President Trump announced late on Friday that his administration will double tariffs on steel imports from 25% to 50%, saying the move would help protect American steelworkers during a visit to a United States Steel Corp. plant in Pittsburgh on Friday focused on boosting the US steel industry. 

Trump was visiting the plant to champion an expected deal between United States Steel Corp. and Japan’s Nippon Steel Corp. as one that would ensure the iconic American firm remains US-owned and operated, even as details on the agreement remain vague. He said the new tariffs would benefit the new venture’s US operations.

“We’re going to bring it from 25 to 50 percent on steel into the United States of America, which will even further secure the steel industry in the United States,” Trump said during remarks at a steel factory in Pittsburgh, flanked by banners that read “The Golden Age,” “American Jobs” and “American Steel.”

🚨 BREAKING: @POTUS announces that next week, tariffs on steel imports will double to 50% — “which will even further secure the steel industry in the United States.” pic.twitter.com/AwOSQ380pn

— Rapid Response 47 (@RapidResponse47) May 30, 2025

Trump previously imposed a 25% tariff on steel and aluminum imports, arguing it would boost the US steel industry. Those were in addition to tariffs on automobile tariffs, and a baseline 10% tariff on all imports.

Those tariffs have faced legal scrutiny and skepticism from Wall Street and critics on both sides of the aisle, who have warned that the tariffs will ultimately lead to price increases for consumers. Trump and his allies have insisted the tariff threats, which have often been delayed or revised, have been effective at bringing other countries to the negotiating table.

The five largest sources of imported steel into the US are Canada, Brazil, Mexico, South Korea and Vietnam.

The president’s announcement came as part of an event to tout what Trump called a “blockbuster” agreement between U.S. Steel and Japanese-owned Nippon Steel.

“I believe that this group of people that just made this investments right now are very happy, because that means that nobody’s going to be able to steal your industry,” Trump said. “It’s at 25%, they can sort of get over that fence, at 50% they can no longer get over the fence.”

The new 50% level also offers a backstop for Trump’s promise that the US Steel-Nippon deal, which he opposed on the campaign trail, would benefit steelworkers in the critical battleground state of Pennsylvania. The deal was opposed by the United Steelworkers, who worried Japanese ownership could see capacity reduced and jobs shifted to other plants. 

“We’re here today to celebrate a blockbuster agreement that will ensure this storied American company stays an American company,” Trump said in remarks from a factory in Allegheny County. “We’re going to have a great partner. And I have to tell you, Japan has been a tremendous friend of mine during my years as president.”

Trump’s decision marked a stunning reversal on a transaction that he had fiercely opposed on the campaign trail, but the president cast the shift as coming with concessions from Nippon Steel that benefitted steelworkers.

“Everytime they came in, the deal got better and better and better for the workers,” Trump said, stressing that US Steel would remain headquartered in Pittsburgh.

The president last week cast it as a “planned partnership” bringing investments to the US — not as an outright sale of an American company. Even after Trump’s announcement last week, work continued on the terms, including what veto powers the US government will retain over the board of the US Steel subsidiary.

“In Washington, I’m going to be watching over it, and it’s going to be great,” Trump said.

The Friday event caps what has been a politically contentious and tumultuous path for Nippon Steel’s bid to purchase an iconic American firm, a lengthy saga that left both companies in limbo. Nippon Steel initially proposed a $14.1 billion transaction for US Steel.

The event also had the tone of a victory lap, with Trump receiving a Pittsburgh Steelers jersey and a golden hard hat during his visit, but despite the celebratory tone, critical details on the deal were unclear ahead of Friday’s event. Investors are eager for any insight into the agreement a week after he first announced that he would approve the deal. 

Last week Trump announced a new partnership between U.S. Steel and Nippon on social media, saying it “will create at least 70,000 jobs, and add $14 Billion Dollars to the U.S. Economy.”

