The New York Fed’s Empire State Manufacturing Index expanding…While the most recent reading from the New York Fed’s Empire State Manufacturing Index edged down, it remains in expansionary territory.

What does it mean – The Manufacturing continues to show that the economy is growing. Manufacturing jobs employment component returned to expansion and future expectations for employment jumped to a multiyear high.

Stronger than expected nonfarm payrolls (NFP) report…Labor market is starting to show signs of new life while AI creates questions for many in the software industry.

What does it mean – Despite some continued softness across data in January and recent layoffs in the AI and software space. The most recent ADP report shows that most of the hiring that took place in January was the result of small and mid-size businesses. Further proof that when government reduces regulations and gets out of the way the American entrepreneur rises to the challenge. Policy matters and the shift from the concentration in large businesses last year. Given that small and mid-sized businesses represent 46% of total employment, this represents a very healthy broadening of the economy.

Despite last week’s jobless claims that rose by 22k, the largest weekly increase since the beginning of December and largest since 2020, private payrolls came in above expectations, and the unemployment rate fell to 4.3%. Even with the negative headlines, breadth in labor gains appear to be improving.

CEO confidence rose sharply in Q1…Due to improved economic and industry outlooks and stronger capital spending plans.

What does it mean – CEOs remained cautious on hiring and reported heightened concern over AI, geopolitical risks, and tariff-driven cost pressures but are taking their marching orders from the consumer, less regulation, and more relief to come from the Big Beautiful Bill.

Homebuilder sentiment slipped to a five-month low…Affordability challenges and high construction costs continued to weigh on demand.

What does it mean – Free handouts and cash from Covid front loaded the economy pushing forward tons of spending on everything imaginable. Home prices went up faster than at any time in history. The American dream is now realizing that all that free cash from COVID that caused record inflation has now come home to roost and it is our kids that will suffer the consequences of fear mongering from DC and the media. “Too big to fail” and the “chicken littles” of the world should be avoided at all costs.

Personal income increased 0.3% month-over-month in December… Following an upwardly revised 0.4% increase (from 0.3%) in November.

What does it mean – Along with wages and salaries increasing 0.2% month-over-month in December and increasing 0.5% in November. Americans are seeing their real income rising. Unfortunately, massive inflation during the last administration saw its purchasing power drop by 21% according to the Bureau of labor statistics.

New home sales declined 1.7% month-over-month in December…This is a seasonally adjusted annual rate of 745,000 units versus 758,000 units in November.

What does it mean – On a year-over-year basis, new home sales were up 3.8%. While existing home sales decreased 8.8% month-over-month in January. Overall sales were down 4.4% on a year-over-year basis.

Cost of Health care benefits rise at fastest rate in years…Health Care is the governments “Gordion Knot”. Confused and overwhelmed, it is time for some bold and courageous leadership.

What does it mean – Under the “Un Affordable Care Act (ACA), Obama and Pelosi promised you that the ACA would lower medical cost. Since that vote in December of 2010, healthcare has only gotten more expensive. The family doctor and general practitioner are almost extinct; it has eliminated competition in the health insurance industry driving up costs. It has created massive subsidies programs for insurance companies that are now in charge of your health care, and it is all funded by the you, the taxpayer.

Prior to 1965 the US was spending about 5% of GDP on healthcare. After Medicare and Medicaid became law, it quickly doubled and now represents nearly 19% of GDP. According to Just the Facts, “from 1960 to 2024, healthcare spending in the United States increased from an average of $150/person per year to $15,516 (by 103 times) and from 5.0% of the nation’s economy (gross domestic product) to nearly 19 % (by 3.8 times).

Ronald Reagan was right, “the 9 most terrifying words in the English language are, I’m from the government and I’m here to help.”

Healthcare, inflation, and government intervention…According to Just the facts, “in 1942, the price for a maternity room at Christ Hospital in Jersey City, NJ was $7.00 per day. Adjusting for inflation, this amounts to $139.68 in 2026 dollars. In 2011, the price for a maternity room at the same hospital was $1,360 per day” and even more today.

In 1942, $7 is equivalent in purchasing power to about $139.68 today, an increase of $132.68 over 84 years. The dollar had an average inflation rate of 3.63% per year between 1942 and today, producing a cumulative price increase of 1,895.41%.

This means that today’s prices are 19.95 times as high as average prices since 1942, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.011% of what it could buy back then.

Just the Fact went on to say that “In a 2025 survey of 15 hospitals in Ohio (where state law requires hospitals to publish their prices) found that the daily price of a typical hospital room ranged from $1,201 to $4,187, with an average of $2,834 and a median of $2,583.” This increase is far greater than the average rate of inflation from 1942 to 2025. The one glaring difference between today and 80 years ago is government. The more it got involved the more expensive and less accountable it became.

Governments Gordion Knot. While this example highlights healthcare, the same can be said for the welfare system and trying to solve poverty. Since 1965 and Johnsons “war on poverty,” the government has spent over $25 trillion as of 2024. We can discuss the validity of “The War on poverty” and if there was any economic benefit. But what we know for certain is that the $25 trillion represents over 65% of our national debt. Currently as a nation we spent $5.3 trillion on healthcare in 2025, and the taxpayer was on the hook for over 50% or just over $2.65 trillion.

Alexander the Great saw a simple solution to a complex and impossible-to-untie knot. His example of slicing it in half with his sword provides us all with a symbol of rugged individualism, the ability to act boldly, think outside the box for a solution to a difficult, complex problem by changing the perspective.

The cry for freedom, the American taxpayer, the patient, our children, a massive and ever-growing national debt and future prosperity are begging for, is a quick decisive blow to the government created “Gordion Knot” we call national healthcare and entitlement programs run by the government.

Since the government has gotten involved, we have seen our welfare/healthcare system become the junk drawer in the kitchen. It is a catch all. It is protected by virtue signaling and one’s feelings, void of facts and desperate for more of your paycheck. If left uncheck or on its current path, the American taxpayer will see healthcare alone grow well beyond 30% of GDP, entrapping more and more people to worse health care and the largest entitlement program in modern history.

Once it was Japan, now China… Growing up in the 80’s we were warned that Japan was going to eat our lunch only to fall further behind as the US Private sector continued to innovate and create technology and solutions the consumer demanded.

Over the last 20 to 30 years, it’s been all China and if it was not for theft of intellectual property, sells of vital technology by our elected officials, and our dependency on cheap labor that built China’s economy, the free world would be a lot freer and the environment a lot cleaner.

What does it mean – As long as the USA is a constitutional republic, American exceptionalism will meet the challenges tyranny, globalism and the rest of the world will throw our way.

As the world ages, the US is in an enviable spot when it comes to its work force. US demographics are more favorable relative to China and the euro area, with stronger working-age population growth and a lower share of people in retirement. This puts the U.S. in an enviable position when it comes to competing with China and the global economy.

It’s a simple equation for success. Yet, demands discipline and courage. But most importantly, a family rooted in love.

Saturday morning, we woke up to a changed world and one facing a reality we tried to avoid since the Iran hostage crisis. While every administration since Reagan has discussed it, warned of the threat, and in one way or another, dealt with terrorism funded and backed by Iran.

Today, we take this opportunity to pray for the safety of our service men and women. For our country and our leaders. That our Lord looks after our nation and unites and strengthens us with an unwavering commitment to defend freedom and liberty here and abroad and blesses every one of us with the courage and strength to protect and share the greatness and idea of America, to face our wrongs, and build upon our legacy of rugged individualism aided by the empathy and forgiveness that has made us the most generous and giving nation this world has ever seen. That we have the wisdom and courage to unite behind our troops and recognize and deny the evil that divides our nation or cast doubts on our nation, our troops, and their mission to ensure freedom and liberty, protect the innocent, and keep our nation safe and prosperous.

John F. Kennedy once said, “let every nation know… that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and success of liberty”.

Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

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What does it mean – Companies pushed up orders prior to the tariffs going into effect.

Nonfarm payrolls increased by 177,000 in April…Defying post tariff predictions, U.S. employers added 177,000 workers to their payrolls in April. The consensus was 130,000.

What does it mean – While March private sector payrolls revised down to 185,000 from 228,000. The private sector shows no sign of a recession. The labor participation rate is also moving in the right direction and ticked up a bit more in April. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 7.3% from 8.4% over the last two months.

GDP was down 0.3%…While overall GDP was down, Core GDP was up over 3%.

What does it mean – According to the April 28, 2025, Financial Times article, “Core GDP is the Signal Among all the Noise”. While the headline number gets the press, economists look at what is really being spent and invested. Core GDP is the figures that reflect consumer spending and private investment. Core GDP is calculated by summing real personal consumption expenditures and real private fixed investment expenditures. According to economist Larry Kudlow, “Business fixed investment increased nearly 10 percent at an annual rate in the first quarter,” he said. “And, even better, business equipment and machinery — which is an incredibly important harbinger of productivity, job increases, and real wage hikes — rose an incredible 22.5 percent.” He went on to say, “There’s no recession there.”

Q4 productivity was upwardly revised to 1.5% vs a consensus of 1.2%…Q4 unit labor costs were revised down to 2.2% from the advance estimate of 3.0%.

What does it mean – America was more productive, and it cost us less to do so. Bottom line, this report shows that both components (productivity and unit labor costs) had the right skew for market sentiment. Productivity was higher than previously reported while unit labor costs (an inflation gauge) were lower than previously reported.

Durable goods orders surged 9.2% month-over-month in March…Bolstered by a 139% increase in orders for nondefense aircraft and parts.

What does it mean – New orders for transportation equipment surged 27.0% following a 1.2% increase in February. Much of this surge was due to getting in front of upcoming tariffs.

New home prices fall…The median sales price decreased 7.5% yr/yr to $403,600, while the average sales price decreased 4.7% to $497,700.

What does it mean – While total home sales increased by 7.4% month-over-month in March to a seasonally adjusted annual rate of 724,000 units from a downwardly revised 674,000, prices are starting to fall as affordability and rising interest rates are affecting the housing markets.

Existing Home sales fall to lowest pace since 2009…Sales of previously owned homes in March fell 5.9% from February to 4.02 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. That’s the slowest March sales pace since 2009.

