I work in construction and the industry is cratering. In the last half of 2024 things slowed due to interest rates, but in 2025 Q1 most developers came to grips with the rates and we were set to have decent sales and did pretty good through Q2. We are starting Q3 by laying half of our employees off for the first time in our 30 year history. If the job numbers aren't plummeting we need to really consider they are cooking the books.
Once rates went up housing was worth dramatically less then what it was, but for two years owners sat on their low rates and held out. This summer selling season sellers finally decided to stock holding out but there are still no buyers because rates are high.
That's what we're seeing in Salt Lake right now....way more homes listed now than same time last year, lots of price cuts and homes sitting for longer to find buyers.
We are in a vicious cycle. Higher material prices and interest rates depressed demand so we lost workers and that increased prices further. I’m in the middle of a never ending renovation and my contractor isn’t able to get skilled new staff to replace attrition to finish it
lower your dang prices! The cost of construction is so overinflated in WA. the golden goose has been killed (tens of thousands of tech layoffs)! If you reduce your prices to 20% of the nonsense you charge people might build stuff again and you'd still be raking in obscene profits
Oh sweet summer child. Our prices are double what they were in 2019 because of steel tariffs. Do we work for free? You have no idea how small the profit margins are
Construction doesn’t work like this. We don’t sell to individuals. A developer secures loans based on market conditions and price stability. Material prices are honestly the smallest problem.
The trump administration is like a vulture fund whose LPs are the boomers. They've taken on a healthy portfolio asset and loaded it up with debt to extract distributions (to corporations, the rich, and the elderly). It will take time for the bill to come due. Can it last 4 years?
I love your analogy about poisoning the organism of the United States economy—it’s hard to kill! I think it is only a matter of time before the economic uncertainty and high costs of inputs will cause fraying of the economy. Trying to dodge the results of poor decisions takes energy and effort, depleting innovation and growth.
This reminds me of the video of the guy who is slipping on ice... and he sort of regains his balance... and then slips again... and then regains his balance... but eventually he falls. That's basically the U.S. Economy right now under this tariff policy.
I hate the phrase "stock market reached a record high". Same with the people who go around screaming about "record profits".
*of course* these reach" record highs! They are things which tend to grow over time, with the ecobony. Its like saying "my kid's height reached another record high" (well, if kids heights fluctuated as they grow)
With the stock market basically what has happened that by June it *recovered* from the tariffs etc to where it was in November last year. Having made up all that lost ground it can now reach a "new record high".
That doesnt mean that Trump's policies didn't waste half a year's worth of growth - if it hadn't been for that nonsense these "record highs" could've been had in Jan or Feb
The stock market is a ridiculously bad proxy for the actual economy. If the market represented anything real we would have 50 million job openings (or something equally strange). It will crash because trees don’t grow to the sky and easy money has failed.
If I understand correctly, McKinley's tariffs were put into effect in 1890, while the Panic of 1893 took 3 more years to materialize. And that one was just a preamble to the big one on 1896.
I would have been more surprised if the impact on the economy had been as fast as some predictions made it out to be (order of a few months), but I am also pessimistic about our prospects in one or two years if things remain this way and the tariffs are enacted for real in August.
Hey folks, if you really *want* me to reduce interest rates, please cut it out with all these crazy policies that are making the job of price stabilization much harder
T was supposed to be in a recession two years ago. By last fall, The Wconomist ànd others said it was the envy of the world. This year, growth has slowed by half, hiring by 22 pct ànd inflation is rising. It’s Stagflation Lite. With much more bad fiscal policy in the pipeline
Isn't there an old quip about how “it takes a lot of Harberger triangles to fill an Okun Gap”. That's part of what's going on here. Tariffs are Harberger triangles (deadweight loss). Recession is a huge event (Okun gap, also why they're actually kind of rare)
Good stuff, Derek. I’m no Trump fan, but if China’s economy collapses in the next year, won’t he get credit for both avoiding major harm to the U.S. economy and bringing China to its knees—even if the collapse had little to do with him? It feels like Reagan getting credit for the fall of the Soviet Union, even though their collapse was likely inevitable.
The price of automobiles since Covid hit is so far beyond absurd. They are “eating” the tariffs because they know they can’t raise prices any more. Nobody can afford a $90k pickup with 8% interest. Or a $50k sedan.
