Issue 33: One Big Beautiful Folly

3 July 2025

Trump’s One Big Beautiful Bill is classic demand side fiscal stimulus, benefiting consumers. And its not even populist; low-income households bear the brunt of Medicaid & SNAP spending cuts and receive the smallest income gains. Trading Post is mortified by the surge in unfunded government spending and implied rise in public debt. This isn’t the supply side deregulation measures she had anticipated – measures that have lifted the US trend growth rate. While neither a fiscal crisis nor an inflation spike is projected, fiscal sustainability risks are mounting. Nonetheless the 12–18-month outlook for domestic demand and corporate earnings growth has improved – reinforcing what business cycle indicators were already signalling. But don’t expect the Fed to cut interest rates in a hurry. Trading Post is sticking with the forecast of a single 25bp policy interest rate cut this year.