What does it mean – After 4 years of massive inflation due to the printing of money by the Treasury, spending by your government and decades of artificially low interest rates, housing is starting to get hit by the reaction of not enough government spending, less printing of money and rates starting to normalize under a free market. While this President wants lower rates and yes, one can make an argument for and even justify lower rates, real cost of borrowing is bound to stay a bit higher due to credit risk of most borrowers. Currently the average person purchasing a home is turning over nearly 50% of their monthly income to make rent or a mortgage payment. Historically that number was roughly 30% to 35%. The equation is simple. To get back to a more normal loan to income level, a buyer must either bring in a larger down payment, rates must fall, or income must go up. If one or all of these issues does not budge, it will lead to higher credit risk and higher borrowing costs.

Number of container ships departing China for the US has declined sharply… Following a recent spike container ship activity from China, the current activity confirms and further suggests front-loading activity may be fading.

What does it mean – Used vessel capacity has dropped more steeply than total capacity, indicating rising empty space and softening US import demand. Per the chart below, shipping costs may get a lot cheaper for products coming from China.

They Hate Us Because They Want to Be Us…Xi’s actions speak louder than his words. I love the fact that China’s President Xi’s Presidential plane is a Boeing 747-8.

What does it mean – With a mandate to be the leader in the commercial air liner industry set by and subsidized by the communist government, President Xi does not trust his thieves nor his minister of “copycat” manufacturing to get it right. He rides in a supped-up Boeing 747-8 and refuses to fly on a Chinese made jet liner.

I totally understand why he wouldn’t want the very best and the very best people to build the plane he flies on. Safety and reliability are important. Not to mention can you trust people you take advantage of with no hope to work their way out of being an indentured servant to the government of China?

Think about it. Xi and the leadership of China are scared to death of free people. They fear free speech and the light it sheds on their atrocities and unholy alliances with evil regimes like Iran. China loves doing business with shortsighted CEO’s who manage to the next quarter and can’t see beyond the next earnings report. These CEO’s are easily manipulate and bribed with cheap labor and the expectation they will have access to billions of people. Unfortunately, those people are under the boot of the Chinese government and have little choice or freedom to choose. Not to mention, most of them can’t afford what they are selling.

Xi is one of the very few people who made billions working for the government of China. Gaining access to funds from the Chinese treasury and somehow those funds are now in his name and control. Don’t worry our politicians will not be outdone, they figured it out through USAID and political PAC’s.

At nearly 50% less expensive than the equivalent 737 or Airbus the Chinese version relies on one of three engines, two made by U.S. companies and one by Rolls Royce of Great Britain, and a host of technology made and developed in the USA.

China and their legion of merry band of spies and thieves have yet to crack the code on manufacturing commercial jet engines. Xi knows this and it just might be why he won’t fly Chinese made planes. Not to mention, many of his best spies are now finding it a bit more difficult to steal and plunder as this administration stops the insanity of turning a blind eye to China’s corporate espionage. Many have been arrested for industrial espionage and trying to steal military secrets from Boeing, GE and other vital companies, not to mention from research centers at our leading universities. HMMM.

Heavily subsidized by a government that is known for making companies who work in and or manufacturing in China give over their technology, they are also know to for deplorable working conditions and often use slave labor. Much of the stuff they make is considered knockoffs or junk by most standards.

It is common sense. Any dictator who ripped off his own people and became independently wealthy selling the fallacy of communism and socialism to his or her people as a greater benefit to society and yet, all that your citizens see ids you riding around on a private jet, traveling the world and enjoying the fruits of their labor, might just cause your citizens to wonder why and to what end? And yes, don’t worry our leaders like AOC and Bernie Sanders and many in our government will not be outdone.

I have to laugh and in a weird way love the audacity of Bernie Sanders and AOC as they fly around the country in a private jet telling us, “the world is about to end” if we don’t save the planet while they enjoy the benefits of free markets and capitalism. When will their followers wake up? Bernie has been warning of the approaching destruction caused by the creation of oligarchies since he got elected nearly 50 years ago. Yet he does nothing to break up bad actors and the very largest companies who lobby government officials and elected leaders to create more barriers to entry and make it more difficult for small businesses and entrepreneurs. He says one thing, but his actions speak volumes. He has a history of protecting and voting for regulations that destroys competition and puts in place barriers and regulations in the mane of the consumer that actually are the very antithesis to free markets, capitalism, consumer choice, and what our constitution protects. All one has to do is go to Open Secrets to find out he is one of the largest benefactors of political donations over the last 10 years by corporations from across all sectors of the economy. He was either the number one or top three recipient in the senate for donations from healthcare, pharmaceuticals, insurance companies, and green energy companies. The list goes on and on.

The tariff squeeze. According to Acting Associate Director, RAND China Research Center Gerrard DiPippo, “China has quietly removed over $40 billion of what the U.S. exports to China”. That is nearly 25% of what we currently export to China. This is a massive win for U.S. companies and goes a long way to leveling the playing field.

What does it mean – China is in trouble. Due to the pressure that the tariffs have put on China, workers are not getting paid and are now revolting in the streets. The building and construction industry was already in trouble in China. China is realizing the mess they have created due to socialism, a planned economy, and massive government control. Maybe Bernie, AOC, Tim Waltz, and the DNC can fly their private plane over to China to see how communism really works.

With nearly $8 trillion in new investments from foreign countries and corporations announced in the last three months due to the expectations of tariffs, a favorable tax policy, and reduction in regulations, it is the expectation that our leaders will vote for the continuation of the current tax structure and proposed reduction in regulations, taxes and the leveling of the playing field with tariffs.

Currently oil is down to $58 a barrel from nearly $80 in January. That is a real back pocket issue. Every American and everything bought is made with or transported with energy. Down over 25% in three months is putting money in every Americans pocket and reducing the cost of nearly everything we consume. Along with Drill Baby Drill we are seeing a massive offset to what price increases we are seeing from the tariffs. Reducing government waste and putting policies in place that reduce regulation, taxes and frees capital that will lead to individual prosperity, economic security and freedom and just might set an example China the most ardent socialists in Congress can not deny and continue to prosper from.

Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending May 2nd, 2025 appeared first on DeGroote.

What does it mean – Expansion in the nation’s largest sector accelerated in February. This takes a little edge off the market’s growth concerns but will do little to dampen the noise.

Retail sales increased 0.2% month-over-month in February…following a downwardly revised 1.2% decline (from -0.9%) in January.

What does it mean – Excluding autos, retail sales were up 0.3% month-over-month. Non-store retailer sales jumped 2.4% month-over-month.

The February CPI report came in softer than expected…Coming in at .22 vs. the consensus of .3.

What does it mean – While down nicely, inflation is still sticking above the Fed’s 2.0% target.

Homeownership cost near all-time highs…As a share of median income, US housing affordability has been deteriorating.

What does it mean – If history rhymes, or repeats, housing could be in trouble. According to the Atlanta Fed, the numbers are reminiscent of 2006. Take a look at the following chart.

Your mortgage is much more than your interest and principal…Here is the breakdown of homeownership cost for the average home buyer.

What does it mean – While principal and interest make up the biggest part of one’s payment, property taxes have skyrocketed due to the massive increase in property values and with that so has insurance costs. According to the Atlanta Fed the average monthly cost to own a home in the U.S. is now over $3,100 up from just over $1,600 in 2020.

Income needed for homeownership…The cost of home ownership as a percent of annual income has exploded to record highs.

What does it mean – Historically banks lent 30% on a borrower’s annual income. With interest rates at record lows banks began to ease the lending requirements and, in many cases, will lend up to 40% + of income and more in some cases.

When it comes to conforming loans, the banks take literally no risk, as most conforming loans are Freddie Mac and Fannie Mae loans. These are GSE’s or Government sponsored Enterprises that operate in the free market with the explicit backing of the government. Hmm…Don’t worry there is nothing wrong with this.

With the back stop of the Federal Government, also known as you, the taxpayer, another government agency better known as Ginnie Mae or the Government National Mortgage Association purchases conforming loans to create capital for Fannie Mae and Freddie Mac to originate more loans backed by you, the taxpayer.

Don’t get me wrong, we have all benefited from easy money, low interest rates and the government derisking the lender from responsibility to make sure the borrower could actually pay the loan. Heck, all of our homes have doubled in the last few years and property values are up 4x in parts of the country over what they were 30 years ago. In essence the government derisked the banks by fooling you, the taxpayer, and tempting you with greed and the wealth creation of home ownership. Remember last week’s letter about Odysseus and the Sirens and the risk of temptation and the importance of self-control.

Today, the U.S. median income is roughly $80,000. Yet, to purchase the average family home at today’s current price by financing 80%, pay the taxes, and insurance you will need to make over $120,000 a year.

Due to massive printing of money and the explosion of government, we have inflated our way out of the American Dream for many Americans and most of our children.

Treasury deficit continues to expand…Congress better get on board and wake up. The Treasury Budget for February showed a deficit of $307.0 billion compared to a deficit of $296.3 billion in the same period a year ago based on the Continuing Resolution pushed through Congress prior to the election in Nov. 2024.

What does it mean – While Congress has spent the last 50 years confusing congressional hearings with actual work of real oversight, the Treasury budget is running amuck with waste, fraud, abuse, and incompetence. Expect this to continue until an actual budget is passed.

Now that DOGE is shedding light on waste, fraud, abuse, and incompetence, one has to ask, when will Congress actually ask each Agency what they really need to run their departments and actually budget towards reality instead of guesstimating with your hard earned money.

 Eggflation… Stop killing the chickens. Over the last few years the U.S. stopped listening to the farmers and relied on the academics to oversee the bird flu creating massive shortages. With a quick shift in policy, the cost of eggs has dropped over 10% since beginning of the year.

What does it mean – Policy matters. While Bird Flu has been around for some time. How we handled it has changed. The U.S. applies the “stamping out policy”. Per the FDA contagious viruses are to be stamped out by killing the entire flock or heard.

U.S. farmers are required to kill their entire flock. Over 160 million chickens have been destroyed over thew last few months, creating a shortage in the U.S. while other countries listened to the experts – the Farmer. Many other countries have had no issues as they separated the infected birds from the flock and culled or destroyed only the sick birds. These countries saw their egg prices level out at prices ranging from an equivalent cost of roughly $2.65 per dozen and under $2 in many parts of the world, while we in CA have consistently suffered under prices ranging between $7 and $9 per dozen and in some areas up to $12.00 during this same time period and across the U.S eggs have hovered between $5 and $8 a dozen. During COVID, these are the very same “experts” that shut down our schools, churches, and encouraged businesses to let folks work form home and mandated vaccines to children that had a 99.999% survivability rate.

