Initial jobless claims for the week ending March 14 decreased by 8,000 to 205,000…The consensus was 215,000.

What does it mean – Continuing claims were little changed, indicating stable labor market. This will probably keep the Fed preoccupied for now with the inflation side of its mandate. Future reports like this may make it tough for the Fed to cut rates in the future.

Producer Price Index was up 3.9%, versus 3.6% in January…The uptick is from the survey prior to the war in Iran.

What does it mean – After the survey came out oil prices have spiked to over $100 per barrel. This will surely hit consumer pocketbooks.

The Philadelphia Fed’s manufacturing index edged up…Coming in above the consensus forecast.

What does it mean – This report marked the fourth straight monthly increase in industrial production.

Deregulation…An LLM-based deregulation index for the US has reached the highest level in decades.

What does it mean – From the Chart below you can see that deregulation often coincides with economic expansion.

According to the opening statement from the most recently released report from the White House Economic Council.

“Excess regulation harms economic activity by increasing compliance costs and misallocating resources away from more profitable activities, thus discouraging innovation, investment, and economic growth. Regulatory complexity coupled with high compliance costs can also act as a barrier to entry, sheltering incumbent producers and stifling competition, thereby reducing startup activity and job formation. Moreover, onerous regulations can lead to higher prices, reduced opportunities, an increase in the poverty rate, and disproportionate impacts on small businesses”.

This letter has been consistently pointing out exactly what The White House Council Of Economic Advisors reported in their 2025 report. Below is a graph of previous periods where we saw deregulation.

Inflation is baffling experts…Powell is providing daily proof he is in over his head as he keeps rates steady, pushing mortgage rates higher and home ownership more difficult.

What does it mean – According to First Trust’s Brian Wesbury, “recent figures have been downright bizarre”. The producer prices index rose 0.7% in February and was up 3.4% from a year ago. Yet the increase has been led by the services sector, not the goods sector. The Fed and many economists expected the complete opposite. Prices for goods in the PPI are up 2.5% in the past year, while services prices are up 3.8%.  We see a similar pattern for consumer prices where services prices are up 3.1% in the past year while commodity prices are up 1.3%. The good new is that this trend and the effect of tariffs have been much more muted than many feared. Yes, inflation is still above the Fed’s 2.0% target.

Affordability and Powell’s politics over principal. It is no secret that Powel and this administration see the role of government and economic policy much differently. While he favored a very loose money supply during the previous administration and in fact even lowering rates prior to the election, he has reversed course and has tightened the money supply vs historical averages. According to First Trusty, “in the ten years prior to COVID, the M2 measure of money grew about 6.0% per year with inflation averaging at or below 2.0%.  In the past year, M2 is up just 4.3%”.

The Fed is anything but lose now while it puts more pressure on the administration to solve housing and the affordability factor. The Fed is actively working against the very people it is supposed to serve. You – The taxpayer. The Fed continues to tighten through higher rates and steals money from the taxpayer by continuing forced redistribution of your hard-earned taxes while it pays banks interest on their reserves. As you know from previous letters, this theft has been going on for the last 15 years and has got to stop!!! It stifles lending, increasing the cost of capital, and creating massive profits for banks as they bring in hundreds of billions in profits by doing nothing to grow their business. It is killing small banks and entrepreneurs. Government Created this theft about the same time as the States figured out that the Affordable Care Act (ACA) would allow for massive fraud through massive expansion of government programs with little to no oversight. Probably not a coincidence. The ACA was thousands of pages long and Nacy Pelosi famously said. “We have to pass the bill so that you can find out what is in it”. Now we know. Health care fraud and waste are at record highs as government grows its stranglehold on nearly 20% of our economy.

Oil prices spike…Highest prices since 2022/23. While Iran and its backed proxies attacked US interests and bases over 180 times during that period according to the White House briefing and reports from the defense department.

What does it mean – Different cause but same results. In 2022/23 and through much of 2024, America was actually under attack by Iran and its proxies throughout the Middle East and Africa. With over 180 attacks by the largest terrorist organization in the world accompanied by a self-destructive energy policy and massive regulation that closed refineries, pipelines, and allowed the federal government to increase regulations and ultimately slow play the release of federal land for the purpose of drilling and developing petrol energy while they invested billions in unreliable wind energy that killed countless mammals off the coasts. All leading to the highest gas prices we have ever seen as a nation.

Drill Baby Drill…While California suffers from the highest gas prices it also suffers under the highest gas taxes in the country. It is forcing the closure of refineries run by Philips, Valero and Chevron to name a few. CA is literally pushing thousands of high paying jobs out of the state as these companies shut down and relocate their headquarters and operations out of CA to states like Texas.

What does it mean – While the rest of the country continues to see fuel prices rise, California continues to double down on stupid and sees its prices rise much faster and higher than the national average. Here is what it cost me to fill my truck with Diesel on 3/23/26. The worst part about it is the pump shut off at $200.00 and I could not even fill my tank.

According to Andy Walz and his interview at The New York Times, “California has had, I think, very poor energy policy. They’ve put a climate agenda ahead of reliable and affordable energy, and the consequences of that are that energy in California — any form of it — is unaffordable.”California you have agency. You have the power to choose. Seek the facts and choose wisely. Policy matters!!

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 20, 2026 appeared first on DeGroote.

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.

The post What Happened Last Week and What It Means to You: Week Ending February 27, 2026 appeared first on DeGroote.

Q3 real GDP up to 4.4%…Revised slightly higher to 4.4% from the advance estimate of 4.3% due to an upward revision to exports and investment.

What does it mean – Tariffs are not slowing down the economy and money is flowing to America in the form of foreign investments. Americans should be celebrating. Yet the media’s silence is deafening. Globalism is falling apart as Americans stop subsidizing the rest of the world. The American constitution stands alone when it comes to protecting your inalienable rights and elevating the individual citizen over the government. The protection of freedom, property rights, and intellectual property is a magnet for liquidity and investments. Thrusting America and Western Civilization to the forefront of technology, healthcare, innovation, education and manufacturing. The rest of the world is slowing or neutral at best.

New home sales month-over-month/year-over-year by region…In October:

Northeast (-14.3%/-40.0%); Midwest (-9.0%/+21.3%); South (+16.9%/+42.1%); and West (-36.3%; -24.8%).

What does it mean – Today, CA citizens are walking away with their wallets, selling their homes and following their kids to recapture the American dream and live in a state that protects individual liberty, respects the law, and puts its citizens first.

Industrial production increased 0.4% month-over-month in December…Following an upwardly revised 0.4% increase (from 0.2%) in November. The capacity utilization rate was 76.3% versus an upwardly revised 76.1% (from 76.0%) in November.

What does it mean – manufacturing output was even better than the headline suggests given the nice upward revision for November. This is consistent with an economy that closed 2025 on a good note, notwithstanding the government shutdown in October. Deregulation is setting American manufactures free adding to continued growth and capacity. If deregulation continues, expect more growth in manufacturing and the trades.

CPI was up 2.7% on a year-over-year basis…Inflation the lowest it has been since pre-covid. Total CPI was up 2.7% versus 2.7% in November, while core CPI was up 2.6% versus 2.6% in November. 

What does it mean – Core CPI was a touch cooler than expected, which prevented the year-over-year rate from rising. While this is a small victory and a welcome sight for a market. Yet affordability is still out of whack and housing needs to come down.

California power bills soar 39%…Compared to the rest of the nation, CA is a different story. According to UC Berkeley’s Haas Energy Institute and the New York Times the cost of energy continues to be nearly twice the national average. California residential electricity prices for the 12 months ending March 2024 were 29.85 cents/kWh, 96.1% higher than the U.S. average of 15.22 cents/kWh.

What does it mean – Most of CA can barely afford to fill their cars with gas and struggle with outrageous energy prices due to mismanagement of our power grid. In fact, CA utility costs have gone up more than 39% due to poor policy driving green energy and poor land and water management that has led to decreased resources contributing to massive fires. Could you imagine what the cost of energy would look like if we had a winter like the Midwest and all the East Coast has been enduring? If we get a hot summer expect to lose power and enjoy the third world trend of rolling blackouts as CA continues its march towards ineffective green energy built by tools powered by oil and gas made mostly in China. You just can’t make this stuff up!! But you absolutely get what you tolerate.

California’s Jock Tax…You really can’t make this up unless you live in CA.

What does it mean – Bad Bunny’s antics may have created a controversy for the NFL, but CA legislatures keep doubling down on stupid trying to fund the very problems they created.

