#Economy & #Stocks Review - Delusions of Political Control

E&S Review

Much of today’s economic data, including officially collected and produced time series, is highly unreliable. Statisticians use well-documented techniques such as geometric smoothing, seasonal adjustments, substitution, double counting, and hedonic adjustments to modify economic outcomes dating back to the 1980s. Politicians and central bankers often leverage these techniques for political gain.

Data manipulated by these statistical methods are frequently revised without clear notification to the public, especially when administrations or public policies change.

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Delusions of Political Control

In April 2025, the U.S. government reported a $258 billion budget surplus, a 23% increase from the previous year. This surge was driven by strong tax receipts and a record $16 billion in customs duties, largely due to heightened tariffs on Chinese and other imported goods. Individual non-withheld tax payments rose by 16% to $460 billion, while refunds also increased by 16% to $86 billion, contributing to total net receipts of $850 billion in April.

Despite the April surplus, the year-to-date budget deficit for fiscal 2025 reached $1.049 trillion, a 23% increase from the prior year, due to record spending. Outlays totaled $4.159 trillion, with significant increases in expenditures for Medicare, Medicaid, Social Security, and interest on federal debt.

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Many remain firmly believe that Trump is strategically using tariffs, often described as playing “3-D chess” while using the Art of the Deal, and exerting significant influence over economic cycles. Our observation is that people tend see events through the lens of their beliefs, and no amount of data or warning from our models will change that.

With that in mind, we advise the minority to stay cautious, objective, and prepared. Trump, contrary to popular opinion, is not in control.

The economic cycle as defined by the Economic Activity Composite (EAC) has been down for nearly a year. The EAC, our measure of marginal economic activity, is deteriorating rapidly.

Economic Activity Composite

It’s common practice for Trump and every sitting Adminstration to claim credit for economic forces beyond their control. In truth, it’s the invisible hand, the collective global consciousness, that’s playing 3-D chess. By comparison, Trump is playing checkers. Unfortunately, many will come to understand this the hard way.

Despite popular belief, the stock market rally may be at risk in the near future. We’ll dive deeper into this with our subscribers, especially as the timing becomes a focus while most people debate who’s really playing 3-D chess.

To navigate the real world—not the world shaped by perception management, subscribe to our Economy & Stock, US Bond, US Dollar, Bitcoin, and other Reports. Profits come from surfing waves of reality, not perceptions.

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Source: http://www.edegrootinsights.com/2025/05/economy-stocks-review-delusions-of.html