Soaring Costs Are Ironically Tariff-Proofing the Economy

Should we be concerned about the economy – much less the stock market – as President Trump heats up his tariff rhetoric?

Perhaps, tongue-in-cheek, we should first look at the data. Where are Americans spending their money these days – and how resilient is that spending in a world of higher tariffs?

The latest troubling trend shows that Americans are spending more on healthcare – often in the form of “insurance” that doesn’t insure against anything – than on necessities like food and housing:

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Americans now spend more on healthcare than on groceries.

U.S. healthcare continues to outpace overall inflation, thanks to high government involvement in mandates and subsidies.

We note – somewhat jokingly – that if these trends continue, healthcare spending will be the entire U.S. economy by about 2150.

Meanwhile, some forms of healthcare, such as cosmetic surgery, continue to rapidly-improve over time and costs decline.

But where the government lays its hand on the scale, all Americans are burdened with the costs of a government-run healthcare plan, while still having the appearance of a private, free-market plan.

~ Addison

50 major companies that will likely fail to survive Trump’s MAGA economy. Many have 5-star ratings. Most are “buys” per Wall Street. But they’re dead companies. Click here to see the full list.

P.S. What caused the madness of America’s healthcare system? The blame starts with FDR. During World War II, wage and price freezes and a labor shortage led to employers coming up with the idea of providing health insurance.

Today, your insurance is still tied to your job – but with the negatives of government plans and mandates that make it unwieldy. And it’s a problem that looks like it’ll get worse before – err, if – it gets better, as it’s not a centerpiece of President Trump’s Great Reset plan.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Should we be concerned about the economy – much less the stock market – as President Trump heats up his tariff rhetoric?

Perhaps, tongue-in-cheek, we should first look at the data. Where are Americans spending their money these days – and how resilient is that spending in a world of higher tariffs?

Turn Your Images On

Americans now spend more on healthcare than on groceries.

U.S. healthcare continues to outpace overall inflation, thanks to high government involvement in mandates and subsidies.

We note – somewhat jokingly – that if these trends continue, healthcare spending will be the entire U.S. economy by about 2150.

Meanwhile, some forms of healthcare, such as cosmetic surgery, continue to rapidly-improve over time and costs decline.

But where the government lays its hand on the scale, all Americans are burdened with the costs of a government-run healthcare plan, while still having the appearance of a private, free-market plan.

~ Addison

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Gold has led people to do the most brilliant, the most brave, the most inventive, the most innovative and the most terrible things. ‘More men have been knocked off balance by gold than by love,’ runs the saying, usually attributed to Benjamin Disraeli. Where gold is concerned, emotion, not logic, prevails. Even in today’s markets it is a speculative asset whose price is driven by greed and fear, not by fundamental production numbers.

Fresh GDP data — the Commerce Department revised Q2 growth upward to 3.3% — fueling the rally. Investors cheered the “Goldilocks” read: strong enough to keep the music going, not hot enough (at least on paper) to derail hopes for a Fed pivot.

Even the oddball tickers joined in. Perhaps as fittingly as Lego, Build-A-Bear Workshop popped after beating earnings forecasts, on track for its fifth consecutive record year, thanks to digital expansion.

Neither represents a bellwether of industrial might — but in this market, even teddy bears roar.

In modern finance theory, only U.S. T-bills are considered risk-free assets.

Central banks are telling us they believe the real risk-free asset is gold.

Our Grey Swan research shows exactly how the dynamic between government finance and gold is playing out in real time.

When we compare apples to apples—median home prices to median household income, both annualized—we get a much more nuanced picture. Housing has indeed become less affordable, with the price-to-income ratio climbing from roughly 3.5 in 1984 to about 5.3 today. In other words, the typical American family now has to work much harder to afford the same home.

But notice something crucial: the steepest increases coincide precisely with periods of massive government intervention. The post-dot-com bubble recovery fueled by Fed easy money after 2001. The housing bubble inflated by government-backed mortgages and Fannie Mae shenanigans. The recent explosion driven by unprecedented monetary stimulus and COVID lockdown policies.

Neither represents a bellwether of industrial might — but in this market, even teddy bears roar.

In modern finance theory, only U.S. T-bills are considered risk-free assets.

Central banks are telling us they believe the real risk-free asset is gold.

Our Grey Swan research shows exactly how the dynamic between government finance and gold is playing out in real time.