.@POTUS: “As part of this monumental commitment, Nippon will invest $2.2 billion to increase steel production here in the Mon Valley Works… In addition, another $7 billion to modernize steel mills, expand ore mines, and build state-of-the-art facilities in Indiana, Minnesota,… pic.twitter.com/YqCnzxB5pr

— Rapid Response 47 (@RapidResponse47) May 30, 2025

U.S. Steel’s fate had been uncertain dating back to December 2023, when Japan-based Nippon steel said it planned to acquire the Pittsburgh-based company. The fate of U.S. Steel became a hot button issue during the 2024 campaign, particularly given its headquarters was in a key battleground.

Both Trump and former President Biden had opposed the sale of U.S. Steel. Biden blocked the sale shortly before leaving office, citing national security reasons.

Advocates for a deal between Nippon Steel and US Steel have long argued that the Japanese company would help revitalize the American firm with investments. But the deal also faced resistance from the powerful United Steelworkers union that operates US Steel mills across the country.

The next steps to consummate the deal are not entirely clear. Both sides need to finalize their agreement through the Cfius review process. It’s not clear whether the text of any mitigation agreement — which is likely to spell out what powers the US government retains — is finalized.

Trump invited on stage former Pittsburgh Steelers player Rocky Bleier and current Steelers players Mason Rudolph and Miles Killebrew, who presented the president with a football jersey to express their appreciation. But as the Hill notes, the intended focus was on Trump’s attempts to revive the steel industry. The president argued other presidents had ignored the steel industry at the expense of places like Pittsburgh.

The US was the world’s fourth-largest steel producing nation as of 2023, according to the World Steel Association. It is also the world’s largest steel importer, excluding the European Union, according to the International Trade Association.

“Decades of Washington betrayal and incompetence and stupidity and corruption cost this region over 100,000 steel jobs, and they melted away just like butter melts away,” Trump said.

Shares of other US steel companies including Nucor Corp., Cleveland-Cliffs Inc. and Steel Dynamics Inc. rallied in after-hours trading.

Authored by Manouk Termaaten (founder and CEO of Vertical Studio AI) via CoinTelegraph.com,

Major corporations control decentralized AI (DeAI) companies, leaving decentralized AI in the dust. To build a more decentralized world, the sector must actively execute upon a focused DeAI strategy, with shared standards between projects, without compromise.

In April, a UN report warned that AI’s $4.8-trillion market is dominated by a mere 100 companies, most of which are based in the US and China. Centralized AI incumbents have the money and the connections to control this massive new industry, which means significant implications for society. 

These companies, all employing centralized AI technology, have run into their fair share of headaches. For example, Microsoft’s Copilot garnered attention for creating explicit, inappropriate images, such as children in compromising scenarios. This sparked a public and regulatory backlash.

Although Microsoft created stricter moderation, it had already demonstrated that centralized AI can harbor problems in part due to its closed-source code. 

Citadel was wrapped up in an AI trading scandal in the financial sector, as algorithms allegedly manipulated stock prices via artificial volume creation.

Google’s Project Maven, a Pentagon pilot program used in military tech, has raised ethical questions.

“We believe that Google should not be in the business of war,” reads a letter penned by Google employees and addressed to Sundar Pichai, the company’s CEO. The employees requested that Google leave Project Maven.

“We ask that Project Maven be cancelled, and that Google draft, publicize and enforce a clear policy stating that neither Google nor its contractors will ever build warfare technology,” the letter states.

So much for “Don’t be evil” — the company’s old slogan.

These situations give us clear examples of the potential failures of centralized AI, including ethical lapses, opaque decision-making and monopolistic control. DeAI’s open-source ethos, community governance, audit trails and computer facilities can give more than a few massive corporations an edge in the future of AI. 

Centralized AI gains more power 

Corporations and nation-states maintain an upper hand in AI development today — not DeAI projects. Nation-states and corporations can and do outspend DeAI.

Nation-states see that the stakes are high, as Russian President Vladimir Putin highlighted when he warned that the country that wins the AI race will “become the ruler of the world.” The People’s Republic of China aims to become the global leader in AI by 2030. 

