The Sky is Not Falling But Trump's Economy Is Falling MAGA Fast These Days

March 7, 2025

The U.S. economy is very strong and will most likely remain very strong in the next years. The sky is not falling and will not fall on Trump. However, there is volatility and many Americans are concerned, especially MAGA voters who are feeling the pinch of high food prices, high healthcare costs, relatively stagnant wages, and potentially less savings for retirement.

Food Prices

During President Trump's second term, the United States has been grappling with persistently high food prices, with eggs emerging as a focal point of concern. Several factors, including a severe avian influenza outbreak, supply chain disruptions, and economic policies, have contributed to this inflationary trend.

Escalating Egg Prices

The average price for a dozen Grade A eggs in U.S. cities soared to $6 or higher in February 2025, surpassing the previous record of $4.82 set two years earlier. In certain regions, prices have reached unprecedented levels; for instance, California, which has been hit the hardest by Trump's policies, reported egg prices as high as $9.22 per dozen. The USDA projects a 41% increase in egg prices this year, reflecting the severity of the situation. 

Contributing Factors

• Avian Influenza Outbreak: A devastating bird flu has led to the culling of millions of egg-laying hens, significantly reducing supply. Over 160 million birds in the U.S. have been affected, leading to prolonged recovery periods for egg production. 

• Supply Chain Challenges: The pandemic-induced disruptions have strained logistics and labor availability, exacerbating the supply-demand imbalance in the food sector.

• Trump's Policies: Trump tariffs and massive deportations have impacted import costs and domestic production expenses, contributing to overall food price inflation.

Broader Food Price Inflation

Beyond eggs, the overall food sector has experienced notable inflation. Between December 2024 and January 2025, grocery prices increased by 0.8%, positioning them 2% higher than in January 2024. The USDA forecasts a 3.4% food price increase for the current year under Trump, exceeding historical average growth rates. 

Political Implications

The persistent rise in food prices, particularly eggs, has become a significant political issue. Some Democrats argue that focusing on economic concerns like grocery costs is essential to reconnect with voters, suggesting that these everyday issues may influence public perception of Trump's administration. Our recommendation is to eat less, become more productive, save and invest more, but that is just us. Most Trump voters just want to eat more and pay less, but Papa Trump is not delivering on that end. For big eaters, there's light at the end of the tunnel because Trump's deregulation policies could make processed foods cheaper to produce. 

Rising Healthcare Costs

In the initial weeks of President Trump's second term, the United States has witnessed a notable escalation in healthcare costs, with projections indicating a continuation of this upward trend throughout 2025. Several factors, including inflationary pressures, increased utilization of medical services, and rising prescription drug expenditures, are contributing to this surge.

Current Healthcare Cost Trends

• Employer-Sponsored Health Plans: Employers anticipate a 5.8% increase in total health benefit costs per employee in 2025, even after implementing cost-reduction strategies. 

• Overall Medical Cost Trend: PwC's Health Research Institute projects an 8% year-on-year medical cost trend for the group market and 7.5% for the individual market in 2025, marking the highest increase in 13 years. 

Key Drivers of Rising Healthcare Costs

1. Inflationary Pressures: Persistent inflation in the Trump economy is compelling healthcare providers to adjust pricing to maintain financial stability, thereby escalating overall healthcare expenditures. 

2. Obesity Epidemic: The growing utilization of specialty medications, particularly weight loss drugs for the obesity epidemic chronic and associated chronic medical conditions, is significantly contributing to increased healthcare costs. 

3. Behavioral Health Services: The mental health crisis is an amplified demand for behavioral health services, further straining healthcare resources and contributing to cost increases. 

Outlook for 2025 and Beyond

The consensus among industry analysts points to a sustained rise in healthcare costs:

• Global Perspective: The WTW Global Medical Trends Survey forecasts a global average medical cost increase of 10.4% in 2025, underscoring a worldwide challenge. 

• Historical Context: U.S. health expenditures have escalated from $2.8 trillion in 2012 to $4.5 trillion in 2022, with projections reaching $7.7 trillion by 2032, highlighting the enduring nature of this issue. 

In conclusion, the early phase of President Trump's second term is characterized by escalating healthcare costs, driven by a confluence of inflation, increased service utilization, and rising prescription drug prices. 

The Stock Market 

Over the past week, U.S. stock markets have experienced notable declines, with both the S&P 500 and the Nasdaq Composite indices retreating from their recent record highs.

S&P 500 Performance

• Recent Decline: The S&P 500 has fallen approximately 7% from its peak earlier this year.

• Key Levels: The index is approaching its 200-day moving average, a critical support level that, if breached, could signal further declines. 

Nasdaq Composite Performance

• Recent Decline: The Nasdaq Composite has entered correction territory, defined as a decline of at least 10% from its recent peak. As of the latest data, the index has dropped around 10.4% from its December high. 

• Tech Sector Impact: The technology sector, which constitutes a significant portion of the Nasdaq, has been notably affected. Companies like Marvell Technology have reported revenue guidance that fell short of expectations, contributing to broader sell-offs within the sector. 

The Trump Economy is Failing Already 

Several elements have contributed to the recent market downturn:

• Trade Tensions: Ongoing concerns about a potential global trade war have unsettled investors, leading to increased market volatility. citeturn0news24

• Economic Indicators: Recent economic data, including job reports and manufacturing indices, have painted a mixed picture of the U.S. economy, adding to investor uncertainty. 

• Corporate Earnings: Disappointing earnings reports from key companies have further dampened market sentiment. 

Market Outlook

Analysts are closely monitoring the S&P 500's 200-day moving average, often viewed as a "line in the sand." A decisive move below this level could trigger additional selling pressure. Conversely, if the index holds above this support, it may signal a potential stabilization. 

Investors are advised to remain cautious, given the current market volatility, and to stay informed about ongoing economic developments and corporate earnings reports.

The Labor Market

The U.S. labor market exhibited modest growth in February 2025, adding 151,000 jobs, slightly below economists' expectations of 160,000. This marks an increase from January's revised gain of 125,000 jobs. 

Unemployment Rate

The unemployment rate edged up to 4.1% from 4.0% in January, reflecting a slight softening in labor market conditions. 

Sectoral Performance

• Healthcare: Continued its growth trajectory, adding 52,000 jobs, consistent with its 12-month average. Healthcare costs continue increasing also.

• Financial Activities: Gained 21,000 jobs, surpassing the prior 12-month average of 5,000. Notably, commercial banking shed 5,000 positions.

• Transportation and Warehousing: Added 18,000 jobs, aligning with the average monthly gain over the past year. 

• Federal Government: Employment declined by 10,000 jobs, reflecting ongoing federal workforce reductions. 

Wage Growth

Average hourly earnings for all employees on private nonfarm payrolls rose by 0.3% to $35.93. Over the past 12 months, wages have increased by 4.0%, most of it under the Biden era. 

Market Reaction

Financial markets responded negatively to the jobs report, with major indices experiencing declines. The S&P 500 fell 1%, the Dow Jones Industrial Average dropped by 340 points, and the Nasdaq Composite decreased by 1.4%. 

Economic Outlook

The labor market's performance, coupled with trade policy uncertainties and federal spending cuts, suggests potential headwinds for economic growth in the coming months. Economists caution that these factors could dampen business investment and hiring decisions, warranting close monitoring. 

Stay tuned. The state of the economy is always a developing story. 

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