With farmers becoming more proactive, the cost of eggs in the US decreased 0.63 USD/DOZEN or 10.88% since the beginning of 2025, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Historically, Eggs in the U.S. reached an all-time high of 8.17 in March of 2025.

The Biggest Story no one is talking about!!

 The next Gold Rush…Utah HB306 passed. Since Friday March 7, 2025, a day that will one day prove to be the most important day in economic history since the US went off the Gold Standard.

In fact, I cannot get out of my head the song “I am so excited” by the Pointer Sisters. As Americans we should be jumping for joy. Unleashing our celebratory instincts unless you are prone to burning down your city after your professional team wins a championship. But that is what Utah has given us all. A reason to celebrate!!! Putting the people, the individual back in charge of their economic future.

The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Utah, I am so excited, I just can’t hide it.

What does it mean – We are one step closer to having an option as individuals to utilize gold and silver as a currency. Last week, the Utah House and Senate gave final approval to a bill that would create a system allowing the state to make and accept payments in gold and silver. The payment system would use “gold or silver vaulted within the state,” be made publicly available, and allow for “the redemption of physical gold or silver by system participants.”

Can you Imagine?

Can you imagine, millions of Americans opting out of a fiat currency (digital or paper) and having the choice to use transactional gold to receive payments and pay bills. No longer being hit with a capital gains tax.

Let’s dream a bit…The U.S. median income is roughly $80,000 per year. There are over 163 million people employed. Based on the median salary times the number of employed Americans, total salaries paid out is over $13 trillion. According to historical numbers, that is roughly the value of gold in Fort Knox based on the last audit done nearly 50 years ago.

Think about this. What would the price of gold be if one-third or roughly 54 million people utilized transactional gold to pay their bills? What would it mean to the Federal Reserve?

Simply put, if you had a choice to take your paycheck in gold and utilize it to pay your bills, your checking account alone would outperform money markets and typical savings accounts and historically perform far better than the bond market and in some years in line or even better than the S&P500. Vastly improving one’s lifestyle and putting you in control of your financial future. Your lifestyle will improve far beyond a 3% increase in your salary every year.

Fiat currency – The Reality of the dollar.

The definition of fiat currency is a government currency not backed by anything tangible like gold or silver.

In 1971 the U.S. officially went off the Gold Standard at a price of roughly $44.60 per ounce. Today, gold stands at $2,994 an ounce and the $1 has lost 88% of its purchasing power since 1971 per the charts below. Adjusted for inflation it would take $7.84 to purchase the same item in 1971 for $1.00. Folks, that is inflation due to the printing press. Yet, the Fed believes 2% inflation is good. One must ask why. It certainly won’t help the consumer or the saver. See below.

When comparing the purchasing power of Gold today vs. 1971 the numbers are staggering.

According to HUD, The Department of Urban Development, the average home price in the USA in 1971 was $25,200. Gold was at $44.60 per ounce. If we purchased a home in 1971 when the dollar was backed by gold, it would have cost the average home buyer 565.02 ounces of gold.

The average home in the USA at the end of 2024 was $419,200. With Gold at $2,994 an ounce, we could have purchased 4 homes with the 565.02 ounces of Gold or had a value of $1,691,669.88.

After going off the gold standard in 1971, our country suffered massive inflation both times when the Fed initiated a loose money policy and printed money to spark consumption.

Since 2001 and specifically from 2006 to present, the US economy has been artificially boosted in recent years by massive deficits and a very loose monetary policy. Directly causing massive inflation and weakening of the dollar.

Reversing course and reducing this artificial stimulus will be like having morphine wear off or a toddler coming off a sugar high. Brian Wesbury says it best, “what is good for the long-term makes the short-term look worse.” Looking back at history, this is much like what happened with Ronald Reagan in the early 1980s.  Even though his policies led to a boom in the economy, the fix (especially for inflation) was a painful process.

Take a look at my good friend Kevin Freeman’s book  Pirate Money. Nearly two-dozen states are already working on legislation to follow in Utah’s footsteps.

If Utah and these other states are successful in creating transactional gold, get ready for another gold rush.

Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending March 14, 2025 appeared first on DeGroote.

What does it mean – Inflation readings moved in the wrong direction for the Fed’s policy comfort, which will keep the market on edge about the Fed.

Inflation is not transitory…The FOMC minutes suggest the Fed will remain on hold as inflation persists.

What does it mean – The Fed is in no hurry to lower rates due to numbers from January and may even keep the Fed second guessing itself for the foreseeable future. Remember, the printing press is still working overtime.

Eggs…The cost is up nearly 10-fold in three years.

What does it mean – A dozen eggs now cost the average American $8.23 and over $9 in California according to the Epoch Times article. In 2022 the national average for a dozen eggs was $0.89 and in 2014 a dozen eggs cost $0.59. According to Jada Thompson, associate professor of agricultural economics and agribusiness at the University of Arkansas. Yet, according to Thompson, “by the beginning of February, the size of the egg-laying flock had dropped by about 7 percent compared with the number of birds in the field at the end of 2021.” While demand is up, and we lost 7% of the production due to the Bird Flu, we could see the “Fauci effect” take hold on our food supply as the very people in the FDA and NIH who are supposed to protect us rush to get patents on vaccines to vaccinate our food supply.

Yes, don’t worry, BIG PHARMA to the rescue. I will bet we are going to see an epic fight to vaccinate chickens, turkeys, and every other farm animal costing consumer and taxpayer untold trillions if big pharma gets its way. Better speak out. If the FDA and NIH are allowed to continue to be rewarded with fees from patents that they are supposed to oversee and if things don’t change in DC prepare for $20 a dozen. Not to mention, what will vaccinating our food supply really do to it? What will it do to our children and future generations to come? Eventually vaccines will be on the table and there will be nothing organic once those hit the food supply.

Retail sales declined 0.9% month-over-month in January…After an upwardly revised 0.7% increase (from 0.4%) in December retail sales falls.

What does it mean – While there was a notable pullback in spending on goods and services in January, one could chalk it up to the post-holiday hangover. It could just be a tired consumer after the holidays. But one has to ask, will that fatigue persist because of rising food prices due to the bird flu? Will the consumer hit the credit cards as folks start to plan what they will do once they get their tax refund.

Consumer delinquency rates are grinding higher…This is not good. As of the end of January we are getting back to near all-time highs for consumer delinquencies.

What does it mean – While peaking in 2010 and then again in 2021, we have seen 90-day delinquencies up nearly 40% over the last 24 months. Maybe folks should pay off their credit card with their tax refund.

If your government controls it, you can’t afford it…This chart is as clear as day. Everything the government touches drives the costs through the roof at rates far greater than inflation.

What does it mean – We need to downsize government back to the basics.

Per the chart below governments desire and insatiable appetite for power and control has put bureaucrats with little to no real-life experience in control of the rules and regulations that have destroyed major portions of our economy, our culture, our independence, and have dramatically destroyed competition and created oligarchies and in some cases, monopolies. Major industries are now controlled and structured through massive government regulation.

Per the chart above President Obama not only nationalized health care through Obama Care also known as the Affordable Care Act, which you can clearly see is unaffordable. In that same bill, the federal government largely nationalized the student loan industry in 2010 via a piece of legislation related to Obamacare, the “Health Care and Education Reconciliation Act of 2010.”

There is a reason Nacy Pelosi said, “we have to pass the bill so you can find out what’s in it.” You can come to your own conclusions.

This single piece of legislation is wreaking havoc on the health care industry and education system that was once the envy of the world and is now dictating your health care and our children’s future and our countries future through the backdoor as they mandate who gets accepted to universities, not on merit, but on indomitable characteristics like one’s sex or color of their skin.

As we look deeper into the above chart, over the last 50 years the government has instituted itself into the free market through massive regulations in every industry and that affects our economy. Through lending mandates dating back to the late 70’s and 80’s, it has caused housing prices to skyrocket.

The actual cost of money is exploding. One must ask what does it cost when a good borrower is forced to subsidies a bad borrower and the government gets between you and the lender, or in many parts of our economy, that relationship has been removed and makes the tax payer responsible for the bad loans. Not to mention, what happened to local banks? We have allowed the government to circumvent the free market. These policies are causing the real cost of education, healthcare, and housing to explode. Yes, interest rates are low but most of America can not afford the house they currently own today or the healthcare or insurance they are forced to buy.

What does it say about the federal government that changed the rules and nationalized the student loan industry under Obama in 2010 with the help of Congress. As we predicted, it drove up tuition at record levels and now most college graduates are not able to afford their student loan payment. Typical of academia and bureaucrats vying for more power and control. Disgusting.

SEIU admits it…Minimum wage increase in CA raised food prices and cost California over 10,700 jobs.

What does it mean – This study by the Berkley Research Group shows that California’s new $20/hour minimum wage for fast-food workers raised food prices and destroyed jobs.

Here are the key Findings from the Berkeley Research Group study:

• 10,700 Jobs Lost: According to U.S. Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages data, California’s limited-service restaurant lost 10,700 jobs (-1.9%) between June 2023 and June 2024—marking the steepest decline this century outside of the Great Recession (2009) and the COVID-19 pandemic (2020).
• 14.5% Increase in Food Prices: Since the legislation mandating the $20 minimum wage for fast food workers was signed in September 2023, food prices at California’s local restaurants have increased by 14.5%—nearly double the national average (8.2%).
• Technology and Automation Replacing Workers to Offset Increased Labor Costs: Restaurants have accelerated the use of ordering kiosks, AI drive-thru systems, and robotic kitchen automation, reducing available entry-level jobs and shrinking employment per location.

Another great example of big government policy destroying business, jobs, and the ability for people to feed their families. It is driving more and more people to be more reliant on government welfare. When will the CA voter get a clue?

What DOGE it Matter?

The economic sirens of Homer’s Odyssey – The lure of the easy money and “free stuff for all”

When will the Republican (RINO’s and elites) in the Senate and Congress get a clue?

Republicans better get on board with their constituents or find themselves answering to voters in less than 2 years.

We are living in a world of temptation and instant satisfaction without any accountability or need for self-control. Watching DOGE at work and the economic impact this will have on our economy and wandering how we even got to this point reminded me of Homers Odyssey. Since our schools stopped reading the classic and rarely assign a book 100 years old, let’s go back and remember a classic from about 800 B.C.