AI will likely develop an authoritarian bent and feature the pervasive lack of privacy proliferating across today’s World Wide Web, all defined by a corporate state that maintains only a veneer of sharing the fundamental values of the Enlightenment.

DeAI faces an uphill battle

The chances for DeAI to carve out a considerable market share are relatively small. The incumbents are so well-resourced that the battle is one of David and Goliath. Nation-states and corporations will maintain the lead on access to AI, making it all but guaranteed that most of the world will interface with AI first on centralized systems, giving them early adopter status. 

But on a long enough timeline — decades or hundreds of years — DeAI can win market share via open-sourced models and transparent developer documentation.

To realize the vision of DeAI, the sector will have to maximize AI’s benefits with security. DeAI must execute on privacy and data control, resilience, scalability, reduced latency, access democratization and cost-efficiency. It must do this as a community and express its values to the world — regulators, consumers, investors and more. 

DeAI brings numerous advantages over centralized AI systems, like improved privacy and data control, no single point of failure, edge computing and democratized access.

Despite these advantages, AI will undoubtedly be dominated by the prominent state-enterprise apparatus characteristic of the neoliberal world. 

To create a more decentralized world, it’s time to proactively implement a clear DeAI strategy and establish common standards across projects, ensuring these are upheld without compromise.

Authored by Jonathan Turley,

Various Democrats are promising to investigate and impeach President Donald Trump if they retake the House next year. At the same time, others are promising a scorched earth campaign against those who support Trump, including Elon Musk. Representative Suhas Subramanyam (D-VA) declared this week that Musk committed crimes and will be at the top of the list. 

MSNBC’s ratings may be declining but the network is escalating the unhinged rhetoric. Host Symone Sanders ominously told Rep. Suhas Subramanyam (D-VA) , “Let’s talk about Elon Musk” and his “data” on waste that he identified in the federal government: “So what are Democrats going to do about the data? Are you all going to follow up on this?”

Subramanyam immediately pledged to hunt Musk down:

“… certainly, I think some crimes may have been committed over the past 3 or 4 months, and they are going to come to light one way or another, even if it takes us getting into power again, but we will subpoena people and find out.”

There is no evidence of any criminal conduct by Musk. Indeed, DOGE has largely won in its fights to gain access to records in the search for fraud and waste.

Nevertheless, after calling for Musk to be “taken down,” Democratic rep. Jasmine Crockett (D., Tx.) is also calling for Musk to be investigated over DOGE once Democrats take power.

It is otherworldly to see Democrats raising prosecution threats against the effort to reduce the size and waste of government. One can certainly be critical of some of the cuts under DOGE but few would disagree that Musk helped find billions in waste, including some shocking revelations about the inefficiencies of our government.

A former Obama aide, Rep. Subramanyam just arrived in Congress but has immediately resumed the same failed narrative. The Democrats are an example of how, if you only have a hammer, every problem looks like a nail.

There is a return to the same script from pledges of prosecutions to impeachments.

Rep. Alexandra Ocasio-Cortez has even reimagined the “defund the police” campaign into an “Abolish ICE” campaign.

Resisting immigration enforcement, downsizing government, and other issues are only moving the party further from the center of this country.

The threat only reaffirms my call yesterday for President Trump to award Musk the Presidential Medal of Freedom for his contributions to space exploration, electric vehicles, free speech, and other public service. Elon has lost a fortune in resisting these attacks and threats from the left. This country owes him a great debt.

To close out the week, corporate media is finally catching up to a theme we flagged for readers on Wednesday: President Trump’s “Plan B” trade war options.

• Wednesday evening: Goldman Responds To Trade Court Block Of Trump Tariffs: Nothingburger, White House Can Sidestep

This follows a move by Biden-appointed activist judges at the U.S. Court of International Trade who attempted to derail Trump’s trade agenda ahead of the 2026 midterms, only to be overruled by the U.S. Court of Appeals for the Federal Circuit on Thursday. 