For winning the Super Bowl every Seattle Seahawks player will take home $178,000 for that game. Yet, given that the Superbowl was played in California, every player is exposed to paying taxes in CA even if they do not reside in CA. While I do not agree with it, I can see the thinking and why some may believe it is reasonable for the state of California to tax that specific income. But that is not what CA does and may explain the exodus by business owners.

According to Tyler Durden of Zero Hedge and the CA tax code, CA will go back in time, “all the way to the start of the NFL season in September and take their ‘fair share’ of the players’ ENTIRE salaries over the entire season.”

The “jock tax” may be the most punitive tax I have ever seen. Can you imagine working all year long to earn a birth to the biggest game in football only to lose more money than you made from the biggest game of the season?

In case you are wondering, here are the facts and how the tax works. According to Zero Hedge, “Both teams arrived in California last Sunday, so each player will log at least eight duty days in the state just for the Super Bowl.

California then divides those duty days over the entire season, and you end up with a percentage. If a player spends, say, 7% of his duty days in California over the season, then the state claims the right to tax 7% of his entire annual salary at California’s top marginal rate of 13.3%!”

In Sam Darnolds case, the Seattle quarterback earned $178,000 for that game. Yet he’ll end up owing CA roughly $249,000 in state taxes this year. In other words, Sam Darnold will LOSE over $70,000 for winning the Super Bowl. Beyond crazy.

Along with the highest taxes on fuel, energy, water, and everything else that moves, earns, or breathes, in CA there is no reason to think that voters in CA would expect anything less from their legislature and governor but to tax the hell out of anything that moves.

With a budget of over $500 billion, where does all the $ go?…For most citizens, ignorance is bliss.

What does it mean – Here are a few examples of where it does go.

1. CA has spent over $24 billion on solving homelessness only to see homelessness set records and exceed almost all states combined.
2. CA spent over $9.5 billion on healthcare for illegals in 2025 and it is only going up.
3. CA spends over $18,000 per student in public school and our public school system is ranked at the bottom of our nation. Let’s not forget the train to nowhere.
4. CA is going to spend over $128 billion on a highspeed train to Modesto according to the new estimates.

To add insult to injury our elected officials decided to pass regulations that will start closing and putting oil refineries out of business this year. This alone will cost our state billions in tax revenue, countless jobs, and increase the cost of gas to levels that will even make the Europeans cringe. At the same time, they are now talking about adding a mileage tax. Can you imagine?

In 2026 CA will continue with a $200 million program to help citizens buy electric vehicles. Yet now that Sacramento needs more revenue to fund their pet projects, NGO’s, drug distribution centers, and homeless shelters, they decide it is a great idea to go after all drivers including the very people that they just subsidized with a proposed mileage tax. Did we forget that CA increased the gas tax in 2025?

The above are just a few examples of how our elected officials want to make up the shortfall in revenue from the 200 plus major businesses like Oracle, Hewlett Packard, Charles Schwab, and Chevron that have left CA and took hundreds and thousands of jobs and taxpayers with them over the last few years.

In 2025 over 216,000 CA tax paying citizens fled CA and we replaced them with the highest homeless population in the country and provide sanctuary status for illegals at taxpayers’ expense. They want to tax roughly 200 billionaires 5% of their net worth and if they leave prior to the tax being passed by ballot, CA can go after them.

“Even Hollywood is crumbling. On-location film and TV production in Los Angeles hit its lowest level since the pandemic shutdown.” According to Zero Hedge, “TV production was down 16.1% in 202 and 42,000 entertainment jobs vanished in just two years. While Hollywood continues to cut its nose off despite its face, production has scattered to Georgia, the UK, Canada, and Australia, where tax incentives are far more generous.”

While the rest of the country is enjoying a 100-year low in the murder rate and violent crime.  CA watches as it loses citizens, industry, jobs and lets crime skyrocket. CA’s Governor Newsom and Attorney General Rob Bonta would rather spend millions on an online portal where people can report federal ICE agents for “misconduct”— essentially using tax dollars to help obstruct immigration enforcement. Making it unsafe for both officers and citizens and almost impossible for them to do their jobs.

Hotel California…Last thing I remember – I was running for the door – Had to find the passage back to the place I was before – “Relax”, said the night man – “We are programmed to receive” – You can check out any time you like, but you can never leave.

If we are to look at the recent regulations and laws passed by California’s elected officials, one would have a hard time believing that these elected officials and their constituent’s believe in personal freedom, self-determination, accountability and personal responsibility. It certainly flies in the face of free markets, capitalism and our inalienable rights endowed by our Creator.

What does it mean – The State of California may have finally lived up to the song so aptly named, “Hotel California” by The Eagles. California for all its natural beauty, resources, incredible history of entrepreneurism, ingenuity, and creativity, CA may have become the embodiment of the song “Hotel California”. It sure looks like CA is truly living up to the Eagle’s story that it so elegantly wove together to describe the self-destruction that comes from putting feelings above truth, dismissing wisdom for instant gratification, describing a lifestyle of hedonism and greed that took over the music industry in the 1970s in California. The song according to Don Henley represented a “journey from innocence to experience, serving as an allegory for the dark underbelly of the American dream, excess, and narcissism in 1970s in Los Angeles.” Highlighting a self-prevailing prophecy based on feelings and not morality, where excessive, luxurious lifestyles become an inescapable trap.

Today, CA is living in its trap of immediate gratification and virtue signaling. The hardest working people in Sacramento are the social media directors for every elected official. Not a day goes by that some elected official posts discredit morality and the rule of law to pander to a group of people hoping for special treatment or to gain their vote.

It is the exact opposite of what our founding fathers wanted and that has led to the success of our country and brought peace and prosperity to the world. Unfortunately, our success as individuals and as a nation is dependent on hard work, accountability, and faith in our citizens.

In Proverbs 23 we are given a road map to living a purpose filled life. It is a comprehensive guide to navigating all that life throws at us. It leads to civility and prosperity for individuals, our communities, our state and our nation. It tells us to focus on seeking wisdom; to focus on discernment, self-control, and prioritize truth over worldly temptations that lead to gluttony, lust, and greed. These are instructions to guard our hearts, honor our parents, understand and be mindful of the deceptive nature of worldly pleasures. To fear God as His laws and His love are never changing and constant. It is the wisdom we seek to keep us safe from our own demise.

While the song Hotel California echoes temptation, we are reminded that our nation is rooted in Biblical truth. Don Henley said it best when asked by a reporter about the following line in the song,

“So I called up the captain / ‘Please bring me my wine’ / He said, ‘We haven’t had that spirit here since 1969.’”

Henley’s response says it all. “Thanks for the tutorial and, no, you’re not the first to bring this to my attention,” said Henley. “And you’re not the first to completely misinterpret the lyric and miss the metaphor. Believe me, I’ve consumed enough alcoholic beverages in my time to know how they are made and what the proper nomenclature is.”

Don Henley went on to say that the lyric in question has “nothing to do” with alcohol at all. Rather, it was a “sociopolitical statement.”

“My only regret would be having to explain it in detail to you, which would defeat the purpose of using literary devices in songwriting and lower the discussion to some silly and irrelevant argument about chemical processes,” Henley continued.

Policy matters – My friend Robin said it best. “Markets respond to incentives and so do citizens. When incentives reward productivity and responsibility, prosperity follows. When incentives reward dependency and excess, fragility follows”.

Sacramento has made it clear. They will confiscate as much as possible to fuel their socialist utopia. “The problem with socialism is that you eventually run out of other people’s money.” Margaret Thatcher.

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 6, 2026 appeared first on DeGroote.

Q3 GDP expanded at a robust 4.3% annualized rate…Despite the longest government shutdown in years, GDP grew significantly above the 3.3% consensus estimate. Driven by strong consumer spending and a substantial contribution from net trade.

What does it mean – Affordability continues to be the headline and major concern for us all. Yet, the consumer continues to flourish while net trade continues to favor strong demand for US goods despite the so-called expert’s predictions on tariffs and the government shutdown. Based on what I see a smaller government is a better government and a heck of a lot less expensive.

Initial jobless claims for the week ending December 27 decreased by 16,000 to 199,000…Briefing.com consensus was 226,000.

What does it mean – Coming in below 200,000 for just the second time this year. This should be encouraging to a market that has grown more sensitive to signals from the labor market.

Existing home sales increased 0.5% month-over-month…November brought a seasonally adjusted annual rate of 4.13 million. While sales were down 1.0% on a year-over-year basis.