Homer’s Odyssey…In Homers Odyssey, the story of Odysseus, a warrior who is returning home, to the island of Ithaca from the Trojan War depicts the lure of temptation and the importance of self-control.

What does it mean – Portrayed as beautiful women with bird-like features, the sirens are armed with amazing beauty and irresistible songs. They promised knowledge and pleasure without sacrifice. Their prey, fooled by the temptation of pleasure and lust for wealth and power, absent from hard work and moral courage to do what is right, the sirens lured their victims with instant gratification and envy that ultimately lead to destruction for those who hear their songs. Odysseus ordered his men to tie themselves to the boat and stuff their ears with wax to protect themselves from the lure of temptation…the Sirens.

Like Odysseus and his men, or more recently (about 90 years ago) the movie, Mr. Smith Goes to Washington. Like Odysseus and his men, the brave souls who get elected and go off to DC with all the right intentions fall to the Sirens temptation of greed, power, and wealth.

Now DOGE and what was known as RIGO during the Clinton administration, is and was a spotlight on waste, fraud, and abuse. And one word I would add to this to the list of words DOGE and RIGO were and now are commissioned to deal with – incompetence.

Over the last 30 days it is clear that the “Sirens of DC” have continued to wreak havoc on our elected officials and for some, they have fallen to the temptation of wealth and power. How is it that someone working in government all their life making on average $175,000 is worth over $20 million and in many cases far more?

The great news is DOGE and RIGO before it has figured out the game. The difference is that it is not Bill Clinton immediately firing 100,000 federal employees and nearly every judge appointed by his predecessor. Nor did it not stop Obama from talking a big game about the need to reduce government and make it more accountable.

In DC the Sirens lure of the sweet sound of free stuff fogs our vision, tempting the weak and stirring envy and jealousy. Our printing press runs constantly to cover up the blunders of incompetent and unaccountable bureaucrats and elected leaders

Transparency, accountability, competence and the rule of law matter. Like RIGO under Clinton DOGE matters. It is a giant spotlight illuminating the halls of congress and dark crevasses of government so that the people can see what is being done with their treasure and talents.

In the private sector, if a company had waste, fraud, and abuse like we have witnessed, it would be criminal, and people would go to jail. Yet, in government we have this impression that it is ok to squander, waste, lose, forget, and use the people’s money and treasure to benefit ones personal interest or agenda. And that is criminal.

In Davey Crockets biography, written by his friend Edward Ellis in 1884, he tells a story of a widow. One could say this story was the first to point out the hypocrisy of the swamp. In his famous speech on the floor of Congress he challenged both chambers and illuminated their duplicity for all to see. Many in DC still have not learned a thing and the Sirens of temptation continue to fog our elected and unelected leaders’ clarity between what is theirs to give and who it belongs to.

As Ellis tells the story, “The House was considering a bill for the relief of the widow of a distinguished naval officer. There was general agreement that this was a worthy cause, and everyone expected the bill to pass easily. But then Crockett rose and gave what he himself might have called a “sockdolager” of a speech.” Here is Davey Crockets speech.

Mr. Speaker—”I have as much respect for the memory of the deceased, and as much sympathy for the sufferings of the living, if suffering there be, as any man in this House, but we must not permit our respect for the dead or our sympathy for a part of the living to lead us into an act of injustice to the balance of the living. I will not go into an argument to prove that Congress has no power to appropriate this money as an act of charity. Every member upon this floor knows it. We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right so to appropriate a dollar of the public money. Some eloquent appeals have been made to us upon the ground that it is a debt due the deceased. Mr. Speaker, the deceased lived long after the close of the war; he was in office to the day of his death, and I have never heard that the government was in arrears to him. This government can owe no debts but for services rendered, and at a stipulated price. If it is a debt, how much is it? Has it been audited, and the amount due ascertained? If it is a debt, this is not the place to present it for payment, or to have its merits examined. If it is a debt, we owe more than we can ever hope to pay, for we owe the widow of every soldier who fought in the War of 1812 precisely the same amount. There is a woman in my neighborhood, the widow of as gallant a man as ever shouldered a musket. He fell in battle. She is as good in every respect as this lady, and is as poor. She is earning her daily bread by her daily labor; but if I were to introduce a bill to appropriate five or ten thousand dollars for her benefit, I should be laughed at, and my bill would not get five votes in this House. There are thousands of widows in the country just such as the one I have spoken of, but we never hear of any of these large debts to them. Sir, this is no debt. The government did not owe it to the deceased when he was alive; it could not contract it after he died. I do not wish to be rude, but I must be plain. Every man in this House knows it is not a debt. We cannot, without the grossest corruption, appropriate this money as the payment of a debt. We have not the semblance of authority to appropriate it as a charity. Mr. Speaker, I have said we have the right to give as much of our own money as we please. I am the poorest man on this floor. I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.”

Some things never change…In typical Washington fashion, not a single member gave a single dime to the widow and yet they were far too willing to give the people’s treasure.

Crocket went on to tell his Friend, “There is one thing now to which I will call your attention. You remember that I proposed to give a week’s pay. There are in that House many very wealthy men—men who think nothing of spending a week’s pay, or a dozen of them, for a dinner or a wine party when they have something to accomplish by it. Some of those same men made beautiful speeches upon the great debt of gratitude which the country owed the deceased—a debt which could not be paid by money—and the insignificance and worthlessness of money, particularly so insignificant a sum as $10,000, when weighed against the honor of the nation. Yet not one of them responded to my proposition. Money with them is nothing but trash when it is to come out of the people. But it is the one great thing for which most of them are striving, and many of them sacrifice honor, integrity, and justice to obtain it.”

Our nation has answered the call for Freedom throughout the world and our sacrifice to freedom and liberty is unmatched. Capitalism is the economic bedrock for which our economy runs on. Capitalism has created more wealth and freed more people than any other economic structure known to mankind. For nearly 250 years America has stood as a beacon for entrepreneurism and self-determination. While the Sirens of temptation may lure us all, it is our dedication to a moral and just system that puts the individual in control of their destiny to pursue their happiness protected by their inalienable rights.

John Adams famously reminds us that, “our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” “That morality and virtue are the foundation of our republic and necessary for free society.”

In Abraham Lincoln’s Gettysburg Address, he said, “that these dead shall not have died in vain– that this nation, under God, shall have a new birth of freedom and that government of the people, by the people, for the people, shall not perish from the earth” U.S. President Abraham Lincoln, The Gettysburg Address, November 19, 1863

DOGE matters because you matter. Your treasure and talent deserve the very best from yourself and from those we elect. We are the stewards for the next generations to come.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending February 28, 2025 appeared first on DeGroote.

What does it mean – Since November we have seen payrolls expand (partially due to the holiday season) but more importantly we have seen it expand through January as small business optimism explodes. As we have seen in the past, skepticism and continued massive revisions are the new normal for the Bureau of Labor Statistics and many government “experts.”

As First Trust pointed out the skepticism is warranted. Over the last few years government “experts” have warned on issues ranging from COVID – “fifteen days to slow the spread,” six-feet distance rules that turned out to have no scientific basis, school lockdowns, dying from COVID versus dying with COVID…etc. – the list goes on and on. “Then the “experts” vouching for Trump-Russia Collusion in 2016-17 and then casting doubt about Hunter Biden’s laptop in 2020 and we can see why many investors have become skeptical about everything the federal government says, including the monthly reports on the economy, like the jobs report that comes out early every month.”

Government agencies have been their own worst enemy. The U.S. has a massive economy, and the government has allowed employees to work from home have not helped government efficiency and the ability to get reports out timely. We have seen record revisions since the government has allowed employees to work from home. Let’s see how things change going forward.

Small Business Index soars to record level…The National Federation of Independent Business (NFIB) reported that its optimism index rose 3.4 points to 105.1, following a historic monthly gain in November.

What does it mean – Small business is the heartbeat of America. The answers to our problems are all around us. The answer is us!! This election proved that we, the people, have a lot more common sense and are much smarter than policymakers.

NFIB Uncertainty indicator also fell by 12 points in December…On top of the Small Business indicator from NFIB, the uncertainty indicator also fell by 12 points in December, marking the largest two-month decline on record.

What does it mean – According to John Carney, “The drop reflects a shift toward greater clarity on the policy direction in Washington.”

The Advance Q4 GDP report showed real GDP decelerating…According to the Bureau of Economic Analysis, GDP fell to the seasonally adjusted annual rate of 2.3% versus 3.1% in the third quarter.

What does it mean – While we did see weakness from the overall economy, personal consumption expenditures were up 4.2%. Consumers continue to buck the trend.

 Shipments of manufactured goods jumped 0.6% in December…Following a 0.1% increase in November, manufacturing saw a significant short-term bump.

What does it mean – The weakness in factory orders was concentrated in the durable goods space, primarily in nondefense aircraft and parts. Business spending was up, evidenced by the growth in new orders for nondefense capital goods excluding aircraft.

Tariffs…In President Trumps first few days he announced a whole slew of Tariffs; within hours, every country named but China got inline to do business with the American consumer.

What does it mean – It is simple. While members of both parties, the media, and the ‘experts” who advocate for “Big Government Solutions and the status quo,” all went into epileptic shock. Yet, countries named by the President jumped in line to benefit from the American consumer.

Below is a great map from the Independent in London. Full disclosure. The map below is off. We are not threatening to invade Greenland. Another miss by media and the “experts” but should not take away from the power of the visual. A great point. The world is truly your oyster.

Trump announces 25% tariffs on steel and aluminum…After threatening several countries to get in line or face tariffs, Trump seeks to protect U.S. steel and aluminum industry.

What does it mean – Lost in the reporting is that the tariffs are reciprocal. Meaning that Canada, Mexico, China and others have 25% to 30% tariffs on U.S. Steel and aluminum. President Trump went on to say, “If they are charging us 130 percent and we’re charging them nothing, it’s not going to stay that way,” Trump said. “If they charge us, we charge them.”

A bit of history and the facts about Tariffs-

For nearly 180 years America became the wealthiest, most prosperous, and most powerful country in the world by using tariffs based on unique bilateral situations. Our nation successfully used tariffs as diplomatic leverage, raised revenue, and kept taxes low. Until 1913 tariffs accounted for nearly 95% of the revenue to the Federal Government. Tariffs can reshore industries and they can help us build economic relationships. For 180 years we protected our manufacturers, farmers, and raw material producers from foreign companies and countries from dumping cheap material into our markets.

