Is the Economy Heading for a Downturn? Trump’s American Dream

Hello everyone, welcome to “Tang Qing’s Current Affairs.”

Today we have some interesting topics to discuss – China’s prices are not rising but falling, the shadow of deflation is becoming heavier, young people are even “begging in groups” in the ancient city of Dali. What’s going on exactly? On the international front, the United States has just handed a $24.4 billion pandemic bill to the CCP, how significant is the impact? And Trump has a “American Dream,” will it bring prosperity or crisis? Let’s uncover these together!

Let’s start with China’s deflation issue, which has become increasingly apparent recently.

In February, the CPI, the Consumer Price Index, dropped by 0.7% compared to the previous year. What does this mean? Simply put, prices are not only not rising but starting to fall. Moreover, this is the first time in over a year that the CPI has turned negative.

Many may think that falling prices are a good thing, right? But in economics, this is actually a dangerous signal – it reflects weakened consumption and shrinking demand. When people are unwilling to spend money, and businesses hesitate to invest, the entire economy starts to deflate.

Looking closely at the data: urban CPI is decreasing, as well as in rural areas; food prices plummeted the most, down by 3.3%, non-food items are also down; prices of consumer goods and services are all declining. In simple terms, prices for food, daily products, and services are all decreasing.

More worrisome is that the downturn is not only affecting consumption but production as well. In February, the PPI, the Producer Price Index, dropped by 2.2% compared to the same period last year, marking over two consecutive years of negative growth. Prices at which factories sell goods are dropping, highlighting a chilling effect along the industrial chain.

Of course, the Chinese National Bureau of Statistics has come out to explain, saying this is due to the Lunar New Year holiday shift, as last year the holiday was in February, while this year it was moved up to January, leading to a high base number comparison. But many economists warn: even if this factor is removed, deflation pressure still exists and is significant.

Ironically, while the CCP government is calling for “boosting consumption,” they have also set a goal of “GDP growth of around 5%.” Li Keqiang mentioned in the government work report that it relies on the government increasing borrowing, boosting domestic demand, and stabilizing growth. However, the reality is that as soon as the policies were introduced, the CPI turned negative. Isn’t this a contradiction?

Not to mention, external pressures are also mounting. With a series of new tariffs from the United States, China’s export growth has significantly slowed down. Exports from January to February only grew by 2.3%, far below expectations, and analysts predict it will become even more challenging in the future.

Economists are even more concerned that if stimulus policies are not effective and domestic demand cannot be boosted, China might fall into a long-term vicious cycle of low prices, shrinking consumption, and insufficient investment.

After discussing China’s deflation pressures in the economy, let’s take a look at a social phenomenon domestically – young people are actually “begging in groups” in the ancient city of Dali, what’s the story hidden behind this?

In the ancient city of Dali in Yunnan Province, a group of young people has collectively taken to the streets to “beg.” This is not a joke, they are actually sitting on the ground, holding up signs with the words “begging,” some saying “need rice,” others boldly proclaiming themselves as “professional beggars.” There even exists a “begging group,” with over eighty people in it.

The “Xiaoxiang Morning News” interviewed one of the participants, Mr. Yang. He mentioned that initially there were only five or six people sitting, and within less than ten minutes, the group had grown to over twenty people, with passersby even joining in. What’s more absurd is that people actually scanned QR codes to send money, varying from five to ten yuan, and there was even someone who donated one hundred yuan.

Why would seemingly normal people choose to sit and “beg” instead of working? Mr. Yang explained that this is a form of “rebellion” and a response to reality. He felt that just as others could set up stalls to sell alcohol, tarot card readings, or fortune-telling, “begging” could also be considered a new form of street performance.

This situation may sound absurd on the surface, but it’s actually quite thought-provoking. Many young people are becoming increasingly disillusioned with the current way of life but are unable to find a genuine way out. They are neither deceiving others nor breaking the law, just expressing their anxiety in an exaggerated manner.

Online reactions have been diverse: some find it novel, others think it’s “too abstract,” and some straightforwardly state that this is the real China, no more talk of “economic recovery.”

In response, the management authority of Dali Ancient City has taken notice and dispatched personnel to advise. But in the end, can you advise away a widespread feeling of anxiety?

When the youth of a country begin to consider “begging” as a social activity, a means of expression, even a way of life attitude, what kind of deep sense of helplessness lies behind this?

Looking at the international scene, there’s been major news recently: Missouri in the United States has won a lawsuit against the CCP over the pandemic. This is “another heavy blow from the international community holding the CCP accountable.”