What does it mean – November home sales got a nice boost as the Fed lowered rates.

Headline inflation for November cooled to 2.7% Y/Y…Core inflation fell to 2.6% Y/Y, both significantly below consensus forecasts.

What does it mean – Month-over-month inflation rates were not available due to the government shutdown. The chart below shows estimates based on inflation trends from alternative data sources.

Here is a breakdown of year-over-year inflation by component.

Leading indicators expect US growth to be solid in 2026…Bridgewater’s leading indicator expects US growth to be solid and above FOMC forecasts for the coming year.

What does it mean – Less government regulations, bureaucracy, and lower taxes, puts you in charge of more of your money.

Happy Birthday America. As a nation we are about to celebrate our country’s 250^th birthday. I can’t wait and love the idea of celebrating our nation’s greatest achievements, our rich history, traditions, and recognize and celebrate our founding fathers’ unprecedented achievements.

What does it mean – Call me patriotic. I love being an American.

Our history is remarkable and it was no mistake that we are here today because our founding fathers understood where freedom comes from.

We are the greatest country in the world. Our economic power is second to none. Our constitution has secured our nation for nearly 250 years and through every generation, it has met the challenges our world has thrown at us every time.

Through our republic and commitment to free markets, capitalism and free people, the United States has freed more people from tyranny and socialism than all nations combined or any other form of government. It has protected us from despots, tyrannical governments, enemies both foreign and domestic, spread freedom throughout the world and promoted and protected individual liberty throughout.

The United States citizen gives more to charity than all nations combine. We feed and protect the starving world and provide the resources and examples of individual success and the power of a can-do spirit and rugged individualism. We have more patents and have created more technology, art, music, businesses, industries, scientists, doctors, and continually lead the world in inventions and patents year in and year out. In fact, there is not another nation even close to us when it comes to creating life-changing inventions, wealth, saving lives, and protecting freedom, free speech and religious liberty. When the world gets ugly, the world calls on America. And we deliver over and over again.

You have to wonder how this is possible. What is in our DNA that is so different from Europe, Asia, Africa and Latin America? Is it the land? Is it the people? What is it? Why are we seen as the enemy or vilified by so many yet called upon to solve the world’s problems through our treasure, talent and blood? Why does the American citizen continue to sacrifice their hard-earned savings and so freely give it to those less fortunate?

The following list of countries by charitable donation shows the total charitable donations from individuals within the nation, as a percentage of the nation’s GDP. The figures were published in February 2016 by the Charities Aid Foundation (CAF) in its report titled Gross Domestic Philanthropy.^[1] The report only considers the 24 countries about which CAF was able to collect comprehensive data.

One can only surmise that when push comes to shove, our staunchest allies, and fiercest enemies of freedom are jealous or fear our patriotism, our love of country, generosity, and the abundance of good fortune through hard work and individual liberty. These nay sayers of freedom fear free people because free people are often the most prosperous people and are less reliant on the trapping of government entitlement programs. Free people remove the need for big government. That is why they fear America and our Constitution. It reminds me of Galatians 4:16 “Have I now become your enemy by telling the truth.”

The American citizen is unfazed. No matter what they say, we are a generous bunch. The American citizen gives more year in and year out regardless of economic circumstances. Yet, history has shown that when the cost of government goes up through higher taxes and regulation, charity suffers. Historically our charitable giving has been just above 2% over the last 50 years and was even higher prior to the advent of Johnsons Great society. When Big Government got Bigger the poor suffered and charities struggled to meet their needs allowing the trappings of government entitlement chain the poor and needy to endless programs run by bureaucrats.

America has a culture of gratitude and understands that giving freely is an amazing joy the rest of the world does not understand and is often sidelined by bad policy and overreaching governments that have replaced charity with the high cost of burdensome entitlement programs. Our tax code celebrates and promotes charity. In fact, you have heard me say, “you can give by choice or by force.” You get to pick.

Davy Crockett famously said that while individuals have the right to give their own money as charity, Congress has no constitutional authority to appropriate public funds for charitable purposes, arguing it leads to corruption, a principle detailed in his “Not Yours to Give” speech. Davy Crocket was spot on. Look at the huge fraud we have seen within the NGO’s and entitlement programs that are the government answer to charity. He believed charity should be a personal, not governmental, responsibility, emphasizing that using public money this way was a dangerous overreach of power, not a debt or right.

Don’t give up. The power of gratitude is one that promotes immense pleasure and sense of self worth and accomplishment. The more you give the more you receive.

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 – If you are currently on or going to collect Social Security, you represent a massive voting bloc, and the government will make sure your Cost-of-Living Adjustments come in on time and are calculated prior to the deadline.

Due to the demand by the Social Security Administration, a small part of the federal government took a short break from being shut down to make sure the Labor Department could deliver the September Consumer Price Index (CPI). Why? Because the Social Security Administration needs this inflation report to calculate and announce the Cost-of-Living-Adjustments (COLAs) for Social Security beneficiaries for 2026. Magically, the demand for this number temporarily transformed some government statisticians into “essential” workers from “non-essential” workers.

The key takeaway from the report is that CPI and Core CPI were both cooler than expected, which will keep the market thinking that the FOMC will announce a 25-basis point rate cut and should not upset “expectations” for another cut in December.

Fed lowers rates…The Federal Reserve cut its benchmark interest rate a quarter of a percentage point on Wednesday.

What does it mean – Even with record revenue from tariffs inflation seems to be in check.

Global Debt…With $38 Trillion in debt tough decisions will be made by choice or by force.

What does it mean – A government big enough to give it to you is certainly big enough to take it away. Lowering interest rates will also slow down or lower the trajectory.

Over the last few weeks, we have been experiencing a lack of data to report on due to the government shutdown. The great news is it may be saving taxpayers $billions and slowing our march to $40 trillion in debt. DC may finally be realizing just how bloated the Federal government is while the private sector continues to move forward building and creating wealth to fund the insatiable appetite of a bloated bureaucracy.

“Big Government Sucks.”… It is not just a saying, it is the truth. And that sucking sound you hear is coming from your bank account and your children’s future.

What does it mean – With reality front and center, we unfortunately continue to have folks who think more government is the cure to their problems. New York City is about to double down on another hit of government heroin. This will lead to more government control, more taxes, and more depression and pain.

One must ask, where on this planet has Socialism and Marxism ever increased productivity, life expectancy, freedom of speech, economic freedom, and promoted and protected religious freedom?

Answer – Nowhere, nonexistent, nada, not even in Karl Marxs Russian utopia. It is theoretical at best and even a bunch of farm animals figured it out. Yet somehow every major city run by people who bring the very policies that are the antithesis to economic freedom, liberty, and the pursuit of one’s happiness is doubling down on stupidity. Just look at Portland, LA, SF, Seattle, Chicago, NY, Houston, New Orleans, and Memphis. These major cities with the same causes are resulting in the same self-destructive behavior fueled by greed and envy are akin to George Orwells Animal Farm.

The good news is our border is now secure and will continue to be protected. Our service men and woman will get paid due to the generosity of Timmothy Mellon who will cover the salaries of our servicemen and women during the shutdown. And don’t worry, your elected officials made sure that their inability to create anything will never affect their salaries and the people that support their addiction to your money will always be paid regardless of their inability to produce a product that will actually protect our sovereignty, our inalienable rights, and reduce the size of government so that free men can prosper under the messy yet very efficient “invisible hand.”

In Adam Smith’s book, “The Wealth of Nations”, he writes about the “invisible hand.” This is a metaphor for how individuals acting in their own self-interest can lead to a beneficial outcome for society as a whole. By pursuing their own goals, society benefits by the dynamics of supply and demand, and markets naturally adjust prices and trade flows without centralized control.

Adam Smith describes how personal motives can lead to broader economic benefits and fulfillment of society’s needs. That in a free-market system, which created the wealth and freedom we have today, is the impetus and mechanism that stimulates and promotes the pursuit of profit by producers and the desire for goods by consumers. Driven by supply and demand, the results are clear and have led to generations of proven efficiencies and allocation of resources that have produced the goods and services that built the greatest country in the world without the need for central government planning.

Further proof that a planned economy fails – $14 trillion pledge in 2022 to reduce and hopefully eliminate carbon fuels is just a hoax according to the science and current water levels at Plymouth Rock.

What does it mean – It took Bill Gates to say it, so it must be true. Government forced clean energy initiatives have not worked and will not stop the climate from changing. Plymouth Rock is at the same sea level as it was when our forefathers stepped foot on this land in 1620. I guess the past presidential and congressional climate Czars will not have to worry about their beach houses.

