Pulse Check on the U.S. Economy | This Week's Economy Ep. 99
Examining job creation, inflation, and other economic health vitals.
Hello Friends!
How is the Trump administration responding to voters’ economic concerns? At the start of 2025 and one month into the new administration, it’s time to assess how the economy is responding. Today, I’m diving into fresh economic data and key policy decisions shaping our nation’s financial future. Let’s break down what’s driving the numbers—and what it means for your wallet.
In this episode (and the show notes below), I’ll discuss the latest jobs report, inflation trends, and federal and state spending. For more information, tune in on YouTube, Apple Podcast, or Spotify, or visit my website.
FUELING AMERICAN JOBS
Examining the Data:
The latest U.S. Bureau of Labor Statistics jobs report reveals concerning trends:
Job growth estimates continue to be revised downward, and the number of jobs added in 2024 declined by 10%. This highlights the need to view monthly reports with caution.
Household employment rose by just 308,000 in 2024, the weakest growth outside of a recession in decades. Labor force participation remains below 2019 levels, indicating more out of the labor force than expected.
Inflation-adjusted weekly earnings have finally increased for the first time since 2021.
My Take:
Diagnosing the Weakness: Beneath the surface, the job market remains fragile due to big-government policies. Tariffs and excessive federal spending continue to weigh on economic growth, threatening to worsen conditions.
Policy Solutions for Growth: To revitalize the economy, we need pro-growth policies, tax reform, and regulatory reductions that empower businesses and spur job creation. Trump’s recent executive order on 10 regulatory cuts for every new one (compared with the one-in, two-out approach last time) is a step in the right direction, reducing government overreach and fostering business expansion.
Building a Stronger Workforce: Increasing labor force participation and household employment is essential for long-term stability. While ongoing shifts in Washington and the corporate landscape may bring short-term challenges, emerging technologies create new job opportunities.
Related:
ADDRESSING INFLATION
Examining the Data:
Under Biden, excessive spending and regulatory overreach led to rising deficits, while the Fed’s money printing pushed inflation to 40-year highs, eroding real wages. Average weekly earnings, adjusted for inflation, have been down about 2% since April 2020, when Biden took office. The result has been higher costs and fewer opportunities for Americans.
My Take:
Unique Challenges Facing Economy: As the Federal Reserve raises borrowing costs to fight inflation, ongoing tariffs will only add to the rising cost of goods already impacted by persistent inflation.
Solutions to Inflation: The Fed must reduce its bloated $6.8 trillion balance sheet, while Congress needs to curb federal spending. Cutting government spending can help address the debt driving the Fed’s excessive money printing, which is key to controlling inflation.
New Administration Opportunities: With Trump back in the White House, the focus is shifting to pro-growth policies. Lower taxes, regulatory reductions, and private-sector-driven infrastructure projects are expected to create a more favorable environment for businesses and economic growth.
Related:
SUPPORTING FREE TRADE
Examining the Issue:
President Trump has criticized the record-high trade deficit, but the same data shows U.S. exports also hit a record, signaling strong global demand. Trade benefits Americans by providing goods no longer made domestically or available at lower costs, reflecting strong consumer demand. The U.S. economy benefits from these trade arrangements.
My Take:
Threat of Tariffs: Tariffs are taxes on Americans, raising prices and straining households already struggling with inflation. This costly policy distorts markets, reduces competition, and harms long-term growth.
Better Trade Policy: Revisiting trade agreements and cutting tariffs will lower costs, boost U.S. competitiveness, and create growth opportunities.
Economic Growth Through Free Trade: Expanding free trade and reducing business costs fosters a stronger economy. By limiting government interference and empowering the private sector, we can create a future that benefits families, businesses, and industries.
Related:
I recently explained at NBC News how that trade helps us prosper.
CONFRONTING FEDERAL SPENDING
Examining the Issue:
With the national debt surpassing $36 trillion (125% of GDP), this crisis can no longer be ignored. Under Trump and Biden, reckless spending has driven annual deficits to $2 trillion, destabilizing the economy and burdening Americans with higher prices and uncertainty.
My Take:
Addressing the Spending Problem: Bipartisan fiscal policies have fueled inflation by forcing the Fed to print more money to cover deficit spending. This unsustainable approach threatens long-term economic stability.
Reforming Government Efficiency: The Department of Government Efficiency (DOGE) aims to cut waste, reduce redundancy, and streamline operations with private-sector principles. A strict spending limit—tied to population growth plus inflation—should be a cornerstone policy. The presidency must use its influence to push Congress for spending cuts or veto excessive spending bills.
Advancing Economic Freedom: Spending limits will empower taxpayers, drive growth, and create fiscal stability. Moving beyond flawed Keynesian policies, we must prioritize budget discipline and pro-growth strategies that ensure long-term economic prosperity.
Related:
SETTING STATE SPENDING LIMITS
Examining the Data:
While the federal government can run deficits, issue bonds, and print money, state governments operate under stricter fiscal constraints. Nearly all require balanced budgets, and most enforce tax and expenditure limits. This necessity fosters disciplined budgeting to maintain stability without stifling economic prosperity.
From 2014 to 2023, data from the Sustainable Budget Project reveals the costly impact of excessive state spending:
Aggregate state spending (excluding federal funds) rose by 61.1%. Had spending been limited to population growth plus inflation, states would have spent $1.44 trillion in 2023—$454 billion less than the actual $1.89 trillion.
If federal and state governments had followed sustainable budgeting practices, taxpayers could have saved over $2.5 trillion in 2023 alone—funds that could have been invested in businesses, job creation, and wage growth.
My Take:
Why Spending Limits Matter: Government spending should not outpace taxpayers' ability to fund it. Tying spending growth to population growth plus inflation prevents unchecked expansion, curbs excessive taxation and debt, and protects economic stability.
Sustainable Budgeting Solution: Sustainable budgeting is a commitment to economic freedom and efficiency. Strict spending limits ensure fiscal responsibility. Viewing population growth plus inflation as a cap—not a target—keeps spending in check and fosters a thriving economic environment.
A Stronger Economy: States that adopt sustainable budgeting enjoy more jobs, higher wages, lower tax burdens, greater economic growth, and a stable fiscal environment, paving the way for long-term prosperity.
Related: Click the picture to read my commentary at National Review.
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com.
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