Let's talk about how tax refunds are unlikely to save Trump's economy.... - Belle of the Ranch

Well, howdy there Internet people. It's Belle again. So, today we're going to talk about how tax refunds are unlikely to help Trump's economy.

A lot of economists, especially those hoping to spend the country's economic state for the benefit of the administration, were really hoping that tax refund season would provide a substantial boost to consumer spending. and therefore, shroud the economy's health for another quarter. They hoped the extra 370 bucks or so that many Americans will see would be splurged. However, Trump's war with Iran seems to have thrown a wrench into those plans.

According to Gas Buddy, early Friday morning, average gas prices have gone up 99 cents per gallon since last month and 24.8 cents since last week. That's going to eat into the expected splurge in spending. When gas and diesel go up in a country that runs on trucks and vans for deliveries, well, everything goes up. That means the refund boost to big ticket items tends to evaporate. That's on top of inflation coming in hot.

Paul Dietrich is the chief investment strategist at Wedbush Securities and explained it pretty clearly when he said, "When energy costs rise, consumers do not stop spending. They just stop spending on what they want and spend more on what they have to buy."

He's right. It's really that simple. Like most of Trump's policies, it hits those on the bottom first and works its way up. Or as Dietrich put it in purely economic speak, "Lower income households get squeezed by fuel costs, while higher income households can also get hit if the stock markets hit their asset values and stock market gains. The Iran war acts like a tax increase on the consumer, except nobody voted for it.”

Now, if you're wondering what he means and how gas prices can hit the stock market, first you have increased overhead for the companies. So, for the few investors left that are actually looking at the price to earnings instead of just vibes, companies make less.

Second, let's say a TV manufacturer planned on selling a 100,000 units. With increased fuel costs, they may only sell half of that. It's bad, not just for the manufacturer, but also the retailer and the companies that supply the retailer and the companies that make add-ons like wall mounts or remotes. All of these companies can take a hit.

With the recent revisions showing the last quarter of last year was pretty stagnant. Trump really needed this boost to try to continue to show the base they should reject the evidence of their eyes and ears and their receipts and account balances.

If you're wondering how bad this is hitting Trump's already fragile economy, the Fed kept rates the same, and there's already talk of them being raised next time because there is even more inflationary pressure on the horizon.

I've got a pretty good record of being able to say what they're going to do. I don't have a clue. It's almost like they're dealing with the dueling pressures of stagflation without it really being called that.

Anyway, it's just a thought. Y'all have a good day.