Could Bill Gates change of heart or newfound truth be the fact he needs cheap efficient energy to power his AI investments and server farms. He is buying nuclear and gas/oil to create the energy needed to build, supply and maintain the digital landscape Microsoft seeks to control.

Our government is not our opportunity, but our protector of freedom. Fortunately, free markets and capitalism have offset the insatiable demand for power and control by government officials and elected and unelected bureaucrats.

Invest in yourself. Solve a problem. “Whatever the mind of man can conceive and believe it can achieve.” From Think and Grow Rich by Napoleon Hill.

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 24, 2025 appeared first on DeGroote.

What does it mean – If the BLS is right, layoffs are low, but finding a new job, if laid off, is taking longer.

The Conference Board’s Consumer Confidence Index rose to 97.2 in July…While the consensus was 95.5, it was revised up from 93.0 in June.

What does it mean – While not exuding confidence, the consumer is on the bubble but still spending.

Demand PPI up 3.3% year-over-year…With the index for final demand is up 3.3% year-over-year, versus 2.4% in June shows remarkable growth.

What does it mean – The overall economy is on the move with very little inflation as fuel and energy down and food back in line with expectations and demand.

Total CPI increased 0.2% month-over-month…The food index was flat month-over-month and was up 2.9% year-over-year. Much better than the previous few years.

What does it mean – The one outlier was footwear. Blame it on MAHA. People must be walking more. The footwear index rose +1.4% month-over-month following a 0.7% increase in June. Both readings in the last couple of months are higher than normal.

Light truck domestic truck sales increased 8.9% to 9.72 million… Sales are up 6.8% above a year ago according to first quarter numbers.

What does it mean – In football it is often said when a player flat out runs through or over the opposition, you could hear the announcer, or the crowd go wild with exclamations and excitement that their player just “trucked” the other guy. It is synonyms with action and grit. The light truck market has often been a signal of middle-class expansion and optimism. Historically a spike in light truck sales was a prelude to more manufacturing, construction, and overall business in America. Always a great statistic showing the power and excitement of an iconic American standard. The Truck!!

Homes on the market going up significantly…Nevada leads the way as it has seen a 52.9 percent year-over-year increase in the number of homes on the market.

What does it mean – According to Realtor.com, sellers in Nevada are now more willing to negotiate prices, as luxury homes are sitting longer at a median of 64 days on the market. “At the very top of the market, prices for homes at the $6 million-plus range are down 15.21 percent, compared with the 6.78 percent national decrease,” the report states.

Across the nation, California ranked fourth on the inventory list, with almost 78,000 active listings this July compared to 57,148 in July 2024. The state’s median home price was $750,000.

According to this same report and the data from California Association of Realtors, it shows that only about 13 percent of the people in the Los Angeles metro area can actually afford to buy a home here in Los Angeles.

Record low!! Both married and home ownership at age 30 at record low…According to data from the U.S. Census Bureau, the below chart estimated the percentage of 30-Year-Olds Who Are Both Married and Homeowners from 1950-2025. The analysis is based on data from the U.S. Census Bureau, academic reports, and social media insights, conducted as of August 4, 2025.

What does it mean – While human behavior is consistent it can be influenced. Marriage, home ownership, children, all happen under natural desires and conditions. Yet, as economic pressures and bap policy mounted we begin to witness the slowdown in family formation with generation X. It was put on steroids with the millennials and now generation Z is realizing the fallacy they have been sold by society and media.

Historically we watched generation after generation mary in their mid 20’s, buy their first home in their late 20’s, have children, be in more debt as a percentage of income in their 30’s and consume more junk food as a household in their late 30’s and early 40’s than at any other time in life as they fill their children with Doritos, soda, and fast food. They upgrade to their largest home in their 40’s and as they reach their 50’s they go through their mid-life crisis get their biggest raise as the kids start to go off to form their own families and the cycle starts over for the next generation.

Yet, this current trend and over 2,000 years of history and studies from the ancient Greeks to the current professors and experts throughout our country have witnessed family formation shifting dramatically due to economic constraints, government policy, and societal norms that have pushed the boundary of behavior. Most importantly the last 60 plus years have torn at the thread of society leaving our economy and society in a dangerous place.

One could show that over 60 years of failed government policy has created the unintended consequences that have dramatically led to the slowing of family formation and undermining of home ownership and stunting the economic wellbeing of an entire generation and possible two or three. The massive decline in home ownership has paralyzed the millennial generation and many of generation Z. It is affecting the overall economy, personal and social stability, the rule of law, and psychological wellbeing of our children, their children and possibly generations to come. Below is a chart and the numbers. You can extrapolate the cause and what you think may have caused this.

• 1950: Approximately 50%.
• 1960: Stable around 50-52%, with a slight peak.
• 1970: Begins to decline to around 48%.
• 1980: Drops to approximately 45%.
• 1990: Stabilizes briefly at 43-44%.
• 2000: Notable drop to around 35%.
• 2010: Further decline to 28-30%.
• 2020: Falls to about 15%.
• 2025: Projected to decline to around 12% (based on social media posts).

Fear leads to more bad policy…State Capitalism has destroyed every sector it has touched. Just look above and what it has done to home ownership. Will the government increase its exposure to corporate ownership and increase its already large stranglehold on our economy and free markets?

What does it mean – U.S. Government signals possible purchase of 10% to 20% of chip maker Intel and others along with wanting equity in companies that benefited from the CHIP’s Act.

While investors will love it in the short term it is sure to destroy competition, allow the government to pick winners and losers, stifle innovation and creativity, reduce capital creation in that sector and the overall economy. Got to ask yourself, are you willing to invest in a company competing against a competitor that has unlimited resources that are backed by the government?

While I like what Howard Lutnick and Scott Bessent have been doing and no one can argue the deals that they have done that have led to massive investments in America.

Yet, if you recall when President Biden signed the CHIP’s Act, I commented in this letter it amounted to corporate welfare to some of the richest companies in the world with no teeth or accountability. While Lutnick and Bessent are trying to reign in the money and make the biggest of these beneficiaries accountable to the corporate welfare the previous administration gave them.

Two wrongs do not make a right. The CHIP’s act was sold as in investment in technology but had nothing in place to protect the American taxpayer. It was a technology handout to chip companies hoping they would invest in manufacturing here at home. Yet, the last thing we can afford is more government and to go further down the path of State Capitalism. I am strongly against this. This misguided path to accountability and creating a value for the taxpayer must be re-examined. The taxpayer already is partnered with corporate America through the ongoing stream of taxes in the form of income taxes, payroll taxes, Medicare, Social Security etc. Not to mention many government pension plans already own the stock and can vote for or against the board already.

Lutnick and Bessent claim that the U.S. Government, that granted nearly $10 billion to Intel through the CHIP’s Act signed by Biden, should be followed up with government ownership as management at Intel has failed to deliver what was promised under that Chip’s act. Further, an investment of an additional $10 billion would righten the ship at Intel and that investment should come in the form of equity.

Intel has a lot to answer for, and the board and its CEO are far from exemplary citizens or good stewards. Yes, accountability is right and needed and not to mention the new CEO has massive ties to China. That alone should have been a massive red flag for the Biden administration but that is another issue we can discuss later.

At the same time, I find it interesting. The CHIP’s act gave out record amounts of money that amounted to record corporate welfare to these companies including Taiwan Semi-Conductor, to only watch this administration come in and get massive investments from companies like Taiwan Semi-Conductor that the previous administration gave $billions to without any accountability and did little to increase investments under the previous administration. One may conclude that the real value to Taiwan Semi-Conductor and other companies around the world is not what we give them but what they get access to and what they may lose if they do not play by the rules. Tariffs brought them to the table as it threatened access to the U.S. consumer and economy. The lesson we have learned and may need to reinforce with some, is the American consumer is the engine of the world and innovation; creativity and demand start in the USA. Companies don’t need a handout but a reason to stay. To invest, manufacture, create, innovate, hire and compete to solve the consumer needs and demands here in the USA.

America’s not so good history of State-run Agencies and government intervention. America has been flirting with State Run Capitalism, also known as Socialism, since the 1930’s. Since the 1930s, our government has paid farmers not to farm or to farm certain crops.