Back in 2020 when the pandemic erupted, Missouri directly sued the CCP, stating clear reasons – they intentionally concealed the virus, misled the world, and hoarded medical supplies, leading to global chaos and substantial economic losses.

This case has been ongoing for nearly five years, and on March 7, the federal court in the U.S. formally ruled – Missouri emerged victorious.

The court judgement mandates that the CCP government must compensate – note, nearly $24.4 billion, plus interest. And the defendants include not only the CCP but also the National Health Commission, Ministry of Emergency Management, Ministry of Civil Affairs, Hubei Province, Wuhan City, and the Wuhan Institute of Virology, all listed.

This is the first time a U.S. court has made a formal ruling holding the CCP accountable for the pandemic. The Attorney General of Missouri also firmly stated that this marks a milestone in the U.S. holding the CCP accountable. They even intend to directly seize CCP assets in Missouri for compensation, including farmland.

Yes, they intend to seize CCP-owned farmland in the U.S. This action isn’t symbolic but a concrete operation.

Naturally, the CCP immediately opposed this move, with the Chinese Embassy in the U.S. issuing a statement saying the ruling has “no facts, legal basis, or international precedence,” basically stating – we won’t acknowledge it. They even warned that if Chinese interests are harmed, they will take countermeasures.

However, acknowledging or not acknowledging is one matter, the impact of this victorious lawsuit on international opinion is a concrete reality. It sends a clear message: the world hasn’t moved on from the pandemic yet, and accountability for the CCP is ongoing.

Next, whether other states in the U.S. will follow suit, whether other countries will join in, how will the CCP respond? These are all aspects worth paying attention to.

Shifting focus back to the U.S. economy, things are far from calm – Trump mentioned the U.S. is in a “transition period,” the market is restless, what’s going on?

Over the weekend, during an interview with Fox News, Trump was asked if there might be an economic recession this year. His response was intriguing, not a direct denial but saying, “There will be a transition period. We are doing some very big things, bringing wealth back to the U.S. This takes time, but it’s ultimately good for the country.”

His intention is clear, the U.S. is in a transformation phase. His economic policies, including imposing tariffs, tightening immigration, tax cuts, reducing regulations, and even cutting some federal spending. In his view, this combination is rebuilding the economic foundation of America.

However, the market’s response isn’t as optimistic. Goldman Sachs suggests a 20% possibility of an economic recession in the next year, J.P. Morgan indicates 35%, and the Atlanta Fed even estimates that GDP might contract by 2.8% in the first quarter of this year.

Upon Monday’s opening, the stock market immediately dropped. Nasdaq plummeted by over 3%, while the S&P 500 also saw a decline of over 2%. Leading the drop were tech stocks, with Tesla falling by over 15% in a single day, and giants like Apple, Microsoft, Amazon, NVIDIA all sliding by over 2.5%.

This financial market volatility reflects a lack of investor confidence in the future economy.

The 10-year Treasury yield dropped to 4.22%, the U.S. dollar index also experienced the largest weekly decline in two years, all signs are indicating that the market is in a wait-and-see mode, if not outright worry.

However, Trump does not seem bothered by these fluctuations. During the interview, he even mentioned, “Don’t pay too much attention to the stock market.” His point is clear, he’s looking at the long-term picture, not getting caught up in short-term fluctuations.

U.S. Treasury Secretary Mnuchin stepped in to soothe the sentiments, stating that the current economic situation is more akin to a “market withdrawal period” – due to excessive government spending previously, a certain “detox” has to begin, and the discomfort is inevitable.

On another note, U.S. Commerce Secretary Howard Lutnick was more optimistic, stating, “The United States will not experience an economic recession.”

Now the question arises: is this a beginning towards prosperity or a precursor to decline? The answer may not be immediately clear.

It’s not just the stock market that’s restless, the financial sector has started to play out a “familiar script” once again.

Do you remember the flashy financial products before the 2008 financial crisis? Well, they have made a comeback but on a larger scale now.

Last month, the U.S. structured finance industry held a grand event in Las Vegas called the SFVegas Summit. The scene was bustling, with over tens of thousands of attendees, even more than at Davos. Banks, funds, investment firms – they were all there, discussing the familiar theme: asset-backed securities.

This time, the packaged products were diverse – credit card debts, auto loans, aircraft leasing, data center rentals, and even golf carts, plastic surgery installment payments were securitized, even rental income generated from AI businesses were “packaged into products” and sold.

Last year, the U.S. saw a record high issuance of asset-backed securities totaling $335 billion. Collateralized debt obligations also sold for $201 billion. At the beginning of this year, data center-related bonds alone sold for $4 billion, accounting for one-third of the previous year’s total issuance.

