Fear and consternation, nightmares alive in the American psyche.
Recent headlines read thus:
- “Trump's sweeping new tariffs send global stocks plunging as U.S. allies plan response,” said NBC News.
- “Dow Jones plunges more than 1,600 points as stock market recoils from Trump tariff shock,” said CBS.
- “Markets plunge with S&P 500 down 6% and Dow down 2,200 after China retaliates against Trump tariffs,” added the AP.
Nor are equities the only product to feel the heat. In my field of business, reports of containers filled with lumber stuck at domestic ports are manifold, with hardwood exporters waiting anxiously to learn of some miraculous breakthrough in tariff negotiations between the U.S. and China.
“I don’t feel good about it,” one of our buyers told me forthrightly. “I’ve got lumber out to Country X right now, and we’re trying to determine how we’re going to handle these new tariffs.”
He explained how difficult a task it was that the current administration was undertaking. Specifically, how, because of the nature of our laws and political system, there is little time for the president’s plan to work since he arguably has till the midterms before he becomes a lame duck. Finally, the buyer told me what he really didn’t understand is how, even if Trump succeeds in bringing industry back to the country, we could possibly supply all the needed new workers, the current unemployment rate being only 4.2%.
I appreciated the robust discussion, and I told the buyer so, but his questions, particularly about the workers, caught me off guard.
Since I’ve had time to think, though, it seems that what the president is counting on has to do with GDP and is related to the following.
To begin with, the equation for GDP is C+I+G+(X-M). C equals consumption, I is investment, and G is government spending, while X and M are exports and imports, respectively. It’s my belief that Trump aims to change the balance of the equation – away from government spending and a negative current account, while weighted more toward gross private domestic investment and balance sheet surpluses.
His actions suggest as much. Trump recently told a reporter that there is currently $7 trillion committed for private investment, a number that has grown in the past several days; additionally, his tough negotiations – particularly with China – are geared toward narrowing the trade deficit.
Still, our buyer’s comments about where the workers would come from remained unanswered.
This is where DOGE comes in.
The dismissed government workers, so controversial in the media lately, will be free to move into the investment category, adding robustness to the labor market that will allow for new workers to flow into the private sector.
I told my friend this, but he was still skeptical. And perhaps he’s correct. It’s a huge undertaking the current administration is tackling, after all, though the results will be known soon enough. But I take comfort in the fact that barring some kind of fundamental change, the path we’ve been on is unsustainable. So, in the end, for me at least, it comes down to one thing: Does someone have a better idea?
Along with his father, Allen Keller runs a lumber business in Stevenson, Alabama. He has a Ph.D. in Creative Writing from Florida State University and an MBA from University of Virginia. He can be reached for comment at [email protected].
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to [email protected].
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