During the 1970’s in desperation to right a wrong the government caused this by going off the Gold Standard and putting the printing press in overdrive. The U.S. ushered in and instituted price controls. Compounding government control they double and triple down on more government control as they differentiated between industries and even individual companies within industries. At the very same time, the US government capped oil prices, restricted branching by Savings and Loans and would not let banks pay interest on checking accounts. Talk about massive government overreach. The 70’s made the squad and swamp creatures in DC look like raging capitalists. Unfortunately, it’s the same BS but with way better marketing and a lot of folks who have never studied our constitution or civics.

For decades the government set up and financially backed and operated Government Sponsored Enterprises (GSEs), like Fannie Mae and Freddie Mac. Thes GSE’s run by the government are responsible in part for holding mortgage rates artificially low which distorted the housing market. These agencies allowed people and corporations to bid up the price people were/are willing to pay for the existing homes due to artificially low rates, while many state and local governments make it difficult to build new housing.

Another GSE is Sallie Mae. This organization has taken over the entire student loan origination process and manages most of the payment process at a massive cost to the American taxpayer and student. Sure, it guaranteed anyone who can breathe could get a student loan including illegal aliens at the expense of the American citizen. No wonder the price of tuition at a UC school has doubled since the takeover under Obama in 2010. Not to mention that average student graduated in 2024 with $37,850 in student loans. Prior to the takeover by the government in 2010 the average student graduated from college with $20,470 in debt according to the study by the Education Data Initiative. And let’s not forget the last administration ran on forgiving over a $ trillion in student loans.

State capitalism is not new. History is littered with well-intentioned ideas, unfortunately government is not in a position nor capable of running, managing, and unable to be accountable to the success or failure of these programs. When it is in charge, it often picks winners and losers trying to influence society like we saw during the mortgage crisis in 2008 and 09.

Here is a quick look at some long-standing interferences in the market by government. Ethanol subsidies and gas mileage requirements (which, contrary to the narrative about Trump were recently watered down by the Big Beautiful Bill. The Biden Administration allocated green energy subsidies to favored firms under the Inflation Reduction Act, the CHIPS Act favored semiconductor production in the US, and the Nippon-US Steel takeover was originally blocked for political reasons.

The last administration saw an aggressive EPA and an overbearing government constantly looking for a reason to expand its control. They forced manufacturers to change lightbulbs, stoves, dishwashers, toilets, washing machines, and dryers. None of this is new. Yet should we tolerate it? What are the unintended consequences? Has the reality of those unintended consequences proven to be worse than the short-term fear?

While this interference in markets began long ago, it was George W. Bush who provided the perfect opening for socialism and communism during the Financial Panic of 2008-09. President George W. Bush bizarrely announced that he had to violate free market principles to save free markets. What???

2008 led to mark-to-market accounting procedures. It turned a manageable loss in housing values into a once-in-a-century financial panic. Yet, instead of adjusting those accounting practices because it would hit the poorly managed banks that made loans to people who could not afford them due to pressure from the Equal Lending Act and numerous other government programs that oversaw lending standards and regulated banks. These very same policymakers set up TARP to bail out the Big Banks. These are the very bureaucrats and elected officials that actually provided the banking guidelines and regulations that allowed for the largest economic collapse in our lifetimes. Their rules and regulations set the stage for this to happen. At that same time the very same regulators, elected officials and bureaucrats also designed an auto bankruptcy (remember GM) that bailed out Big Labor and launched multiple rounds of Quantitative Easing.”

Due to the massive harm inflicted by the policy reaction to the 2008-09 crisis. Government leaders then and over the last 50 years have paved the way for a bigger, more intrusive government. It will take a massive attitude shift to stop both sides from justifying the government owning corporations. The unintended consequences are numerous, and the outcome will be no different than what every other country has experienced around the globe. From Nazi Germany to Tojo’s Japan, to Russia to South Africa, Zimbabwe, China, Brazil, Venezuela, the list goes on and on. Socialism, communism and planned economies have never worked nor have government owned enterprises.

Why would this be any different? Rules for thee but not for me. Will our government demand a seat at the board table? Will an elected official be placed on a board making a huge board salary to buy his votes to protect a failing project or policy? Government officials are famous for passing laws but never enforcing them on the ruling class. I.E. insider trading and mortgage fraus to name a few.

Regardless of side, we now have one coin. And both sides are seeking the same solution through two different arguments.

Heads, one side argues that the government deserves equity in a company because Congress and President voted to give money to a company to protect Americas financial and security interest. That the money given deserves a return to satisfy the taxpayers and ensure that the company lives up to its obligations. Who wouldn’t want a return on their investment and encourage corporate leaders to be good stewards and protect Americas interests?

Tails, we get an emotional plea urging equality and redistribution of the country’s wealth. Without the government regulating, controlling, and having an interest in the company it would create division and unfair outcomes for the underserved in society. That with governments help, we can preserve our future and protect Americas interest by creating a partnership that benefits all citizens. Yet, that partnership exists in spades. No matter what that company makes in income after expenses, the company has a partner that has never put in one penny, risked capital or had to make payroll. That partnership is forced through taxes on profits, employment taxes, forced benefit packages etc.

While different sides of the coin with different reasoning to justify the same outcome, neither side is on solid ground. If the American people allow congress to flip this coin, we will get the same outcome. It is dangerous and will lead us closer to a state-run socialist economy and will only compound the disaster we inherited from the 2008 crisis.

I would rather face the tough reality of failure and bankruptcy and live in a country that protects and promotes the individual’s pursuit of happiness, protects private ownership and limits government and promotes individual liberty and free markets. It is what built this country and made it the Greatest Nation the World has ever seen.

I have all the confidence in our citizens under a limited government protected by our Constitution.  Remember a government big enough to give it is also big enough to take it away. Let’s reward success, encourage doers, never stop trying and let failures fail. The lessons learned are worth the journey.

As for national security, our elected officials should do everything they can to make it so rewarding and prosperous for businesses and entrepreneurs that there is no other place they would want to be. They will go to the ends of the earth to protect that freedom and opportunity. And by the way, it already exists, and it is protected by the Constitution of the United States of America. And we are blessed we call it home.

As the famous astronaut and future CEO of Eastern Airlines Frank Borman once said, “Capitalism without bankruptcy is like Christianity without hell.”

The future will challenge us, and we will face tough times. Yet, with nearly 250 years of history and our constitution in hand, we are well prepared and have roadmap to guide us through the next 250 years.

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 August 15, 2025 appeared first on DeGroote.

What does it mean – The key takeaway from this report is the recognition that the stronger growth was fueled by the decrease in imports (-30.3%). These are subtracted in the calculation of GDP. This means net exports component contributed 4.99 percentage points to Q2 GDP growth.

Since first announced on April 2^nd, just four short months ago, they have contributed to record revenue and massive investments in the US. Like many Americans, we can’t wait for the jobs to follow driving more consumer spending, growth, and economic freedom.

Nonfarm payrolls growth was much weaker in July than expected…Bureau of Labor Statistics (BLS) revised down May and June by 285,000.

What does it mean – The numbers are weaker than expected. Mostly stemming from uncertainty around the tariff issues. Yet, the unemployment rate was decent at 4.2%, but the U-6 unemployment rate, which accounts for underemployed workers, jumped to 7.9% from 7.7%, the labor force participation rate went down, and people unemployed for 27 weeks or more increased to 24.9% of the unemployed from 23.3% in June. These are both significant numbers.

The key takeaway from the report is really a question. If these numbers are correct why wont the fed lower rates? It is a concern for all watching the discrepancies at the BLS and Fed. It again raises the concern that the Fed and BLS have their own agenda.

Remember, prior to the election in November of 2024, this very same BLS pumped up the job numbers by over 800,000 and the Fed lowered interest rates when things looked great according to the BLS. Now with the shoe on the other foot, both the Fed and BLS are acting completely opposite and may be caught red handed picking sides. One has to ask if this data was available a day earlier, would the Fed have dropped rates?

Total retail sales increased 0.6% month-over-month in June…Excluding autos, retail sales rose 0.5% month-over-month.

What does it mean – Americans felt pretty good about things in June. Sales picked up fairly broad-based across all retail following declines in April and May. The June report also showed increases in discretionary spending activity, such as autos (+1.2%), apparel (+0.9%), building materials and garden equipment supplies (+0.9%), and food services and bars (+0.6%).

First time since 1933…For the first time since 1933, two Fed governors, Christopher Waller and Michelle Bowman, dissented from the decision not to change rates and openly preferred cutting the target for short-term rates instead.