• Thursday afternoon: Appeals Court Reinstates Trump Tariffs

With lawfare intensifying in the courts by leftist activist judges, the Trump administration must now press forward with its ‘America First’ trade strategy on a firmer legal footing.

This takes us to our note late Thursday, citing Deutsche Bank’s policy team focused not on the court circus but instead on Section 899 of the “Big Beautiful Bill” that is currently circulating through the U.S. Senate.

As DB’s George Saravelos explained, this legislation creates the scope for the U.S. administration to transform a trade war into a capital war if it so wishes, a development that is highly relevant in the context of this week’s court circus surrounding Trump’s trade policies.

• Ignore The Tariff Court Challenge: Here’s The Obscure “Nuclear Option” Hidden In The Big, Beautiful Bill

Fast forward to Friday morning, UBS analyst Simon Penn told clients about the growing chatter around Section 899 in President Trump’s new tariff framework—already earning the nickname “the revenge tax.”

There’s an increasing amount of conversation about the “899” provision in President Trump’s tariff documentation. It’s been dubbed the “revenge tax”. There’s lots of noise on Friday because it hit the front pages of the Financial Times and Bloomberg.

In very brief, the provision allows the administration to take actions against anything it considers to be a “discriminatory tax”. It leaves the door wide open on the definition and interpretation. Reading through the document and the various opinions that have been given, it looks like its aim is two-fold. It’s a last line of defence to cover anything not caught by the tariffs already in place; it’s another leverage tool to deal with issues such as double taxation and withholding taxes. The provision signals that the administration could step into services, and in particular, financial services. In that case, the administration has designed a powerful negotiating tool and has also built in a technique to deal with any country that attempts to fight back with services-based levies.

UBS analyst George Redman also flagged the increasing traction of Section 899 in corporate media coverage, suggesting that the Trump administration may be preparing to deploy non-tariff measures against serial trade offenders, such as China, to bring Beijing back to the negotiating table. 

Redman noted:

The front page of the Financial Times is focusing on Section 899 of the “big beautiful bill,” which will likely draw attention on Friday. The provision allows the government to raise taxes on foreign investments in the U.S. from companies and investors based in countries it deems to have punitive tax policies. As such, it could include US-based companies with foreign owners and international firms with American branches. Expect a micro focus on companies most exposed to this risk, which are likely to underperform on Friday.

This week’s developments with circus courts show only a temporary blow to Trump’s emergency tariff powers, and the administration appears poised to shift toward a more legal, concrete, and flexible framework—centered around Section 899.

Authored by Joseph Lord via The Epoch Times,

The Department of Homeland Security (DHS) on May 29 released a list of so-called sanctuary jurisdictions across the nation that could be made ineligible for federal funding under an executive order by President Donald Trump.

The DHS list encompasses counties and cities across 35 states and the District of Columbia with policies deemed as obstructing federal immigration enforcement.

“These sanctuary city politicians are endangering Americans and our law enforcement in order to protect violent criminal illegal aliens,” DHS Secretary Kristi Noem said in a statement. “We are exposing these sanctuary politicians who harbor criminal illegal aliens and defy federal law. President Trump and I will always put the safety of the American people first. Sanctuary politicians are on notice: comply with federal law.”

The announcement comes after an April 28 executive order signed by Trump requested that DHS produce “a list of States and local jurisdictions that obstruct the enforcement of Federal immigration laws.”

In their press release on the publication of the list, DHS stated: “Each jurisdiction listed will receive formal notification of its noncompliance and all potential violations of federal criminal statutes. DHS demands that these jurisdictions immediately review and revise their policies to align with federal immigration laws and renew their obligation to protect American citizens, not dangerous illegal aliens.”

In some cases, entire states have been marked sanctuaries. They include California, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, and Washington, as well as the District of Columbia.

Some of the jurisdictions fall in traditionally Republican states. These include Anchorage, Alaska; Atlanta and surrounding counties; Boise, Idaho; Monroe County, Indiana; Douglas County and Lawrence, Kansas; Louisville, Kentucky and four counties in the state; New Orleans; 10 counties in Nebraska; five counties in North Carolina; seven counties in North Dakota; and Nashville and one county in Tennessee.