Some industry insiders bluntly mentioned that this hype resembles the period pre-2008. In that atmosphere, everyone was saying “no problem” while burying deeper and deeper bombs.

Why is this wave back again? One reason is that banks are now under regulation’s watch, making it hard to lend haphazardly, but the burden has shifted to fund companies which then lend out money, package it into securities, and sell it off. It looks lively on the outside, but risks might be quietly shifting.

However, not everyone is optimistic. Some analysts have started to issue warnings: signals of an overheated market are becoming increasingly clear, these “structured financial products” are accumulating too rapidly, mirroring the tempo before the crisis.

The critical question is, do these debt products have sufficient risk control behind them? Do investors truly understand what they are buying? Once the market cools down, will these debt assets still be sold successfully?

This wave of enthusiasm, is it normal financial development or building up to a bubble? Perhaps only when problems surface, will we know the answers.

When discussing the direction of the U.S. economy, a key question cannot be avoided: which path to take?

On this point, Trump is undeniably a person with a “belief.” What he pursues is not the popular “Silicon Valley tech utopia” of today but a more traditional, hardcore “19th-century version of the American Dream.”

He often mentions that the strongest era in America was from 1870 to 1913, known as the “Gilded Age.” Back then, America relied on high tariffs, low tax burdens, the rise of manufacturing, and became a global industrial powerhouse.

Trump goes to the extent of saying, “we were a tariff nation at that time, and then became an income tax country, things could’ve been better.”

His idol is the late 19th-century President William McKinley, a staunch protectionist. Shortly after taking office, Trump signed an executive order renaming the highest peak in the U.S. as “Mount McKinley” as a tribute to this elder statesman.

Furthermore, he openly declares, “I am a tariff man.” In his eyes, tariffs aren’t just simple taxes but a national strategy, a economic weapon to suppress adversaries, and protect local industries.

His policies indeed align with this direction – raising tariffs on Chinese products, European goods, foreign automobiles, semiconductors, steel, drugs, advocating for an “equal tariffs” policy, and even considering establishing an “External Revenue Service” to make foreigners pay for U.S. finances.

Of course, tariffs are just one part of his beliefs. Another set of combinations consists of tax reduction policies, continuing the 2017 “Tax Cuts and Jobs Act,” introducing tax exemptions, unifying the corporate tax rate to 15%, all forming his vision of the “low-tax, high-growth” American Dream.

Some opinion articles support this approach. A commentary in the New York Post titled “Tax Cuts Should Take Priority Over Tariffs” mentions that this combination could become an “economic steroid” to counter the “Biden Economics” aftermath, directly boosting investment confidence to avoid economic recession.

However, some voices present differing views. For instance, Stanford University history professor Richard White points out that while the Gilded Age did indeed make a few individuals extremely wealthy, the lives of the majority of ordinary people were not good, and in fact, health indicators even declined.

Moreover, even President McKinley, whom Trump admires, eventually began to endorse the idea of “reciprocal trade,” believing that if the U.S. wanted to export more, some import barriers must be lowered too.

After all, today’s global economy is far from the horse-drawn carriage era of the 19th century. The global supply chain is intricately linked, solely relying on tariffs to reverse the situation isn’t that simple.

Nevertheless, Trump’s concept of the “traditional America” still holds real appeal. He paints a picture of an era filled with “buzzing factories, clanging steel,” an attractive vision for many in traditional industries and blue-collar voters.

Even tech capital is inching closer. Meta, Google, Musk – they’ve been issuing signals of “welcome tax cuts, anti-regulation.”

An article in “Politico” suggests that Trump’s “Golden Age” is more of a 21st-century new “Gilded Age,” but instead of steel tycoons and petroleum giants, it sees tech capital and massive corporations hogging the spotlight.

However, there are also reminders – the prosperity behind the Gilded Age was accompanied by stark wealth disparities, labor strife, political corruption, and subsequent waves of reform.

Is this ideology outdated? Or is it a classic revival? It may not be an easy question to answer immediately. But what’s certain is that it’s indeed altering the electorate’s outlook.

So, today we’ve delved into topics like China’s deflation pressure, the anxiety of young people, global pandemic accountability, the U.S. economic transition, financial market concerns, and Trump’s “American Dream.” Behind these phenomena, the world is rapidly changing – will China’s economy fall into prolonged stagnation, or find a new path? Will U.S. policies bring prosperity or crisis? In the coming months, the answers to these questions may gradually surface. Which aspect are you more focused on? How do you view the underlying trends of these phenomena? Feel free to leave comments in the comment section, and if you enjoyed our program, remember to like, subscribe, hit the notification bell, and we’ll see you in the next episode.