I’m not someone who gets upset when people make money. Car prices could get cut in half, though, and the dealerships and manufacturers would still be fine.
A lot of that is baked in to the cost structure of the cars though. We keep ratcheting up features. You can make simpler cars but they both need to be legally allowed and priced not just a little bit significantly cheaper. You can buy Indian cars for around $7k that are similar in features to 90s cars. But they don’t meet (current) US safety or emissions regs.
I have heard the President comment that the companies are going to have to “eat the tariffs” at least partially so that prices won’t change. Let’s say that they do. I would think that reduced profit margins also put downward pressure on wages and particularly on investment in growth or new products from these same companies. How long before the inability of companies to invest in themselves will be felt by everyone?
In the ideal case the downward price and cost pressure is also offset by rising sales as purchases move from foreign firms to domestic. But in practice while some of that will happen- we have globally interconnected firms (the “Japanese” car manufacturers probably make more the cars in the US than the “American” firms) and also plenty of this are so cheaply manufactured that even with 30% taxes on the wholesale price - it is _still_ cheaper to import.
There is ample room for humility. Despite the efforts of many-our economy shows resiliency. Much like Rasputin (not discounting mesmerism). The analog to the Trump effect is that an infinite number of chimpanzees over an infinite amount of time could compose “Hamlet.” (Remember: We did have a president who co-acted with a chimpanzee. His name was Ronald Reagan.) Again, the answer may not be with the problem we face, but how we organize to confront it. https://www.iflscience.com/one-monkey-cant-write-shakespeare-in-the-universes-lifetime-better-get-an-army-76596
But if you look at the numbers, we've been going South since Trump’s Liberation Day. A lot of what you are seeing now is business and consumer planning for increased costs down the line. Core prices are beginning to rise, and the US$ has weakened significantly. Much of what the administration has promised has vanished.
I work in construction and the industry is cratering. In the last half of 2024 things slowed due to interest rates, but in 2025 Q1 most developers came to grips with the rates and we were set to have decent sales and did pretty good through Q2. We are starting Q3 by laying half of our employees off for the first time in our 30 year history. If the job numbers aren't plummeting we need to really consider they are cooking the books.
That’s rough. Wishing y’all the best and a good turnaround!
Once rates went up housing was worth dramatically less then what it was, but for two years owners sat on their low rates and held out. This summer selling season sellers finally decided to stock holding out but there are still no buyers because rates are high.
That's what we're seeing in Salt Lake right now....way more homes listed now than same time last year, lots of price cuts and homes sitting for longer to find buyers.
What region?
PNW
We are in a vicious cycle. Higher material prices and interest rates depressed demand so we lost workers and that increased prices further. I’m in the middle of a never ending renovation and my contractor isn’t able to get skilled new staff to replace attrition to finish it
I don’t do much residential work but I feel your pain.
lower your dang prices! The cost of construction is so overinflated in WA. the golden goose has been killed (tens of thousands of tech layoffs)! If you reduce your prices to 20% of the nonsense you charge people might build stuff again and you'd still be raking in obscene profits
Oh sweet summer child. Our prices are double what they were in 2019 because of steel tariffs. Do we work for free? You have no idea how small the profit margins are
not everything is built with steel
Construction doesn’t work like this. We don’t sell to individuals. A developer secures loans based on market conditions and price stability. Material prices are honestly the smallest problem.
The trump administration is like a vulture fund whose LPs are the boomers. They've taken on a healthy portfolio asset and loaded it up with debt to extract distributions (to corporations, the rich, and the elderly). It will take time for the bill to come due. Can it last 4 years?
How the elderly, Dan? You mean the wealthy elderly?
I love your analogy about poisoning the organism of the United States economy—it’s hard to kill! I think it is only a matter of time before the economic uncertainty and high costs of inputs will cause fraying of the economy. Trying to dodge the results of poor decisions takes energy and effort, depleting innovation and growth.
This reminds me of the video of the guy who is slipping on ice... and he sort of regains his balance... and then slips again... and then regains his balance... but eventually he falls. That's basically the U.S. Economy right now under this tariff policy.
https://www.reddit.com/r/funny/comments/rfynaq/really_didnt_wanna_fall/
I hate the phrase "stock market reached a record high". Same with the people who go around screaming about "record profits".
