Economists Sound Alarm on Maganomics

FINANCE
Economists Sound Alarm on Maganomics

Economists are expressing significant concerns about the impact of President-elect Donald Trump’s “Maganomics” on U.S. economic growth in 2025. A joint survey by the Financial Times and the University of Chicago’s Booth School of Business revealed widespread skepticism among over 200 economists across the U.S. and Europe. Many see Trump’s aggressive economic policies—such as steep tariffs of 60% on China and 10%-20% on other nations—as potentially stoking inflation while slowing overall growth.

The majority of U.S. economists surveyed anticipate some negative effects on the economy, with 10% predicting substantial harm. Although Trump’s proposed tax cuts and deregulation might stimulate consumer confidence and spending, the direct and indirect impacts of higher tariffs—such as increased prices, disrupted supply chains, and weakened business sentiment—pose risks.

Interestingly, Republican voters remain optimistic, with 88% expecting stock market gains. However, analysts like Goldman Sachs’s Ronnie Walker caution that Trump’s policies may result in more harm than benefit.

TECH
Trump Era Prompts Meta Shakeup

Nick Clegg, Meta’s head of policy and government affairs, is stepping down as the company navigates the impending Trump administration. Clegg, a former U.K. deputy prime minister who joined Meta in 2018, will be succeeded by Joel Kaplan, a veteran Republican operative and former deputy chief of staff to President George W. Bush.

The leadership change, reported by Semafor, marks a significant shift for Meta as it adapts to a radically altered political climate. CEO Mark Zuckerberg, who previously clashed with Trump, has reportedly met with the President-elect and pledged $1 million to Trump’s inauguration.

Clegg announced his departure on X, reflecting on his efforts to bridge tech and politics during his tenure. He played a key role in establishing Meta’s oversight board and elevating global policy priorities. His successor, Kaplan, is expected to address free speech concerns central to the Trump administration’s agenda.

TECH
Tesla Faces Critical Year Ahead

Tesla enters 2025 with a challenging start, following its first-ever annual sales decline in 2024. Elon Musk’s promises of growth fell short, with Tesla delivering 1.79 million vehicles, missing the 515,000 fourth-quarter target despite heavy incentives. This marks a critical year as Musk tackles a long list of ambitious goals to sustain Tesla's $1.3 trillion valuation.

The drop in sales has led to investor skepticism, especially with competition from rivals like BYD narrowing the market gap. Tesla also faces potential challenges from plans to eliminate federal EV tax credits, further pressuring sales. To counter this, Musk plans to boost demand by introducing new vehicles, including the revamped Model Y, long-delayed Semi, and second-generation Roadster.

Key to Tesla’s future growth is the launch of its low-cost entry model, promised for early 2025. Meanwhile, Musk’s push for unsupervised Full Self-Driving (FSD) remains critical. With a new AI training center, Musk pledges unsupervised FSD will debut in Texas, possibly expanding to other states.

Despite setbacks, analysts like Wedbush’s Dan Ives see potential, citing Tesla’s AI and autonomous driving advancements. However, achieving Musk’s bold 2025 targets is essential to maintaining investor confidence in Tesla's valuation. This year could define the company’s long-term trajectory.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.