From the very beginning, US leadership sought to protect and grow the American industrial base. This meant tariffs. Throughout the 19th century, American economists and leadership were strong advocates of industrial protection. At the ripe old age of 32 and the very first Secretary of the Treasury, Alexander Hamilton wrote extensively on this subject and was the intellectual leader of this movement before passing in 1804.

 George Washington-

In his inaugural address to the nation, George Washington wrote, “I use no porter or cheese in my family, but such as is made in America,” the inaugural President boasting that these domestic products are “of an excellent quality.”

As one of the first acts of Congress and of President George Washington was to enact tariffs. Its stated purpose was “the encouragement and protection of manufactures.”

In his 1790 State of the Union Address, President George Washington went on to say, “A free people ought not only to be armed, but disciplined; to which end a uniform and well-digested plan is requisite; and their safety and interest require that they should promote such manufactories as tend to render them independent of others for essential, particularly military, supplies.”

Thomas Jefferson-

After the war of 1812, Thomas Jefferson’s position began to resemble that of Washington. He became more convinced than ever that some level of protection was necessary to secure the nation’s political independence.

Jeferson went on to say, “experience has taught me that manufactures are now as necessary to our independence as to our comfort: and if those who quote me as of a different opinion will keep pace with me in purchasing nothing foreign where an equivalent of domestic fabric can be obtained, without regard to difference of price.”

Henry Clay-

In 1832 Clay stood in front of Congress and explained that “equal and reciprocal free trade never has existed; it never will exist.” He warned against what we have today “romantic trade philanthropy” … which invokes us to continue to purchase the produce of foreign industry, without regard to the state or prosperity of our own.”. Clay was, “utterly and irreconcilably opposed to trade which would throw wide open our ports to foreign productions without reciprocation” Talk about foreshadowing – Globalism really is the idea of romantic philanthropy. When did we elect our leaders to turn us into a charity for China, Latin America and Europe?

Clay went on to say, “When gentlemen have succeeded in their design of an immediate or gradual destruction of the American System, what is their substitute? Free trade! Free trade! The call for free trade is as unavailing as the cry of a spoiled child, in its nurse’s arms, for the moon, or the stars that glitter in the firmament of heaven. It never has existed; it never will exist. Trade implies, at least two parties. To be free, it should be fair, equal and reciprocal.”

William McKinley-

McKinley stated that, “under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man. It is said that protection is immoral…. Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefiting mankind everywhere.”

McKenley believed free trade destroys the dignity and independence of American labor… “It will take away from the people of this country who work for a living-and the majority of them live by the sweat of their faces-it will take from them heart and home and hope. It will be self-destruction.”

McKinley categorically rejected the “cheaper is better” argument. He said, “Buy where you can buy the cheapest. That is one of their maxims… Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: ‘Buy where you can pay the easiest.’ And that spot of earth is where labor wins its highest rewards.”

“They say, if you had not the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or whether it is dear depends on what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer.”

“The protective tariff policy of the Republicans… has made the lives of the masses of our countrymen sweeter and brighter, and has entered the homes of America carrying comfort and cheer and courage. It gives a premium to human energy, and awakens the noblest aspiration in the breasts of men. Our own experience shows that it is the best for our citizenship and our civilization and that it opens up a higher and better destiny for our people.”

Theodore Roosevelt-

Roosevelt believed that America’s economic growth was due to the protective tariffs and encouraged the industrial revolution.

In his State of the Union address in 1902 Roosevelt stated that, “The country has acquiesced in the wisdom of the protective-tariff principle. It is exceedingly undesirable that this system should be destroyed or that there should be violent and radical changes therein. Our past experience shows that great prosperity in this country has always come under a protective tariff.”

Post WWII-

In 1947 the US and every country but the Soviet Bloc countries agreed to The General Agreement on Tariffs and Trade or GATT agreement. It is now known as the WTO or World Trade Organization as now China, Russia and nearly all the world are part of it. Since 1947 we now only have tariffs on roughly 30% of what is imported yet the US and its producers are subject to far more tariffs ranging from agriculture, steel, aluminum, autos, the list goes on and on.

Henry Clay warned against the idea of “romantic trade philanthropy.” He had a clear understanding of what it meant to open our ports to any and all goods regardless of what it meant to producers and employees.

After years of study, it is clear. Free trade is not so free.

In early 2017, Joseph Stiglitz wrote that “the American middle class is indeed the loser of globalization” (the diminution of international trade regulations as well as tariffs, taxes) and “China, with its large emerging middle class, is among the big beneficiaries of globalization”. “Thanks to globalization, in terms of purchasing-power parity, China actually has already become the largest economy in the world in September 2015”. When considering the term globalism, there is no difference between the term free trade or unrestricted illegal immigration.

In a study by David Autor, David Dorn and Gordon Hanson show that, “trade with China cost Americans around one million manufacturing workers between 1991 and 2007. Competition from Chinese imports has led to manufacturing job losses and declining wages.” They also found that offsetting job gains in other industries never materialized.

Because we did not protect our producers, our country’s safety, food supply and manufacturing are further at risk than ever before. We have witnessed the destruction of the rust built and great cities like Detroit, Cincinnati, and the mining towns in Pennsylvania, Ohio valley, and the coal mining towns of Virginia’s. Companies have closed and Americans have lost well over 1 million manufacturing jobs from 1991 to 2007. No longer do these companies order goods and services from local non-manufacturing firms, “but former industrial workers may be unemployed for years or permanently” according to David Autro, David Dorn and Gordon Hanson.

Another study by Daron Acemoglu and Brendan Price, estimates that competition from Chinese imports cost the U.S. as many as 2.4 million jobs in total between 1999 and 2011.

Study after study is also validated by the two above. They show that increased import exposure reduces wages in the non-manufacturing sector due to lower demand for non-manufacturing goods and increased labor supply from workers who have lost their manufacturing jobs.

Avraham Ebenstein, Margaret McMillan, Ann Harrison also pointed out in their article “Why are American Workers getting Poorer? China, Trade and Offshoring” these negative effects of trade with China on American workers.

The Economic Policy Institute, a left-leaning think tank, has claimed that free trade created a large trade deficit in the United States for decades which lead to the closure of many factories and cost the United States millions of jobs in the manufacturing sector. They show that trade deficits lead to significant wage losses, not only for workers in the manufacturing sector, but also for all workers throughout the economy who do not have a university degree. For example, in 2011, 100 million full-time, full-year workers without a university degree suffered an average loss of $1,800 on their annual salary.  This has led to increased competition and has driven down wages as workers who lost their jobs in the manufacturing sector and who have to accept a reduction in their wages to find work in other sectors are creating competition, that reduces the wages of workers already employed in these other sectors.

The Economic Policy Institute went on to say that the trade agreements have not reduced trade deficits but rather increased them. The growing trade deficit with China comes from China’s manipulation of its currency, dumping policies, subsidies, trade barriers that give it a very important advantage in international trade. In addition, industrial jobs lost by imports from China are significantly better paid than jobs created by exports to China. So even if imports were equal to exports, workers would still lose out on their wages.

God ole Henry Clay’s words could not resonate more today than they have today and for the American Citizen. His warning of a “romantic trade policy” (Globalism) should be an encouragement for us all…Transparency is shedding a light in the darkest corners of government. Revealing the real cost of going along to get along.

Could it be that Clay’s statement to congress was not just a warning to protect our ability to produce and lift all people and our economy, but a warning or a glimpse into the future that would grow government through the means of taxation and redistribution?

The very leadership and unelected bureaucrats who exist off managing the very problems they create find new value in “big government” policies conceived to manage by the very agencies created by government to pacify the very citizenry they are supposed to protect from the very government our constitution protects us from? Quite a vicious circle if we are not diligent and understand what we are voting for.

Klaus Schwab – “You will own nothing and be happy.” – Don’t forget the biggest globalist and free traders of them all, Claus Schwab, George Soros, Bill Gates, Xai, Trudeau, Macron, have spent billions over the last 40 years training and indoctrinating future leaders on how easy it is to be the few who make the decisions and rule from upon high. His merry bunch of disciples like Trudeau, Obama, Clinton, Macron, Newsome, Schiff and Cheney and the Bush’s along with many others shouting, “Free trade, Free trade!!!” Enriching themselves at the cost of their citizens and their countries’ treasury.

According to the Economic Policy Institute, “the manufacturing sector is a sector with very high productivity growth, which promotes high wages and good benefits for its workers. Indeed, this sector accounts for more than two thirds of private sector research and development and employs more than twice as many scientists and engineers as the rest of the economy.” The manufacturing sector, both large and small, provides I vitally important and a major factor in growing the US economy and those economies abroad. Manufacturing jobs provide excellent wages, and well-paid service jobs such as accounting, business management, research and development and legal services. Deindustrializing or offshoring manufacturing is also leading to a significant loss of these service jobs, also a very important driver to the U.S. economy.

However, other groups such as the CATO Institute, a libertarian or right-leaning think tank, say the opposite. They have said that free trade is not a significant contributor to deindustrialization trends. They go on to say that trade can lead to loss of low-skilled or superfluous manufacturing jobs, but these tend to be replaced by higher-paying, higher-skilled manufacturing jobs in other sectors where the U.S. has a competitive advantage. Unfortunately, the statistics do not validate the claim.

What does it mean–

Canada and Mexico have no leverage and China has even less. The U.S. imports 80% of Mexico’s exports and 78% of Canada’s exports. China’s trade surplus with the United States has been increasing, and in 2024 reached a record high of $992 billion. China Exports are roughly $3.4 Trillion. This means the US is nearly 30% of all exports from China.

While China is a massive producer of goods, their economy is a train wreck. They produce far more than their citizens can consume and rely on exports to feed their economy. They truly are the definition of using another’s kindness and charity to exploit their generosity. Even worse they are willing to cannibalize their own economy at the expense of their people. China is often caught dumping material like steel and aluminum on foreign markets, especially the U.S. In the last couple of years Biden complained about it and now Trump is taking action to stop it. This is exactly why we have tariffs.

Currently China’s planned economy cannot absorb the volume of production nor handle the social demand of its citizens. They need the American consumer far more than we need them.

According to the studies above, the U.S. has roughly lost 5 million manufacturing jobs to China at a cost of nearly $1 trillion per year. If those numbers are correct, it has cost the U.S. $200,000 per job. One must ask how many other jobs and local industries have been destroyed and how many people are permanently out of work or saw their income drop due increased competition for fewer jobs?

