What Elon and Trump’s Economic Crash Could Look Like

I figure after coming back from the worst work break of my life and writing about my five-year-old soulmate dog’s sudden, tragic, and still beautiful death, I would get back into the swing of things with a cheerier subject: pondering the collapse of the global economy.

I am become Cassandra. This has been my brand since Trump became president and I have covered the market beginning to recoil in horror. Now that I am in mourning, I am assuming her mythic figure as my own as a coping mechanism. Not financial advice, as all these articles are, but I feel in my bones that based on how many economic levers Elon and Trump are breaking, something fundamental in the economy will crack by 2030 or so (why that date? Look at the difference recently between the five-year and below Treasury Notes versus the seven-year and above).

I couldn’t tell you when or what it will be–no one could, that’s the very nature of crises–but ever since this DOGE coup began, my finance and political science degrees have been sitting in the corner of my office, screaming at me that that this level of destruction by President Musk and pretend president Trump cannot endure without hubris intervening at some point.

Now before jumping into the uplifting transition of full-blown global economic collapse, I should begin this with another obvious disclaimer that every market participant understands: betting that the market will go down is a terrific way to go bankrupt. The odds are very good that the stock market will be higher in a few months than it is now, and I am not trying to steal Dr. Doom’s brand here of timing my Cassandra prophecies. This is a thought exercise trying to paint a picture of what a swift economic crash may look like based on what we know right now, because I do think the outline of a clearer picture is really beginning to emerge. There are existing fundamental weaknesses we can point to like the worst housing market in thirty years, so this isn’t just a partisan exercise in what getting these fuckers on the wrong side of public opinion might look like. They’re breaking things and the smartest money in the world is calling them out on it right in the open for everyone to see.

Reality Check Season

I am willing to bet my entire April salary that the April jobs report is going to be a horror show (to define it, worse than the one in August that activated the undefeated Sahm rule in predicting recessions). The March jobs report will not contain the full brunt of Elon’s cuts to the government, leaving the market to continue chopping through its current blissful ignorance of assuming we’re still under the economic regime of Sleepy Joe and an exciting new technology. The first unambiguous indication that Elon is doing real damage will show up in a jobs report that in no way, shape or form, should be positive. You simply cannot cut that many jobs from America’s largest employer without it hitting the jobs numbers hard. This is the kind of math you could explain to a 2nd grader. At least 1,000 people at the Internal Revenue Service in Kansas City are being laid off, and KCUR reports that there are simply not enough jobs in the city for all these laid off workers. Dr. Donna Ginther, Director of the Institute of Policy and Social Research at the University of Kansas, told KCUR that “as unemployment increases, we could face an economic downturn.” This dynamic is unfolding to varying degrees in every city who depends on America’s largest employer, the federal government.

This horror show could spook the markets. It could not. Markets are really good at doing the Wile E. Coyote thing of running off a cliff for a very long time, but not falling until they notice there is no substance beneath their feet. Maybe markets look down then, maybe they don’t, but in a couple months, the market will be forced to look at Elon’s cuts in a new light. April 4th, mark it down on your calendars, folks. Reality check season begins.

There are reality checks unfolding across the oceans too, and I’m not even going to have time to get into Trump’s trade war with Europe that seems designed to hurt American farmers. A new Reuters/Ipsos survey of Japanese firms found that a staggering 86 percent believe that Trump’s policies will negatively affect their business. I can already hear the know-nothing MAGA contingent saying who cares, but every single market expert I have ever met or been educated by keeps a very close eye on America’s biggest foreign investor. Japanese firms employ over a million Americans, pay $107 billion in wages, and invest $13 billion into U.S. research and development. They own $1.1 trillion worth of U.S. Treasuries (and they trimmed them a little in the 2nd quarter of last year–China too–our second-largest holder of Treasuries). USDJPY is what the sharps look at while the rubes like me write about the two-year and ten-year inversion. Japan is a big deal, and if they are going to pull back investment in the United States to any significant degree, watch out.

They’re not the only major foreign investor we should be worried about either. China’s economy is slowing, driven by a housing market looking more concerning by the day. “If anything, the property numbers are even worse than we were expecting,” said Hui Shan, Chief China Economist at Goldman Sachs. “We thought this year property sales would be down 10 percent compared to last year. But it’s on track for 20 percent decline year-on-year. And what really made the difference is consumption. It was stable, but now we’re seeing for a few months that consumption is slowing. Retail sales in the month of August only increased 2 percent from a year-ago levels.”

Goldman Sachs reduced their growth target from five percent to 4.7, and while a mere 0.3 percent difference in expectations may sound miniscule, for China’s GDP, that equates to $53.37 billion. Imagine if U.S. analysts just took Rhode Island out of their calculations and treated us as having 49 states, that’s roughly the equivalent of the downward adjustment in expectations for the manufacturer of the world. It’s not massive, but it’s certainly the size of a snowball that could roll down a hill into something bigger.