James Surowiecki

President Donald Trump made a surprise visit to an unexpected place last week, touring the Federal Reserve’s headquarters, where two buildings are currently under renovation. Trump then staged a bizarre photo op with the Fed chairman, Jerome Powell, and criticized Powell over the cost of the renovation before telling him to lower interest rates, which the Fed could do—but almost certainly won’t—at its meeting today.
This presidential conduct was all but unimaginable before Trump.

If you’ve been listening to Donald Trump and his critics over the past six months, they have found one thing they can agree on: Trump’s presidency would have a dramatic impact on the U.S. economy. Elected in part because of voters’ anger over high prices, Trump promised that he would “immediately bring prices down, starting on Day One.

After Thursday’s stock-market sell-off provoked by Donald Trump’s announcement that the United States would be imposing new tariffs on almost every country in the world, the one thing we can say for sure is that Wall Street blew it. In the three trading days leading up to Trump’s much-anticipated “Liberation Day” speech, the market rose steadily as investors apparently convinced themselves that Trump would not do anything too crazy. Surely moderation would prevail.

In the months between Donald Trump’s election and his inauguration, cryptocurrency prices soared on speculation that the president would appoint crypto-friendly regulators and set up a “strategic bitcoin reserve.” Trump has delivered on the regulatory front: The Securities and Exchange Commission has a new pro-crypto commissioner and has dropped or paused lawsuits against crypto exchanges.

Donald Trump is a crypto bro who’s going to cut taxes and regulations, loves big banks and corporate mergers, doesn’t care about deficits, loves oil and hates wind and solar, and might actually let RFK Jr. do some kooky health stuff. That, roughly speaking, is the picture of Trump that you get when you look at how markets reacted this week to his reelection as president of the United States. In other words, the markets are saying that he’s pretty much who many of us thought he was.

About a month ago, I was greeted by a welcome sight at the gas station in Connecticut where I usually fill my tank: the price of regular had fallen below $3 a gallon. In the weeks that followed, however, the Middle East was racked by escalating conflict. Israel—which was already in the middle of a nearly year-long invasion of Gaza—assassinated the Hezbollah leader Hassan Nasrallah with an air strike in Beirut.

Cars and trucks are the archetypal examples of industrial hardware. And automotive manufacturing historically has been all about finding ways to efficiently engineer and assemble metal, glass, and plastics into road-going vehicles with consumer appeal. But the big change in locomotion from the internal combustion engine to electric motors has shaken everything up.

Late last month, the Federal Trade Commission issued what’s called a final rule—a new regulation—banning noncompete clauses in contracts for nearly all American workers. Once the rule goes into effect, it will have a dramatic impact on the U.S. labor market. Workers will have an easier time starting new companies and bringing new products to market.

When, earlier this month, Tucker Carlson posted a short video clip of himself visiting a Russian supermarket and raving about how great the bread was and how low the prices were, and another clip from his trip to a knockoff McDonald’s restaurant in Moscow, he received plenty of well-deserved mockery. Carlson seemed both willfully ignorant, pretending that he doesn’t know that prices are lower in Russia than in the U.S. because Russia is much poorer than the U.S.

In 2018, Tesla’s CEO, Elon Musk, got what was potentially the most lucrative compensation package in history, an incentive-based deal that would earn him stock options worth nearly $56 billion if he hit the contract’s targets. He did exactly that, and ahead of schedule. Over the next few years, Tesla’s market capitalization rose by many multiples: Despite having fallen from its November 2021 peak, it is still worth 10 times more than its value in early 2018.

One of the defining characteristics of the second half of 2023 has been the gloominess of American consumers. Even as the economy remained unexpectedly robust—growing at a 5.2 percent clip in the third quarter—and inflation cooled, consumer sentiment as measured by the University of Michigan’s Consumer Sentiment Index dropped steadily from the summer through the fall, and its rating hit a low of 61.3 in November.But then something surprising happened.

It isn’t every day that you see right-wing Americans wildly celebrating the fact that a Mexican brand is now the best-selling beer in the U.S. But that is exactly what we saw this week, after the market-research company NielsenIQ announced that Modelo Especial had dethroned Bud Light at the top of the beer-sales charts. Naturally, MAGA fans had not discovered the virtues of globalization. Instead, they were gleeful at the success of their Bud Light boycott.

Financial panics are nothing new. But the strange little panic we’re enduring—one that started last week with a massive bank run causing the collapse of Silicon Valley Bank and that continued this morning with big sell-offs in the stocks of other regional banks—is arguably the first one in which social media, and particularly Twitter, has been a major player. And if the past few days are any indication, that does not bode well for the next major financial crisis.

The stock market was down sharply on Wednesday this week. It was up sharply on Thursday. And it will surprise no one if it ends up or down sharply today, the final trading day of the year. That’s because, though the market will finish the year down almost 20 percent (per the S&P 500 index), stocks have not taken a steady downward path to get there.

When, earlier this year, Elon Musk went looking for financing for his bid to take over Twitter, he had little trouble finding institutions willing to give him the money he needed. Morgan Stanley took the lead and organized a syndicate of banks—including Bank of America and Barclays—that committed to lending Musk $13 billion. The whole thing took less than a week.

Bed Bath & Beyond is a struggling home-goods retailer whose underlying business is so bad that stories about the company carry headlines like “Bed Bath & Beyond’s Big Dilemma: Can It Survive?” But for most of August, Bed Bath & Beyond was also one of the hottest stocks on Wall Street, rising almost 500 percent in a matter of weeks. And that strange divergence happened for just one reason: Meme-stock mania made a sudden and unexpected return.

If you listen to Americans right now, you’ll be forgiven for thinking that when it comes to the economy, Joe Biden is the worst American president since Herbert Hoover. Every new poll seems worse than the last, and according to the polling-analysis site FiveThirtyEight, Biden has the lowest approval rating at this point in his presidency of any postwar president.

Gas prices in the U.S. are close to $5 a gallon, President Joe Biden’s approval rating is 36 percent, and the first phenomenon has a lot to do with the second. But the factors that have driven gas prices higher are largely out of Biden’s control, at least in the near term. So it wasn’t a shock when he announced yesterday that he was asking Congress to suspend the 18.4-cents-a-gallon federal gas tax for three months.

Last week, Treasury Secretary Janet Yellen did something unusual for a Washington policy maker: She admitted that she’d made a mistake. In an interview with CNN’s Wolf Blitzer about the U.S.’s persistently high inflation rate, Yellen said, of her predictions last year that prices would stay under control, “I was wrong then about the path that inflation would take.”That she was.