President Trumps threat of tariffs has been bilateral and specific to that country. They are not designed to hit an industry across all countries. They are targeted and because they are targeted, they give the country and the manufacturers the opportunity to change behavior. Remember President Trump said, “If they charge us, we charge them.”

Because the rest of the world seeks an open door and access to the American consumer, you, your businesses, your wallet, your values, have incredible leverage over Mexico, Canada, China, along with nearly every other country in the world. This would never have happened if we had not protected our farming, mining and manufacturing industries for nearly 180 years. One should ask themselves, “why the change nearly 70 years ago?”

I remember during the Cold War with Russia when American blue jeans, namely Levis, were highly sought after and Russia banned them and criminalized young Russians from bringing them into the USSR from trips abroad to Europe. Even the Boss himself made fun of it in his famous song Born In The USA. By the way, can someone put out a missing person report on Bruce Springsteen. Maybe they will find the real Bruce and return him when they release all the records from Area 51.

For the last 50 plus years we have given in to the fictitious addiction to “the easy way out.” As a nation we decided it was far easier to become more dependent on the government to solve our problems. As a nation we followed the herd instead and justified the safety of numbers Vs. the virtue of individual hard work and protecting individual liberty and self-determination.

As a nation we thought that if we compromised and gave up a bit of our sovereignty, freedom, and independence we could make the world safer and our and our enemies like us more. In reality, we subsidized the global economy through the destruction of our farmers, mining, and manufacturing industries. We now rely on the very nations we enriched and who still despise but depend on the U.S. They are now in control of most of our food and the resources we once developed, mined, and produced. For over 50 years we have traded our sovereignty for cheap goods and refusing to shift course because the “experts” said we should not.” It would cause inflation or hurt international relations.

All we need is a bit more freedom…Unfortunately for Big Government and unelected bureaucrats, they found out that private business, manufacturers, business owners, entrepreneurs, farmers, factory workers, employees, customers, families, and individuals all by themselves, without regulation, mandates, and extra rules, figured out that they matter and said enough is enough. Their jobs and way of life mean something, and they got past the political correctness and reengaged their God Given Inalienable Rights. Free from the yoke of government overreach, and as Kamala would say, “unburdened by what has been”, small businesses are excited for their future.

E Pluribus Unum – Free to solve “our” problems, the American people remembered that all they need is more of all of us U.S. citizens thinking things through on our own, figuring things out, with fewer rules from Washington or your local or state government. They saw through the political platitudes and realized these government rules, mandates, and regulations have proven deadly to business, healthcare, insurance, farming, and manufacturing industries and in time of need downright dangerous. Bureaucrats and their obsession to regulate and tax everything that moves, breathes, grows and dies have added a few barriers to the doers of the worls and may have slowed us down but the pursuit of the American Dream rages on as capitalists and the power of capitalism turn back the clock on the unholy alliance between government, corporate welfare, and unfair free trade. Thanks to free speech, freedom rings and liberty is shedding its bright light on the darkness of “Big Government and crony capitalism.”

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending February 7, 2025 appeared first on DeGroote.

What does it mean – while the average sales price increased 9.4% to $545,800, Year-over-year the number of new home sales were down 9.4%. Chalk it up to interest rates and persistent inflation.

Manufacturing capacity continues to sink…Over the last couple of years we have seen manufacturing capacity continue to fall.

What does it mean – The October ISM Manufacturing Index checked in at 46.5% (Briefing.com consensus 47.6%) versus 47.2% in September. The dividing line between expansion and contraction is 50.0%. This reading from October is the lowest in 2024.

After seeing the economy snap back from the forced shutdowns and massive stimulus, this election has proved that policy matters.

Great expectations…With this election comes a shift in policy. Economic policy has not yet been passed but President elect Trump has been very clear on what he intends to do once in Washington.

What it means – Expect a shift from over regulation and massive government bureaucracy to an emphasis on growth, less regulation and smaller bureaucracy. This has already led to NY region along with the Richmond Fed’s manufacturing index confirming an increase in activity. It is still very soft but according to the survey the idea of less government regulation and a focus on business, the outlook is improving.

The percentage of sales to first-time home buyers has fallen to a record low…First time home buyers continue to get squeezed out of the market.

What does it mean – Rising interest rates, increase regulation, massive government spending on housing for illegal immigration through NGO’s and a multitude of government agencies has made first time home buying almost impossible for most Americans under current policy. The competition from government has simply priced out most Americans.

Recent College Grads are having a tough time getting jobs…The unemployment rate among recent college grads has risen well above the total unemployment rate.

What does it mean – This is a disturbing trend as many of our graduates are in up to their ears in student debt now guaranteed by the tax-payers due to the government take over student loans through legislation passed by the Obama administration in 2010.

China is smuggling more Iranian and Venezuelan crude…China and Iran a tangled mess of envy and control.

What does it mean – We have enriched and empowered both Iran and China at the cost of international security and economic stability. Our lack of fortitude and resolve has subsidized the very countries that envy your freedom and hindered economic prosperity and safety around the world.

When you do not have the will to enforce sanctions or hold accountable bad actors, you will get more of what you tolerate. Safety around the world, free people, the rule of law, economic freedom and prosperity are the victims.

US non-owner commercial real estate loan modifications and distress are mounting…Per the chart below non owner occupied commercial real estate loans are continuing to signal trouble.

What does it mean – According to the Harvard Business Review, “Pandemic-accelerated troubles in the CRE market may take more than a decade to resolve.”

Since COVID, we have seen an Increase in office space vacancies linked to remote and hybrid work. Many experts expect this trend could extend price declines and deepen losses for lenders in this space. For owners of these buildings, most empty or underutilized office space is too costly to convert to residential or other uses and will require deeper price concessions to make them a viable investment. In some cases, leases can stretch up to 10 years before they are due for renewal, it may take years for the office space market to clear.

Happy Thanksgiving –

By all measurements our nation is the envy of the world. As a nation and as individual citizens we are not immune to the problems of man or the temptations that come with free will. Yet, as a nation we aspire to be a “more perfect union” and individually, we are inspired by our dreams, the desire to achieve more, to be great stewards, and live a life worth living. In Mathew 25:23 His lord said to him, ‘Well done, good and faithful servant; you have been faithful over a few things, I will make you ruler over many things.”

Our nation has been blessed. Our faith and spirit of self-determination, the rule of law, and the protection that our constitution provides us all. It inspires the ownership mentality. It gives authors the ownership of their words and provides inventors the exclusive ownership of their ideas and inventions. Abraham Lincoln went on to say, Article 1, Section 8, Clause 8 – “Provided the Fuel of Interest to the Fire of genius.”

Our inalienable rights have given us the responsibility to hold our government accountable to be good stewards. We have been blessed to have the conviction of 47 presidents, 119 Congresses and a constitution that protects you from the “tyranny of the majority.” For that I am truly thankful.

This past Sunday I was inspired by our pastor as he discussed the idea of being truly thankful and what our founding fathers had said about Thanksgiving and giving thanks. It forced me to search for the definition of “Thankful” and what it meant to our forefathers. Here is how America’s first dictionary, The 1828 Webster Dictionary, defined Thankful.

THANK’FUL, adjective Grateful; impressed with a sense of kindness received, and ready to acknowledge it. The Lord’s supper is to be celebrated with a thankful remembrance of his sufferings and death.

Be thankful to him, and bless his name. Psalms 100:4.

In George Washington’s Thanksgiving Proclamation on October 3, 1789, he went on to say,

“Whereas it is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favor—and whereas both Houses of Congress have by their joint Committee requested me “to recommend to the People of the United States a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many signal favors of Almighty God especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness.”

On that same day, October 3, 1863, during the Civil War President Abraham Lincoln issued this Thanksgiving Day proclamation.

“It has pleased Almighty God to hearken to the supplications and prayers of an afflicted people and to vouchsafe to the Army and the Navy of the United States victories on land and on the sea so signal and so effective as to furnish reasonable grounds for augmented confidence that the Union of these States will be maintained, their Constitution preserved, and their peace and prosperity permanently restored. But these victories have been accorded not without sacrifices of life, limb, health, and liberty, incurred by brave, loyal, and patriotic citizens. Domestic affliction in every part of the country follows in the train of these fearful bereavements. It is meet and right to recognize and confess the presence of the Almighty Father and the power of His hand equally in these triumphs and in these sorrows:”

Coming out of the Great Depression and witnessing the invasion of Polland and worried about the future, President Franklin D. Roosevelt issued his Thanksgiving Proclamation on October 31, 1939.

“More than three centuries ago at the season of the gathering in of the harvest, the Pilgrims humbly paused in their work and gave thanks to God for the preservation of their community and for the abundant yield of the soil. A century and a half later, after the new Nation had been formed, and the charter of government, the Constitution of the Republic, had received the assent of the States, President Washington and his successors invited the people of the Nation to lay down their tasks one day in the year and give thanks for the blessings that had been granted them by Divine Providence. It is fitting that we should continue this hallowed custom and select a day in 1939 to be dedicated to reverent thoughts of thanksgiving.

Our Nation has gone steadily forward in the application of democratic processes to economic and social problems. We have faced the specters of business depression, of unemployment, and of widespread agricultural distress, and our positive efforts to alleviate these conditions have met with heartening results. We have also been permitted to see the fruition of measures which we have undertaken in the realms of health, social welfare, and the conservation of resources. As a Nation we are deeply grateful that in a world of turmoil we are at peace with all countries, and we especially rejoice in the strengthened bonds of our friendship with the other peoples of the Western Hemisphere.

Let us, on the day set aside for this purpose, give thanks to the Ruler of the Universe for the strength which He has vouchsafed us to carry on our daily labors and for the hope that lives within us of the coming of a day when peace and the productive activities of peace shall reign on every continent.”

We wish you all the very best this Thanksgiving and are truly thankful for the opportunity to serve you and your families.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending November 22, 2024 appeared first on DeGroote.

What does it mean – When comparing the election around policy that actually effects society, the similarities are astounding. Like 1980, this election was an election of more “Big Government nanny state policies vs. Limited Government tax cutters and personal freedom.”

While the policies America voted for are very similar to the ones championed by Ronald Reagan in 1980, the markets are almost completely opposite and have almost nothing in common. For example, in 1980 the Federal Reserve was raising rates and fighting runaway inflation. Today, inflation is on still on the march, but the Fed is now cutting interest rates. Prior to November of the 1980 election, the Price-Earnings ratio of the S&P 500 was 8.6. Prior to this election in 2024, the PE ratio was 27. In other words, valuations are far different from what we saw in 1980.