*of course* these reach" record highs! They are things which tend to grow over time, with the ecobony. Its like saying "my kid's height reached another record high" (well, if kids heights fluctuated as they grow)
With the stock market basically what has happened that by June it *recovered* from the tariffs etc to where it was in November last year. Having made up all that lost ground it can now reach a "new record high".
That doesnt mean that Trump's policies didn't waste half a year's worth of growth - if it hadn't been for that nonsense these "record highs" could've been had in Jan or Feb
The stock market is a ridiculously bad proxy for the actual economy. If the market represented anything real we would have 50 million job openings (or something equally strange). It will crash because trees don’t grow to the sky and easy money has failed.
If I understand correctly, McKinley's tariffs were put into effect in 1890, while the Panic of 1893 took 3 more years to materialize. And that one was just a preamble to the big one on 1896.
I would have been more surprised if the impact on the economy had been as fast as some predictions made it out to be (order of a few months), but I am also pessimistic about our prospects in one or two years if things remain this way and the tariffs are enacted for real in August.
You’ve got a typo:
Hey folks, if you really *want* me to reduce interest rates, please cut it out with all these crazy policies that are making the job of price stabilization much harder
fixed, thank you!
I also believe you’re referring to Jerome Powell’s *2025* report to Congress?
You’re welcome! And thank you for all the writing and thoughts!
T was supposed to be in a recession two years ago. By last fall, The Wconomist ànd others said it was the envy of the world. This year, growth has slowed by half, hiring by 22 pct ànd inflation is rising. It’s Stagflation Lite. With much more bad fiscal policy in the pipeline
Not a perfect comparison, but Brexit's punch also took a while to be felt throughout the entire economy
Isn't there an old quip about how “it takes a lot of Harberger triangles to fill an Okun Gap”. That's part of what's going on here. Tariffs are Harberger triangles (deadweight loss). Recession is a huge event (Okun gap, also why they're actually kind of rare)
Good stuff, Derek. I’m no Trump fan, but if China’s economy collapses in the next year, won’t he get credit for both avoiding major harm to the U.S. economy and bringing China to its knees—even if the collapse had little to do with him? It feels like Reagan getting credit for the fall of the Soviet Union, even though their collapse was likely inevitable.
The price of automobiles since Covid hit is so far beyond absurd. They are “eating” the tariffs because they know they can’t raise prices any more. Nobody can afford a $90k pickup with 8% interest. Or a $50k sedan.
I’m not someone who gets upset when people make money. Car prices could get cut in half, though, and the dealerships and manufacturers would still be fine.
A lot of that is baked in to the cost structure of the cars though. We keep ratcheting up features. You can make simpler cars but they both need to be legally allowed and priced not just a little bit significantly cheaper. You can buy Indian cars for around $7k that are similar in features to 90s cars. But they don’t meet (current) US safety or emissions regs.
I have heard the President comment that the companies are going to have to “eat the tariffs” at least partially so that prices won’t change. Let’s say that they do. I would think that reduced profit margins also put downward pressure on wages and particularly on investment in growth or new products from these same companies. How long before the inability of companies to invest in themselves will be felt by everyone?
In the ideal case the downward price and cost pressure is also offset by rising sales as purchases move from foreign firms to domestic. But in practice while some of that will happen- we have globally interconnected firms (the “Japanese” car manufacturers probably make more the cars in the US than the “American” firms) and also plenty of this are so cheaply manufactured that even with 30% taxes on the wholesale price - it is _still_ cheaper to import.
Delayed tariff pain
There is ample room for humility. Despite the efforts of many-our economy shows resiliency. Much like Rasputin (not discounting mesmerism). The analog to the Trump effect is that an infinite number of chimpanzees over an infinite amount of time could compose “Hamlet.” (Remember: We did have a president who co-acted with a chimpanzee. His name was Ronald Reagan.) Again, the answer may not be with the problem we face, but how we organize to confront it. https://www.iflscience.com/one-monkey-cant-write-shakespeare-in-the-universes-lifetime-better-get-an-army-76596
But if you look at the numbers, we've been going South since Trump’s Liberation Day. A lot of what you are seeing now is business and consumer planning for increased costs down the line. Core prices are beginning to rise, and the US$ has weakened significantly. Much of what the administration has promised has vanished.