What does it mean – Powell’s term as chairman runs out next year. He has been a political hack for big government and the oligarchy of “big Banks” that the left claims to hate. Yet, the hypocrites like AOC and Bernie jet set on private planes as they go around the country gas lighting Americans about the evil of the very oligarchies their policies have created. All while they and their socialist cohorts shake down private industry for massive donations to their PAC’s and political apparatus.

While Fed members Waller and Bowman are openly and aggressively pushing for rate cuts, it may be of little help. Trump wants reform not just compliance. The Fed has gotten too big and to powerful and now struggles under the weight of its own policies and the bureaucracy it has created and is limiting its ability to do what it was originally designed to do.

Brian Wesbury of First Trust wrote the following this past week due to the news about the fed and in response to the numbers that keep validating cuts by the Fed.

“One reason for all the drama is simple: the president loves drama, and if you get elected president and like drama, then you’re allowed to generate drama.  Politics 101.

A second reason is that the president wants to play many candidates against each other so he can get the best deal from the one he picks, the one most likely to be more open to cuts in short-term rates, but who would also maintain the confidence of the markets that inflation would remain contained.

But we believe there may also be a third reason, which is that the president could be looking for a Fed chief who will reverse the disastrous decision originally made by Ben Bernanke (supported by the votes of Warsh and Bullard) almost two decades ago.

That decision was to abandon the system of implementing monetary policy by managing the scarcity of reserves in the banking system, which resulted in market shifts in short-term interest rates, and instead launching quantitative easing, leading to (over-) abundant bank reserves, and then directly controlling short-term rates by paying banks interest on reserves, a system that’s led to the Fed itself running massive operating deficits.

Think about it.  For better or for worse, no president in our lifetimes been more willing to use his political capital to review and change the way Washington works.  USAID, the Department of Education, the Census Bureau, colleges that rely on federal largesse have never seen such rapid-fire changes.  We would not be surprised if the Fed is next.”

I believe Brian Wesbury nails it. Over the last few years, I have written many times about the overt hypocrisy of the Fed and fraud that has been laid upon the American taxpayers as the largest banks have been enriched by both sides of the aisle.

Banks have enjoyed record profits while American taxpayers have shelled out $ hundreds of billions to them only to watch “big Banks” become more powerful, debank conservative organizations, gun manufacturers, and defense companies and a number of individuals who spoke out against COVID and the massive overreach of government, all while the small local and regional banks that actually originate 70% of real estate loans and business loans have seen their numbers shrink due to the undue pressure put on them by politicians claiming to want to stop the “Oligarchy”. “Too Big to Fail” and never-ending fearmongering by weak-kneed politicians and Fed Chairman Bernanke forced the idea of using the banks to reverse the cowardly actions they took that we, the American taxpayer, are now paying the price for. Remember Dodd Frank? Two Leaders who got sweetheart deals and then made news trying to fix what they and DC broke…That sure sounds familiar. Unfortunately, the same creatures of fear and pedigree are still running the biggest handout and charity program in the history of America. You can thank Powell for perpetuating this and growing it to well over $200 billion a year.

The good news is we have a few Congressmen like Chip Roy, Warren Davidson, Andy Biggs and several others along with Senators Ted Cruz and Rick Scott who recognize the massive waste and fraud and are pushing to remove the Fed from paying interest to banks on their reserves. Remember this was passed in the 11^th hour by Bush and put on steroids and became an economic power grab by Obama. It was meant as an emergency action to shore up the banks short term. I.E its name “The Emergency Economic Stabilization Act of 2008”. Yet, like everything in DC, if it generates revenue, tax it, if it can be regulated, regulate it, if it works, break it. I think the elected moron forgot why they got elected. Keep government efficient, small and out of out business!! There are 195 recognized countries in the world. Yet, there is only 1 that has a constitution designed to limit government and keep you free to pursue your happiness.

Are we asking the right questions? Brian Wesbury makes it very clear and raises an amazing point. Congress, the Fed, the Senate, none have raised this point or have done anything about it. Through incredible connections and hard work, Brian Wesbury was able to propel this issue of paying interest on bank reserves through Charlie Kirk, Steve Bannon and others. Their programs cast a bright light on the hypocrisy of DC and the massive fraud banks have been getting away with since 2008 due to the help of Bernanke and Powell and the common thread that crosses over party lines…Massive amounts of donations from the banking sector to politicians and their PAC’s.

Brian asks us all to, “think about it. For better or for worse, no president in our lifetimes been more willing to use his political capital to review and change the way Washington works.  USAID, the Department of Education, the Census Bureau, colleges that rely on federal largesse have never seen such rapid-fire changes.  We would not be surprised if the Fed is next.”

It might be time to think about what the Genius act will do and what it means to us all? How will Stablecoin work and what does it mean for investors in digital currency? Will demand continue to drive the value as more people convert to using the Stablecoin? Is the concept of the Stablecoin creating another fiat currency to create demand for more U.S. debt as it is required to be backed by U.S treasuries or dollar denominated securities? Central Bank Digital Currency. Is this the end game and is the Genius act paving the way and allowing the stable coin concept to simplify the transition to a digital currency becoming the gateway to more government control through your digital wallet? Remember what happened to our neighbors to the North.

Recently Tether froze clients access to their digital currency. This further proves the point that this may be the ultimate gateway drug to Big Government. It has happened several times and continues to be an issue as the process for the government has been made much easier for them to freeze assets, further reducing individual liberties and violating many of our rights. It truly is an attack on democracy by “Big Government”. Below is the link to an article titled “Tether’s $24M Freeze Proves Gov’t-Compliant Stablecoins Are Just CBDCs With Better Marketing” by The Free Thought Project.

Government Freezes Digital Currency

Transactional Gold. Several states have already approved transactions in Gold, and this will eliminate the taxation of gold transactions for payment, not to mention it is Constitutional!!! If done correctly it solves many issues and will strengthen our currency, fight inflation, and provide a choice for all. Truly giving you economic freedom. Due to the constitution it solves many of the issues a digital currency is trying to solve but can’t. Taxes!!! Got to wonder why the Fed and many of the biggest banks and most in government fear transactional gold more so than the ability for the government or a digital bank to shut your account down and cut you off from your finances?

Freedom scares those (elected and unelected) who lose power and control when you are put in charge of your own destiny.

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 August 8, 2025 appeared first on DeGroote.

Unemployment falls to 4.1%… The June Employment Situation Report featured a decline in the unemployment rate to 4.1% from 4.2% and a relatively solid 147,000 increase in nonfarm payrolls.
What does it mean – While the labor force participation rate decreased to 62.3% from 62.4%, overall, the numbers point to a strong labor market.

The median sales price decreased 2.9% yr/yr to $401,800… Yet the average sales price increased 1.1% yr/yr to $501,000.
What does it mean – At the current sales pace, the supply of new homes for sale stood at 9.8 months, versus 8.4 months in the year-ago period. From the data, it looks like buyers are getting squeezed. Rates are up and more of their paycheck is going to pay for the mortgage, insurance, and taxes than ever before. According to recent figures the average buyer is putting out over 46% of their monthly income to pay for their housing. Historically that number was roughly 1/3 of one’s household income.

The key takeaway from the report is that the pace of sales remained near the lowest level of the year with sharp decreases in sales in the Northeast and the West masking the gains in the Midwest and the South. There was quite a bit of pressure on the median selling price, as homes priced between $300,000 and $399,000 accounted for 35% of all sales (2025 high), up from 25% in May. Good luck trying to find a single family home in that range in Southern California.

Factory orders surged 8.2% month-over-month in May… After a tough April and all the fear of tariffs, factory orders are on a run.
What does it mean – The key takeaway from this report is that business spending picked up in May. US manufacturing saw much improved activity following the pause on reciprocal tariffs announced in April and the subsequent de-escalation in the U.S. tariffs.

Is it inflation?… Or could it be massive government regulation and overreach and a fed a government that printed massive amount of money devaluing your $dollar?
What does it mean – When I saw the chart below and looked at the goods, services and wages that have seen the highest inflation and increase in costs and reduction in quality and could not help but to see governments hands all over it. Since 2000 we have seen a massive increase in the cost of services and goods the government has inserted itself in through more control, regulation and mandates.
• Hospital Care up nearly 275%
• College tuition is up 190%
• Day Care and Pre K care up 150%
• Medical and Health Care up 140%
• Hourly Wages up 125%
• Housing up $120%
• Food expenses up 100%

Since 2000 everything the government has injected itself into through increased regulations from healthcare, lending, hourly wages, food and housing has led to massive increases. While not the sole issue driving up costs, it is one of the main factors across goods and services highlighted below.