DOGE- Department of Government Efficiency…Under normal circumstances anything that the government does and includes the word efficient would amount to an oxymoron. This department reminds me of the benefits of a line-item veto. Better yet, if congress only voted on single issue bills and actual budgets, we may not be in the situation we are in. I can’t wait for Elon and Vivek to go through the budget with a red pen and turn thousands of pages of nonsense in to something the American taxpayers can be proud of and feel like government is actually working for them.

What does it mean – Hopefully it will do what its name implies. Create efficiency and shrink government!!

Remember President Carter created the Department of Energy and Education only to watch these two behemoths grow and expand beyond what they were intended to do. Now both departments are anchors tied to the necks of taxpayers and struggle to actually perform their duties and mandates.

First Trust made a very good point and highlights that, “every dollar the government spends is taken from the private sector, and the government taxes and borrows nearly 5% more of GDP today than it did seventeen years ago.” Brian Wesbury and his team at First Trust went on to say, “from 1990 through 2007, real GDP grew 3% per year. From 2008 through the second quarter of 2024, real GDP has only grown 2% per year.” For voters and most importantly you, it was the economy that was the number one issue.

When all is said and done, two percent annual growth is stagnation. It is why Americans rejected big government policies and the advice of noted economists like Mark Zandi, Austan Goolsby and Paul Krugman. All of them supported massive government spending. These are the very folks that argue that government spending has a positive multiplier, yet they are unable to tell you the exact multiplier is but will proclaim that $1 of government spending creates more than $1 of GDP. If that was the case and now $36 trillion in debt up from $23 Trillion prior to covid, our economy should have seen massive economic growth. In fact, our COVID response from the second quarter in 2020 to the end of 2024 the US increased its debt by a whopping $4 trillion and spent nearly $2 trillion a year more than it brought in during the last 4 years. This alone should have created massive GDP growth but in reality, all we got was massive inflation!!!

Let’s take it a step further. Add the massive government spending to the fact that the US has invented unbelievably productive new technologies in the last 20 years, adding to massive productivity gains and new markets. Under these conditions one would assume or expect to see the economy booming. Especially with the Fed holding rates at zero for nine of the last 20 years. But it hasn’t. The simple truth – Government is too Dam BIG!!! Here is a look at US Debt from 2008 to 2024.

Here is a look at what Government actually costs the American taxpayers before the cost of the military and defense.

In 2024 your government will cost you over $3 trillion a year. Government has grown exponentially since Johnson’s Great Society, yet, one can easily say the quality of government has fallen just as fast as the costs have risen to build a society dependent on government.

By all accounts according to the government’s own numbers and testing, we have more people today on welfare, more people in section 8 government housing, higher crime rates, an education system controlled by government that is going backwards every day and blames low test scores on racism or sexism instead of insisting on math, English, science, and civics. Our health care is worse today and less accessible to the average American than prior to Obama Care. We have fewer college graduates choosing medicine due to government control of our medical industry. Many of our emergency rooms have shut down throughout our country due to costs created by government bureaucracy and regulation. The results are exactly what free market economists said would happen but then again government “experts” know better. These are just a few of the issues that have arisen from the massive growth of government, no accountability, and the expansion of the nanny state.

At the expense of every Californian, the California legislature is once again proving how stupid they really are…Voters are kept in the dark until it is too late. Gas prices going up in CA.

What does it mean – The CA legislature voted 12-2 to raise the cost of fuel. According to the University of Pennsylvania’s Kleinman Center for Energy Policy, UPENN’s Kleinman center reported, “that the regulators have distanced themselves from their own initial assessment and even suggested it is not possible to project cost impacts going forward. To fill the resulting analytical void, UPENN’s Kleinman Center for Energy Policy update the regulator’s original cost calculations based on the latest regulatory proposal. If Low Carbon Fuel Standard (LCFS) credit prices reach their maximum allowed levels, as has occurred in the past, then retail gasoline price impacts could be $0.65 per gallon in the near term, $0.85 per gallon by 2030, and nearly $1.50 per gallon by 2035. Folks, this is on top of what is already the most expensive gas in the country.”

Bee’s kill META’s nuclear dream…In our last letter we highlighted the amazing opportunity for Big Tech to invest in clean nuclear energy. This past week we learned that the Dept. of Energy and environmentalists have frozen META or Facebooks ability to move forward with investing in nuclear energy to power its servers. You just can’t make this stuff up.

What does it mean – Yes, the small-winged insect. According to the Financial Times and META, “Big Tech’s massive electrical demands of new computer data centers to back artificial intelligence (AI) development has literally been shut down by tiny little bees.” What is amazing is the very same environmentalists who fought Facebook are committing mass annihilation of bees and effecting crops in Southern CA, NV, and AZ, in the name of wind and solar, as they back massive wind farms and solar farms that kill the very same bees, numerous insects and birds. There are some scientists that have actually pointed out that the solar farms and wind farms have hurt pollination of fruit and vegetables that further hurt and reduce food sources for those animals that depend on the bees. In Germany, according to the Global Warming Policy Foundation and their study by Michale Kruger, German wind turbines kill 1,200 Tons of Insects Per Year. Where is the outrage? We need to explain to these people how the birds and the bee’s work.

META is not alone. The very same week, the Federal Energy Regulatory Commission rejected a request to increase the amount of power the Susquehanna nuclear plant can dispatch to an Amazon data center campus. Hmmm. One has to wonder how a department of Energy founded in the 1970’s dedicated to making sure our country is energy independent can justify environmental regulations that increases the cost and eliminates access to power and technology to all Americans based on unproven environmental concerns that are actually killing tons of insects and harming our food supply. And they want you to eat more insects.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending November 15, 2024 appeared first on DeGroote.

Initial jobless claims decrease…For the week ending October 19, initial jobless claims had one of its best weeks in quite some time. It decreased by 15,000 to 227,000.

What does it mean – While better this week, the four-week moving averages still shows an increase in initial claims and continuing claims. Initial claims increased by 2,000 to 238,500 over the last four weeks while continuing claims increased by 17,500 to 1,860,750.

While the media and this administration keep avoiding the economic reality, the American people know exactly how it is hitting their pocketbook and the ones they love who cannot find adequate work.

September retail sales increased 0.4% month-over-month…Following an unrevised 0.1% increase in August.

What does it mean – Here is a look at how America spent money in September.

• Gasoline station sales declined 1.6% month-over-month.
• Food and beverage store sales increased 1.0% month-over-month.

• Electronics and appliance store sales declined 3.6% month-over-month.
• Furniture and home furnishing store sales fell 1.4% month-over-month.
• Building material and garden equipment and supplies dealers sales jumped 0.2% month-over-month.
• Health and personal care store sales increased 1.1% month-over-month.
• General merchandise store sales rose 0.5% month-over-month.

Housing starts decreased 0.5% month-over-month…Multi-unit starts decreased 4.5% month-over-month while multi-unit permits were down 8.9%.

What does it mean – While the number of units under construction at the end of the period decreased 1.9% month-over-month, multi-units and single family are still plagued by higher interest rates and inflation creating more difficulty for buyers and the builders.

Total industrial production declined 0.6% yr/yr…Capacity utilization rate was 2.2 percentage points below its long-run average.

What does it mean – Manufacturing output declined 0.4% following a downwardly revised 0.5% increase (from 0.9%) in August. While some of the fall off can be blamed for the Boeing strike, manufacturing has struggled to gain a foothold in this economy.

 Debt continues to stress U.S. Households…The percentage of U.S. households expecting to fall behind on their debt continues to rise.

What does it mean – Due to the increasing pressure of inflation, more regulations, higher taxes, more “Big Government” spending on social programs that never seem to go away, but only increase, and now include $ billions for NGO’s who support these programs and the massive increase to provide for non-citizens. The U.S. citizens generosity is being stretched beyond its ability to support massive government programs and the American dream. This administration’s policies are in complete contradiction to what protects and fosters a free and prosperous society.

The Green New Deal…Bad policy costing taxpayers $trillions and shunned by the very tech giants who individually pushed for it.

What does it mean – While U.S. Vice President and 2024 presidential candidate Kamala Harris once explained cloud storage as, “It’s on your laptop, and it’s then therefore up here in this cloud, that exists above us, right? It’s no longer in a physical place.” Hmmm.

Unfortunately for VP Harris, your data does reside in a physical space and requires lots of energy. While confused by the metaphor or idea of cloud computing and confirming that it is not just hanging out in “this cloud” above your head, Kamala has been a huge backer of “The Green New Deal”. Unfortunately, “big techs” massive appetite for energy to power their server farms (the cloud) hit reality and they now must spend their own money to meet consumer demand. This could mean a massive shift in energy is coming.

According to recent reports and news from both Google and Amazon, they both inked what are likely multiple-billion-dollar deals with power companies to build small scale, modular nuclear reactors. At the same time, Microsoft announced it has agreed to pay for the revival of the shuttered Three Mile Island nuclear power plant in Pennsylvania. One must ask, why?

These companies need, no, they require and demand massive amounts of reliable energy to power their constantly growing appetite for electricity due to the expansion of “the cloud” and data centers to support generative Artificial Intelligence (AI). Solar and Wind can’t get the job done. Both are intermittent power sources. Both unreliable. For data centers to work and AI and technology evolve and to reach its full potential, data centers need non-stop, reliable, 24/7 electricity. Big Tech companies are now seeking a tried-and-true technology centered around nuclear and natural gas to supply their energy demand.

According to First Trust and economist Brian Wesbury, over the past 20 years, governments around the world have spent or have incentivized companies to spend $18.8 trillion dollars on green energy and just 1.4% of that was on nuclear. Last year alone, the total was $3.5 trillion, with less than 1% going toward nuclear. According to the Department of Energy’s own reports, many governments have shut down nuclear power plants.

Interestingly, over 40% of the $18.8 trillion in green spending was based on what the movement calls “sustainable debt issuance,” including government subsidized loans of nearly $7.5 trillion in government subsidized loan programs. i.e. taxpayer funded.

There is a reason the private sector banks would not do these loans. This Green New Deal would never have happened without the help of government and climate activists like Greta Thornberg, nor would our energy infrastructure be in such bad shape if the government was actually held accountable for its actions and invested money as if it was their own. Could you imagine what $18.8 trillion would have done for our planet if we focused on issues we actually could control.

