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#20 - Eggs and Expectations
Eggs and Expectations for the Economy
Eggs and Expectations
Lura Forcum, February 21.
Hi friends,
If you haven’t been able to keep up with the new administration’s rapid pace in 2025, that’s understandable. From a flurry of executive orders to DOGE’s cuts to major government programs, the first month has been eventful to say the least.
But early indicators suggest that American consumers are growing uneasy.
Remember, independent voters propelled the GOP to power because they were concerned about two major things: affordability and inflation.
But January was a reality check for economic expectations, with consumer sentiment falling by approximately 5%, while inflation expectations for the year ahead jumped from 3.3% in January to 4.3% - the highest level since November 2023.
President Trump promised “I will immediately bring prices down, starting on day one” and many voters were hopeful that there would be significant progress on this front. Leading up to the election, people pointed to the fact that eggs were about 40% more expensive than they were pre-pandemic.
Fixating on eggs might seem like an oversimplification of complex macroeconomic factors, but it highlights a key point: kitchen table economics matter to everyday Americans.
DOGE’s cuts and tariff threats are leading to market uncertainty. This is leading to concerns about an increase in inflation. And as a result? Americans are now likely to limit their spending both at home and in their businesses. This means not buying new homes, having more kids, taking entrepreneurial risks, or applying for a loan.
The effects of this can be seen throughout the economy. Ford executive Jim Farley highlights the implications of these tariffs for consumers by estimating claiming that it would “blow a hole” in the US auto industry. Experts are predicting that this could lead to a $3,000 increase in new-vehicle prices.
But the effects of tariffs don’t just stop there. Your car insurance is particularly sensitive to tariffs. As the price for imported car parts goes up, it becomes more expensive to repair and insure a car. According to a recent article in the Wall Street Journal, “Consumer-price index data on Wednesday showed that motor vehicle insurance costs were up 11.8% from a year earlier in January, up from an 11.3% rise in December.”
The new uncertainty in the market can result in challenges to achieving the economic growth and innovation we all want. The lack of clarity about tariffs and other policies could hurt hiring and investing, and these in turn will have repercussions on the American consumer.
If you want to read more about how the market is now reacting to this churn, I’ve highlighted three articles below:
Some on the right have referred to their tactics as “flooding the zone,” which is best demonstrated by the rapid speed at which the administration is moving to sign executive orders in the first few weeks in office. But what we need to watch out for is that we are not “spooking the market.” As American consumers and businesses wait to see what the longer-term ramifications will be, they’re not spending, which means the economy isn’t growing. Uncertainty and growth don’t go together.
DOGE has potential to usher in positive change and is potentially a once-in-a-generation opportunity to truly revamp our federal government. It’s easy to find examples of federal government waste on a case-by-case basis. These make for great click bait news but let’s keep focused on what will have a long-term impact on spending or truly resetting government's role.
Americans need to see a clear and simple strategy. Furthermore, the public needs to believe that the administration is doing more than scoring political points, and instead bringing about real change that’s beneficial to the American people.
The potential for positive reform is there.
As always, we’d love to hear your thoughts and feedback!
Best,
Lura Forcum
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