This is further proof that continued encroachment into the private sector by big government and the new version of communism trumpeted by AOC, Bernie, the squad, and now the candidate for Mayor in NY, also known as Democratic Socialism, will continue to lead us to inferior services, higher costs, and a slowing economy, hurting every citizen. Government run stores and housing is not the answer. It is theft. America, stop the steal!!

Let’s roll America!!

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

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 July 25, 2025 appeared first on DeGroote.

What does it mean – Tariffs, Trade deals, re-onshoring or onshoring, foreign investments, aircraft sales, manufacturing expansion, steel manufacturing, deregulation, DOGE, etc. All adding to rising wages.

CPI was up 0.2% month-over-month…The consensus was 0.3%. Following a 0.1% decline in March. This is the smallest 12-month increase since February 2021.

What does it mean – The economic pundits will pontificate the meaning of tariffs and inflation and still get it wrong if they don’t stop buying into their own fearmongering and biased ideology. Not sure how many times we have to say it, “inflation is about money supply.” It is about printing money. And yes, The U.S. printed a heck of a lot over the last 18 years. Per our previous letter we printed $68 out of every $100 in circulation today in just the last 18 years. Yet, when it comes to inflation, the economic pundits are once again getting it wrong. Here is a look at money supply. Meaning how much is actually in circulation.

Money Supply is flat…According to the FED M2 money Supply has been fairly flat for the last 24 months.

What does it mean – As seen in the chart below, M2 is flat, yet a bit worrisome as we see the short-term trend is still an issue but is flattening as of late. Don’t forget $9 trillion in debt is coming due and an increase in the debt ceiling is probably going to happen.

Currently the falling inflation flies in the face of nearly every pundit’s prediction. Inflation is slowing down, personal income is up, tariff revenue at record levels, we are managing through this “trade war”. We are debating the “Big Beautiful Bill.” Yet monetary policy continues to throw off the pundits.

While tariffs can result in higher costs for items being tariffed, it does not mean the overall economy is experiencing inflation. Tariffs do not change monetary policy or increase or decrease the supply of money.

For instance, if you earn and spend $1000 every week and the cost of gas in CA is almost twice as much as the rest of the country over the last 6 months, it does not mean you have inflation, just less money to buy other goods and services. This puts downward pressure on those other items as fewer things are purchased since you have less money because CA has a bad fiscal policy and is over regulated and has increased gas prices through taxes similar to tariffs. Net, net, there is the same supply of money(M2) in the economy resulting in low or no inflation.

Tariffs bring in record revenue for second month in a row…Since initiating Tariffs in April, the US has collected back-to-back record revenue and we have seen very little inflation.

What does it mean – Following up a record $16 billion in April with over $23 billion in May the treasury is adding record revenue. Assuming that everything stays as it is, this will bring in over $276 billion to the treasury. Unfortunately, this won’t even pay the interest on the $36 trillion in U.S. debt. At the same time the U.S. is seeing a surge in foreign investments. Yet, the very people who insist upon more social programs and more government spending are the very same folks who do not want fair trade and are willing to raise your taxes and subsidize foreign countries at the expense of the American citizens. HMMM.

The Gordian Knot – Who will rule Asia? The consumer or the supplier? Will U.S. politicians obfuscate their responsibilities to the courts, or will they be Courageous, bold, creative and act decisively?

What does it mean – Most of Washington DC, the media, nearly every pundit, elected, unelected bureaucrat, and the so-called experts continue to prove to the American people they are truly insane. Albert Einstein said it best, “doing the same thing over and over and expecting different results is the definition of insanity.”

Solving complex problems takes courage. Often requiring a solution that may not involve traditional methods. In Greek mythology, The Gordian Knot refers to the legend that anyone who can untie the knot would rule over Asia. HMMM!!! Interesting!!

In this story, King Gordius tied an intricate knot on his chariot’s yoke and dedicated it to Zeus. The myth goes on to say that an oracle foretold that whoever untied the knot would rule Asia.

When Alexander the Great visited Gordium, he took on the challenge of the Gordian knot. Instead of trying to untangle it, he cut it with his sword, fulfilling the prophecy and then conquering much of Asia.

The phrase “cutting the Gordian knot” has evolved to mean solving a complex problem in a bold, creative, or decisive manner.

Today we face a new Gordion Knot. And like the one created by a politician, King Gordius, this one was also created by politicians. And the results very well could be the same. Only this time, our Gordian Knot is the disaster of multi-lateral trade deals that have devasted the American worker, American manufacturing, agriculture, and the American farmer.

Upon further examination of these deals and living with the abhorrent results for nearly 50 years and continuing to double down on stupid and lazy, one could easily conclude that multi-lateral trade deals may have been designed to make life easy for politicians, too lazy to do their job and protect the American businessman, consumer, and most importantly the American Dream. And here we are, roughly 2,400 years later and Asia is in play once again as Freedom is challenged by the pundits and ruling class.

Our merry band of “big mouth courageous midgets” are a perfect example of talking oneself and our nation into a “Gordian Knot” over the fear of tariffs, the massive expansion of government, or trying to rid our government of waste, fraud, and abuse, or a self-made immigration problem that has overwhelmed social services, our schools, hospitals, law enforcement, water, electrical, and housing resources, jeopardizing and essentially delaying at best the American dream for your children and grandchildren.

Alexander the Great’s unconventional, bold, and decisive move achieved the desired result quickly and effectively and he went on to conquer most of Asia.

This timely illustration echoes past lessons we should all learn from and recognize the wisdom of action vs. endless babble and never-ending congressional testimonies that tie us up and take our eye off the prize. Will Congress act decisively and “rip the band-aid off?”

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 30, 2025 appeared first on DeGroote.

What does it mean – General George Patton once said, “If everybody is thinking alike, then somebody isn’t thinking.” The markets are always looking for a reason to move. It could be valuations, earning reports, shift in policy, and often sentiment driven by fear of missing out (FOMO) or plain old fashion fear mongering are just a few examples. It was just over a month ago we saw the media report a false story sending the markets skyrocketing one minute and collapsing the next. After a month of media backfires and lack of basic economic understanding, we are right back where we started. The traditional media like CNN, MSNBC, ABC, CBS, NBC and others have still not figured it out.

Winston Churchill famously said, “Success is not final, failure is not fatal: it is the courage to continue that counts.” “The courage to continue that counts.” Don’t give up on your future because fear mongers scare you out of the markets or stomp on your dreams. Remember you are either a doer or a thinker. And while there will be mistakes it is the lessons learned from doing that fuel the fire of innovation and determination. Sallie Krawcheck once said, “If you’re not making some notable mistakes along the way, you’re certainly not taking enough business and career chances.”

Budget impasse…Republicans are at an impasse as many are hooked on crack just like their Democratic colleagues. Several deficit hawks are holding up the budget as spending has skyrocketed under previous administrations and justified by the Fed artificially keeping rates low, “fear of too big to fail”, and most recently the “pandemic”.

What does it mean – In 2020 we saw the Federal Budget explode due to the Chinese Wuhan Virus also known as COVID.

Congress allocated additional funds that increased the spending in 2020 from roughly $5.3 trillion to over $7.1 trillion. Yet now that we have recovered from the Wuhan virus for nearly three years according to almost all economic data, like Biden, Congress has been missing at the switch for the last three years and allowed the unelected bureaucrats to run wild with the American Taxpayers check book.

In Ecclesiastes (1:9) King Saul said it best, “there is nothing new under the sun”. He pointed out human nature has not changed for over 5,000 years. Today is no exception. As for the American experience, the last 50 years is no different. Take any two-, three-, five- or ten-year period and America continues to expand and grow revenues to the treasury through taxes as consistently as our leaders find more reasons to increase government dependency. As revenue continues to go up, spending on social programs continues to increase at an unsustainable rate, far faster than revenues are growing.

Like a heroin addict, giving an elected or unelected official more supply of the drug they are addicted to, the worse they get. It is why giving needles to drug addicts is destroying California, specifically San Francisco, LA, and other drug sanctuary states and cities. The difference in State capitals and Washington DC the drug of choice is the American Taxpayers ability to put up with their nonsense. Or better said, our willingness to trade our individual liberties and economic and personal freedom for a perceived promise that government will make your life better and cost you nothing. Reality check, your elected officials cannot legislate your happiness or economic security without wealth redistribution. But they can protect the constitution that does protect those rights and your opportunity to pursue your dreams.