Here is a look at CO2 production in 1960 vs. 2020. CO2 is a leading cause to global warming or climate change according to Climate.Gov and the United Nations. Do you actually think the UN is going to control China when it is China that manipulates and controls almost every division of the UN and funds the majority of the leaderships pet projects at the expense of the US taxpayer?

1960 COo2 Production

2020 CO2 Production

As a result of free markets and demand for cleaner, safer, more reliable, and better technology and services. The United States has some of the cleanest air quality in the world and is the most productive nation in the world.

Yet today we let our collective emotions and fear of climate change dictate our energy policy. Or, as President Obama’s Chief of Staff, Rahm Emanuel famously said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Hmmm.

The climate crisis is that crisis. It has led to the largest pay to play political Ponzi scheme in history. $ trillions in government subsidies and grants have propped up countless green companies that have failed miserably yet found the funds to donate to the very politician’s Political Action Committees or PAC’s that voted to fund those companies or Green New Deal initiatives. HMMM. Right now, leadership in DC and the lobbyists benefiting from this boondoggle are begging you to stop looking.

Hyped up on fear and talking points, The Green New Deal Junkies and Lobbyists in DC, Sacramento and across our nation, spent your tax dollars with little to nothing to show for it. They used a “crisis” to enrich and promote their power and ideology at the cost of the taxpayer, entrepreneur, and most importantly, you, the American Citizen.

Compounding the issue, is that much of this was done while the Federal Reserve held interest rates below the rate of inflation for 80% of the time during the past fifteen years. Nine of those years at nearly 0% interest rates. This will surely cause an issue in the debt markets when these loans mature or need to be refinanced at current rates and these companies have almost nothing to show in terms of revenue to pay off the loans or refinance them.

Back to reality – One positive that has come from The Green New Deals constant dependence on taxpayer subsidies and constant fear mongering that the “sky is falling” has led its biggest backers, big tech, back to reality.

Proven clean energy – “Big Tech” is investing in Nuclear and Natural Gas to provide what their clients and customers need and demand. When results mattered and push comes to shove, “Big Tech” moved quickly to make sure they filled the gap for their customers and ensured their margins for the future. Now forced to spend their money, they are choosing a proven and dependable source. As citizens, we pay for and depend on an energy grid that is dependable, consistent, and efficient.

Unfortunately, for us taxpayers we lost close to $18 trillion in the hope that it may one day work. But until then, keep an eye on reality. The good news is the private sector is pivoting from government and political correctness and solving the problem. Google, Amazon, and Microsoft aren’t relying on politically correct green energy (solar or wind) policy. They are buying electricity provided by nuclear power and companies that supply natural gas.

My good friends at First Trust pulled this amazing quote from one of my favorite economists, Milton Friedman. He said, “There are four ways in which you can spend money. You can spend your own money on yourself. You can spend your own money on somebody else. You can spend somebody else’s money on yourself. Finally, you can spend somebody else’s money on somebody else. Spending your own money (whether on yourself or on someone else) means you will care about it. But, when you spend somebody else’s money, especially on somebody else, you don’t care how much you spend or what you get for it.”

When it is dependent on your money…When shareholder value matteres, corporate America is starting to realize that if they don’t change course and protect shareholder value, they will be replaced with management that will. By Fire or by Force. Big Tech is having its moment of clarity as it depends more today on energy than ever before. Due to long-term demand for reliable energy and being forced to spend their money, they have reversed their course and are going with what works, not feelings or popular but facts. Proving once again that the free markets provide the very best solutions and are truly only sustainable in a free society.

Our nation is the greatest nation in the world. Not because of the size of our government, but because government is limited. That its power comes from the “consent of the governed.” Our Declaration of Independence says it best and is the standard which all governments aspire to resemble, but their leaders fear.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—”  The Declaration of Independence – 1776

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending October 25, 2024 appeared first on DeGroote.

Construction Spending down…Total residential spending decreased 0.4% month-over-month while nonresidential spending fell 0.2% month-over-month.

What does it mean – Single family construction was down 1.9%. Multifamily construction was flat. Commercial construction was down 0.7%. Construction along with manufacturing are two of the biggest drivers in our economy.

Manufacturing continues to weaken…ISM New Orders Index dropped to 44.6% from 47.4%.

What does it mean – Anything above 50 signals growth. Unfortunately manufacturing under pressure from rising regulations and a growing government signal more weakness in the private sector.

Keeping up with Uncle Sam…Just like the government. Another case of keeping up with the Jone’s or should I say with “Uncle Sam.”

What does it mean – Last week we discussed the massive “credit card” congress allowed this administration to use to the tune of nearly $500 billion. It turns out keeping up with the Jones is a national past time. Like the government, the consumer hit the “credit card” at record levels and saw its revolving and non-revolving debt increase by $25.5 billion in July. That is a lot of pent-up demand for back-to-school supplies.

Student loan payments have been declining rapidly…When this administration keeps telling you that they are going to forgive your student loans, what do you think is going to happen?

What does it mean – Inflationary and illegal!!! Don’t say we did not warn you. Similar to private healthcare where the government has taken over nearly all aspects, higher education is on the same path of self-destruction.

Like our National Debt, the debt our students owe to the taxpayer has more than doubled under this big government scam. Government took a $700 billion industry in 2010 and turned it into over a $2 trillion industry today that is fraught with waste and fraud. It has led to our greatest universities creating a plethora of degree programs that do nothing for the student or their ability to actually earn a living or create a product or service someone is willing to pay for. It is easy to see why universities are so quick to raise fees and tuition. Heck if you were running a university, why not increase the fees? If the government is going to guarantee the loans and you have no risk in the product you are producing, keep increasing the fees and lower the standards. The more the merrier. Heck let the kids run the place. Did you know that your children can now create their own degree programs, further adding to the dumbing down of our universities and worsening our society. Why the heck would you not accept everyone possible. If there is a seat available, fill it. Don’t worry about the student’s ability to compete or pay back the loan. The university has no accountability to the borrower and is no longer managing a budget or accountable to a third-party lender. All the checks and balances are out the window. It is now guaranteed by you, the taxpayer, overseen by a government agency, with no skin in the game and completely accountable. This is crazy!!

The NFIB Small Business Optimism declines…The NFIB Index registered a sharp decline in August.

What does it mean – Amid increased uncertainty. More firms have been reporting slower sales and lowered sales expectations.

The August PPI report came in slightly stronger than expected…Both headline (excluding energy) and core figures topping forecasts.

What does it mean – Despite the stronger PPI report, the components of PPI that contribute to core PCE inflation remained relatively flat. Should keep the Fed on track.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending September 13, 2024 appeared first on DeGroote.

Nonfarm payrolls keep coming in below expectations…August nonfarm payroll headlines continue the downward trend.

What does it mean – Coming in below expectations and accompanied by downward revisions to July and June that helped drive the 3-month average down from 141,000 to a consistently disappointing 116,000 for the last 3 months. The good news is this the downward revisions are only a bit over 17% off not the normal 30% to 40% revisions we keep getting from the BLS over the last couple of years. The poor job numbers should help convince the Federal Reserve to lower rates.

U6 unemployment rate increases to 7.9%…U6 accounts for unemployed and underemployed workers.

What does it mean…More and More Americans are seeking a second job or trying to find a higher paying job as they are unable to make ends meet.

Manufacturing output fell 0.3%…Durable manufacturing declined 0.9%.

What does it mean – While manufacturing capacity utilization dropped to 77.2% from a downwardly revised 77.9% in June, industrial production continues to signal a slowing economy under this administration’s policies and ever-increasing regulations.

Nothing to see here…It can’t be because there is an election coming up!! The Treasury Budget for August showed a deficit of $380.1 billion compared to a surplus of $89.3 billion in the same period a year ago.

What does it mean – Fiscal year-to-date deficit is $1.897 trillion or 24% higher than the same period a year ago and some how we found it possible to increase spending by $469 billion for the month of August 2024 vs. August of 2023.

Hey Congress, yes you, we know who you are. You are the folks elected to oversee our budget and protect the treasury and resources of the Citizens of the United States of America. Yes, You!!!

Here is how our president and the “last person” in the room decided to secure their future at the cost of yours.

Up until August, the monthly budget deficit was moving along as expected per the ridiculous Green New Deal, massive spending, and the litany of Continued Resolutions to make sure government continues to waste resources at the expense of the American taxpayer.

Just as we started to see inflation subside and the Fed started to increase projections of lower interest rates, polls reflected a shift or need for change in DC. These self-serving morons realized they may be out of a job if they don’t feed you cake and entertain you with gladiators. Just as the gladiators started to take the field (football – and I am a huge fan), our elected and unelected bureaucrats found their “Marie Antoinett” and “Commodus” moment and flooded the system with an unexpected massive spend in the month of August, waiting to see September, hoping to reboot the economy and hoping we do not get a recession just in time for the elections. See the chart below from the U.S. Treasury and Zero Hedge.

As expected, when it is someone else’s money, and it is, leadership acted swiftly to protect its power and self-serving agenda. They kicked the wheels of Government into massive overdrive last month, as outlays as quoted above, this administration increased spending in August by a mind-blowing $469 billion totaling $686 billion, the highest since March 2023, and only a handful of crisis months during the covid crash saw greater government spending in any given month according to Zero Hedge and the U.S. Treasury. The month of August 2024 and the American taxpayer is now the proud owner of a record deficit of $380 billion, up more than 50% from the $243 billion in July, and up more than 55% from July, and up 66% from last August.

You know it is bad when the U.S. Treasury quietly releases these numbers after 5am ET when everyone was sleeping, not at its regular time of 2pm ET. This explains why our “state run media/reporters” again where caught off guard by their cohorts in DC.

Yet, it does not explain why our President, Vice President, and the majority of our 535 useful idiots in both houses could have used these funds several ways to protect and help the American Citizen. If these funds actually existed and did not borrow them, these funds could have reduced taxes for every American, pay down the deficit, improve health care, protect our border, fly every illegal immigrant back to their country of origin, or given 330,000,000 U.S. citizens $1,424.21. A family of five would have gotten $7,120.60. That would have filled a few gas tanks with and a few shopping carts with food. Not to mention put the money back in the hands of the consumer where it belongs.

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

The post What Happened Last Week and What It Means to You: Week Ending September 6, 2024 appeared first on DeGroote.