Other states identified as having at least one county or city in violation of the law include Hawaii, Maine, Michigan, Nevada, New Hampshire, New Mexico, Ohio, Pennsylvania, Virginia, and Wisconsin.

Trump’s April order calls for executive department chiefs and the director of the Office of Management and Budget to “identify appropriate Federal funds to sanctuary jurisdictions, including grants and contracts, for suspension or termination, as appropriate.”

It also calls on the attorney general and DHS secretary to “pursue all necessary legal remedies and enforcement measures to end these violations and bring such jurisdictions into compliance with the laws of the United States.”

The push to strip sanctuary jurisdictions of federal funds aligns with a long-held Republican objective of border security and enforcement of immigration laws.

Future actions related to Trump’s executive order are also expected.

To ensure that illegal immigrants are not accessing federal entitlements like the Supplemental Nutritional Assistance Program (SNAP)—commonly known as food stamps—Medicaid, Medicare, or others, the president directed the attorney general and DHS secretary to “develop guidance, rules, or other appropriate mechanisms to ensure appropriate eligibility verification is conducted for individuals receiving Federal public benefits.”

He has also directed the same officials to “identify and take appropriate action to stop the enforcement of State and local laws, regulations, policies, and practices favoring aliens over any groups of American citizens that are unlawful, preempted by Federal law, or otherwise unenforceable, including State laws that provide in-State higher education tuition to aliens but not to out-of-State American citizens.”

Gap Inc. shares plunged in premarket trading after the retailer warned in its earnings release of a potential $300 million hit from tariffs.

The retailer sources much of its clothing from third-party manufacturers, primarily located across Asia—regions heavily impacted by the trade war—while selling the majority of its merchandise through U.S. stores. The warning comes amid a 90-day pause in the US-China trade war as both countries engage in bilateral talks to craft a trade deal. 

“If these tariff rates remain, they could result in a gross estimated incremental cost of approximately $250 million to $300 million,” Gap wrote in an earnings release. It based its guidance on tariffs of 30% on most imports from China and 10% on most other countries. 

Gap maintained its guidance from the previous quarter, noting that it has strategies to mitigate more than half of that cost: 

“The company currently has strategies to mitigate more than half of that amount. After considering these mitigation strategies, the company estimates a remaining net impact of about $100 million to $150 million to fiscal 2025 operating income, primarily weighted to the back half of the year.” 

Neil Saunders, managing director of GlobalData, told Bloomberg that the tariff warning “spooked investors.”

Shares tumbled as much as 16% in premarket trading in New York, nearly wiping out all year-to-date gains of 18% as of the close Thursday. 

The tariff issue aside, Gap reported a solid first quarter across its brands, except for Athleta and Banana Republic:

1. Total comparable sales +2%, Bloomberg estimate +1.59%

2. Gap and Old Navy both grew market share across all income groups, marking their 8th and 9th straight quarters of gains, respectively.

3. Old Navy posted +3% comps, driven by strong full-price sell-through and a successful relaunch of its activewear line.

4. Gap brand delivered +5% comps, with strong demand in core categories (fleece, sweaters, sleepwear) and solid traction from new collaborations.

5. Banana Republic comps were roughly flat, with stabilization continuing as turnaround efforts in product and pricing gain traction.

6. Athleta remains challenged, with comps down 8% due to weak product engagement and a longer recovery timeline.

7. Operating margins expanded, supported by ROD (reduction of discounting) leverage and tight cost control, while merchandise margins remained flat year-over-year.

For the second quarter, Gap expects sales to remain flat compared to the year-ago period, in line with Wall Street analysts’ expectations. The company expects minimal tariff-related impacts in the current quarter. 

Wall Street analysts weighed in on Gap with their first takes… 

Citi analyst Paul Lejuez, who maintains a “Buy” rating on Gap, lowered his target to $30 from $33 due to the retailer’s higher tariff burden. 