While we have let Congress and Presidential administration after Presidential administration circumvent our constitution and Congress through executive orders in the name of expediency and fear mongering, we have allowed them to turn the federal government into a mega charity dolling out the evil of indebted servitude, further tying our children, grandchildren and their grandchildren to the yoke of government. If the taxpayer wanted to donate to a charity or cause that they care about, they can. Yet, somehow Congress has seen fit to fund massive social programs and NGOs turning America into the world’s largest charity without your consent through a budget process that allows most elected leaders to never be held accountable to their actions. It is high time we demand single issue bills for every budget and law. If Congress can name a post office as a single-issue bill, they can certainly write a single bill funding an issue at the taxpayers’ expense. Instead, we take the easy way out by concealing waste, fraud and abuse in bills that are 1,000 pages long that no one is capable of reading or comprehending hours before being forced to vote on it.

This nonsense has led to the massive growth and unbearable burden on taxpayers and massive size of government, while the quality of leadership in government often fails the very people they serve. You get what you vote for. And when you vote for people who pass rules that are for you but not for them, it is a pretty good sign you are going to get hosed. Don’t worry Congress on both sides of the isle will make sure that insider trading for them is legal and justifiable as they “have given up so much to serve.” What BS. They work at the pleasure of the voter.

Fed holds steady…As expected, the Fed held rates steady, but the FOMC meeting marked a notable shift in tone.

What does it mean – Powell underscored the uncertainty surrounding the duration and impact of tariffs, stating, “I don’t think we can say which way this will shake out.” While noting that the labor market remains strong, he pointed to a sharp decline in consumer and business sentiment.

What he really is saying is he is lost, confused, and afraid of the truth. He is frozen, unable to act. Torn between his political leanings and his responsibility to the people. Rudderless at best. He knows he inherited trouble from Ben Bernanke and his term has been a doubling down on stupidity. He is one inch away from his “let them eat cake” moment and does not even realize it.

With nearly $37 trillion in debt and interest payments accounting for nearly 17% of the budget we are now borrowing to just pay the interest alone.

Moody’s downgrades US Debt…What will this cost the American taxpayer as credit risk adds to the cost of borrowing?

What does it mean – We saw an immediate reaction to the mortgage market as the price of loans moved up to 7% immediately following the Moody’s downgrade to U.S. debt. As over $9 trillion is set to come due this year it puts the fed at odds with every American man, woman, child and family that must live within their budget.

This might be the perfect time to doll out a good dose of castor oil and flush out the system. Years of cheap money and lack of oversight and transparency have led to getting exactly what we voted for. A bloated feckless elected legislature.

According to Brian Wesbury of First Trust, over the last 18 years we have created 67% of all dollars in circulation. Meaning that in the prior 230 years, with better understanding of civics and critical thinkers applying a strong adherence to the constitution, Congress was much more responsible creating only 33% of those dollars in circulation during the first 230 years of our nation’s existence.

In an act of desperation, fear and a lack of conviction from Fed Chairman Bernanke and President Bush’s inability to grasp the reaction to the lack of oversight by congress over the Fed and Treasury, we have printed our way to legislative overreach and an out-of-control Federal Reserve.

In 2008 Congress passed and President Bush signed into Law the Emergency Economic Stabilization Act of 2008 that ushered in the ability for the Fed to circumvent Congress and now run deficits and pay out massive amounts of money to banks on their reserves.

Yes, get mad, seek the truth. You are paying the banks over $200 billion a year in interest and will on its way to $300 billion if everything stays the same. All while the banks make record profits. This is not only a bailout but an example of corporate welfare at the expense of free markets, capitalism and you, the taxpayer. This will continue until congress gets some cojones to undo what they passed.

But it even gets better. Due to this program the Federal Reserve that is under the oversight of Congress is losing $billions every year as they are paying out more than they earn on the reserves. Yep. And they won’t even answer questions from Congress on this.  What is even funnier the “smartest people” in the room had to rename what all of us would call loan or IOU. That’s right, when you get caught call it something else or change the definition. The Fed can’t or won’t call it a loan. Yet, when you lose $billions every year who is paying to keep the charade a live and running?

Deferred Asset – Today the Federal Reserve calls the IOU or loan a deferred asset.

What does it mean – The Fed is crazy. And yes, we can all use a great laugh. The word Jujitsu is awesome. I would expect nothing less from the very best bankers who have found a way to legally embezzle nearly 2/3 of their net profits from the American Citizen. Simply put, the Fed creates a “deferred asset,” which is a negative liability whose value is the cumulative value of the shortfall in earnings. Folks, only in government or now in the Fed as Congress has allowed this to happen through lack of oversight and what may be the second worse bill in the history of the American Monetary system to self-regulate and create money from thin air and stick you, the taxpayer with another massive loss so they can fund their pet projects and DEI initiatives throughout the world.

Another perfect example of why we need to audit the Fed and support Clinton’s Reinventing Government (RIGO), continue Obama’s campaign “to cut wasteful spending”, and Trumps DOGE. Three iconic leaders committed to transparency and making our government more accountable, efficient, and committed to rooting out waste, fraud and abuse at every level of our Federal Government.

Prior to passing the Emergency Economic Stabilization Act of 2008, political contributions from Commercial banks totaled just over $20 million to politicians during the 2006 election cycle according to Open Secrets. In the 2008 election cycle those very same banks contributed over $40 million. Today it is over $60 million per election cycle split almost equally between democrats and republicans. Congress, the optics are terrible. For just over $112,000 per member of Congress, it is no wonder this will never get removed from the budget. And the worst thing about this is you are funding the donations that are destroying capital creation and adding to the regulations that create a “moat” around the very largest and most profitable banks. The architect behind many of Obama’s policies was spot on when he famously said, “Never let a good crisis go to waste.” It is one heck of a cozy relationship both Congress and “Too Big to Fail Banks” are enjoying.

Here are the two charts that tell a picture that will bring every American together to end this fiasco.

Above you can clearly see that Fed reserves were a bit less than $1 trillion prior to the passing of the 2008 Emergency Economic Stabilization Act allowing the Federal Reserve to pay its member banks.

As rates went up the amount of reserves to the Fed went up and peaked in 2022/23 when rates peaked at 5.4%. As rates started to come down bank reserves also started to fall off.

A nail in the coffin for Small Banks…The massive printing and bail outs during the “too big to fail” housing crisis resulted in exactly what every free-market economist said was going to happen. What they never saw or refused to believe is that this legislation would shrink the banking sector by nearly 50% and effectively legislate small banks out of existence as the barrier to entry and cost of maintaining compliance, and regulations became too expensive. It forced consolidation and outright closures to many small banks.

What DC forgot was that nearly 70% of real estate development loans are done at the local level through local small and mid-size banks. As for small business loans, small banks originate the majority of small business loans.

It makes sense. The local small bank knows the community and what the actual community can handle and what the borrowers are capable of. For most of us we are just a number as large banks shy away from business lending as it requires work and local knowledge that large banks do not possess.

Since the late 80’s as the Federal Government and lending has seen massive increase in regulations and costs associated with those regulations the big got bigger and we have seen over 72% of the nearly 15,000 plus banking institutions disappear as of the end of 2023. While many are due to mergers, bankers and entrepreneurs face massive expenses and costs when they go to charter a new bank. The increase in regulations, costs to cross borrow from large banks and meeting federal lending requirements put small communities at risk as banks are priced out by regulations. See the below chart.

This has resulted in the true cost of capital going up for businesses and borrowers, suffocating entrepreneurism, less competition and less access to lending and a huge void in lending that has been filled by private credit-cost borrowers much more than it should. All a cost to the economy due to the lack of trust or fear of market corrections.

Let’s say what it is. The Emergency Economic Stabilization Act of 2008 is corporate welfare that has resulted in a slow move towards fewer banks much like what has happened in Europe. Due to Congress and the last few administrations, we are moving our banking system top one that will one day soon resemble the chaos, lack of choice, and the reality of debanking that Europe and Canada are currently experiencing.

This bill may have settled the markets during the 2008 housing correction, but its good short-term intentions have gutted main street, suffocated the creation of capital, increased the cost of borrowing for small businesses, and put another nail in coffin of the small banking sector. It is destroying competition and significantly reducing the much needed capital for the very engine of our economy that hires and creates over 70% of the jobs in America. Regional and small banking is small businesses that leads to big business and economic freedom and the pursuit of every Americans dream.

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 16, 2025 appeared first on DeGroote.