Happy 250th America…Let’s Celebrate all year long!!
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.
- CA has spent over $24 billion on solving homelessness only to see homelessness set records and exceed almost all states combined.
- CA spent over $9.5 billion on healthcare for illegals in 2025 and it is only going up.
- 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.
- 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
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