low as it was in 2022.