Bloomberg Intelligence analyst Mary Ross Gilbert commented, “Gap’s cautious 2Q outlook and tariff-driven margin pressure may leave room for upside,” adding, “The expected $100-$150 million profit impact from tariffs (about 65-102 bps after mitigation and $250-$300 million before) appears manageable and could be offset further.” 

JPMorgan analyst Matthew Boss, who has an “Overweight” rating and a $29 price target, called this morning’s stock selloff a “buying opportunity,” emphasizing that strong brands “can win in any market.” 

Goldman analyst Brooke Roach raised her 12-month price target to $28 from $25. 

. . .

Authored by Lance Roberts via RealInvestmentAdvice.com,

Ray Dalio, the former head of Bridgewater Associates, is back in the media, trying to stay relevant by claiming the “deficit has become critical.”

” “It’s like … I’m a doctor, and I’m looking at the patient, and I’ve said, you’re having this accumulation, and I can tell you that this is very, very serious, and I can’t tell you the exact time. I would say that if we’re really looking over the next three years, to give or take a year or two, that we’re in that type of a critical, critical situation.”

And this from Bloomberg:

“If you don’t do it (commit to reducing the deficit), you’re going to be in trouble. I can’t tell you exactly when it’ll come, it’s like a heart attack. You’re getting closer. My guess would be three years, give or take a year, something like that.”

Of course, the scare tactics would not be complete without a terrifying chart to back it up, like this from Deutsche Bank:

“Here we remind readers, that the Big, Beautiful Bill currently in Congress has been scored to add about $5 trillion to the debt, resulting in what we said would be Debt Doomsday for the US; this is simply a trade-off of short-term prosperity (a few extra trillion in the next 4 years) for long-term economic collapse (that 220% in long term debt.GDP).”

That is undoubtedly a horrifying chart. The “scoring” is from the Congressional Budget Office (CBO). The CBO analyzes spending bills and tries to determine the impact of future spending versus revenue. Here is the calculation of the latest “deficit” scare.

The problem is that neither Dalio nor the CBO is correct in its forecasts. We will examine both to explain why.

Dalio’s History Of Faulty Predictions

It doesn’t take much to understand that Ray Dalio, a hedge fund titan, is like every other human being and is prone to error. I will not dismiss Dalio entirely, as his track record of managing money at Bridgewater is nothing to be scoffed at. However, his track record is far less enviable regarding debt crisis predictions. Here is a brief timeline.

• March 2015 – Hedge Funder Dalio Thinks the Fed Can Repeat 1937 All Over Again

• January 2016 – The 75-Year Debt Supercycle Is Coming To An End

• September 2018 – Ray Dalio Says The Economy Looks Like 1937 And A Downturn Is Coming In About Two Years

• January 2019 – Ray Dalio Sees Significant Risk Of A US Recession

• October 2022 – Dalio Warns Of Perfect Storm For The Economy (That was also the stock market low.)

• September 2023 – Dalio Says The US Is Going To Have A Debt Crisis

But you can even go further back than these when he wrote about some of his biggest mistakes about a decade ago:

“The biggest of these mistakes occurred in 1981-’82, when I became convinced that the U.S. economy was about to fall into a depression. My research had led me to believe that, with the Federal Reserve’s tight money policy and lots of debt outstanding, there would be a global wave of debt defaults, and if the Fed tried to handle it by printing money, inflation would accelerate. I was so certain that a depression was coming that I proclaimed it in newspaper columns, on TV, even in testimony to Congress.“

Even though Dalio understands his mistakes from 1981 to 1982, he has been repeating them over the last decade.

For investors who listened to Dalio’s predictions of a coming “depression” a decade ago, they missed participating in one of the most significant bull markets in U.S. history.

Again, please don’t make a mistake in what I say. Ray Dalio is a knowledgeable person. However, intelligence does not necessarily prove accuracy in predicting the future. He was wrong in the 80s and has been incorrect over the last decade.

Does that mean he will “never” be correct? No. But investors have lost more money worrying about Dalio’s predictions than they would likely have even if he had been accurate.

But what about those CBO projections?

The CBO’s Projections Are Full Of Faults

Every year, the Congressional Budget Office (CBO) releases a series of projections estimating federal deficits and debt levels over a 10-year horizon. These forecasts, often treated as gospel by lawmakers and media outlets alike, are used to shape public policy debates, inform budget decisions, and frame the long-term fiscal narrative of the United States. Yet, with striking regularity, these projections fail to materialize.

The reason is that, just as with Dalio, the CBO projections are often biased or one-sided estimations, data is excluded, and various other issues impair future accuracy, both good and bad. Furthermore, the agency’s forecasting methodology has structural flaws, ranging from rigid assumptions to exclusions of dynamic economic feedback to blind spots in fiscal behavior and policy change. The result is a set of projections that often mislead more than they inform. The following is a brief explanation of these flaws.

• The Static Nature of CBO Models – The CBO’s analytical framework is based on a static scoring model. This approach assumes that future policy, such as tax rates, spending levels, entitlement programs, etc., will remain unchanged over the 10-year forecast horizon unless new legislation is ALREADY enacted. In practice, this is rarely the case. For example, if a tax cut is scheduled to expire, the CBO assumes it will expire, even if the likelihood of an extension is high. The same goes for discretionary spending caps, Medicare payment reductions, and defense outlays. As a result, CBO projections often include future “deficit cliffs” or sudden fiscal contractions that lawmakers later avoid, all rendering the projections obsolete before they’re even useful.

• Ignoring Dynamic Economic Feedback – Perhaps the most significant shortcoming of the CBO’s model is its limited use of dynamic scoring—the idea that fiscal policy can influence broader economic outcomes, affecting tax revenues and spending. Instead, they rely heavily on baseline economic forecasts that assume a smooth trajectory of growth and inflation, often borrowed from consensus private forecasts. However, those assumptions are backward-looking, calibrated to historical averages rather than adaptive to current or projected conditions.

• Unrealistic Assumptions About Growth and Interest Rates – One of the most baffling elements of CBO’s debt projections is their unwillingness to incorporate realistic future economic growth rates. Over a 10-year horizon, even minor adjustments to GDP growth assumptions can dramatically alter debt-to-GDP ratios. However, the CBO defaults to a long-run real GDP growth rate of about 1.8% to 2.0%—a figure derived from trend productivity and labor force growth, rather than cyclical or structural changes in the economy.

This baked-in pessimism ignores potential upside scenarios such as demographic shifts, productivity surges due to technology, or policy-induced economic acceleration. Conversely, it fails to adequately model downside risks like recessions, geopolitical shocks, or credit events. The result is a misleading “middle path” that rarely reflects actual outcomes.

Similarly, the CBO assumes a gradually rising interest rate environment, where borrowing costs increase alongside debt issuance. However, history shows that interest rates can remain low, even as debt increases. As shown, rates decline with larger deficits as unproductive spending slows economic growth. The recent rate surge resulted from inflation from sending checks to households while shuttering the economy. As the remnants of that infusion fade, economic growth and rates will decline. However, Dalio and the CBO forget the cause of the rate surge and assume the rise was organic when it was not. As growth slows further, Central Bank interventions will challenge the CBO’s recurring narrative that rising debt will inevitably lead to a fiscal crisis via soaring interest payments.

The Future Is Highly Uncertain

To be clear, the CBO is vital in bringing fiscal transparency to government operations. But its forecasts should be treated as scenarios, not certainties. Some economists have argued for including range-based projections—a band of possible debt and deficit paths under varying assumptions for growth, interest rates, and fiscal policy. Others have called for more aggressive use of dynamic scoring to account for behavioral and economic feedback.

One thing is for sure. The future is highly uncertain. As such, any forecast that looks 10 years into the future will be wrong, for better or worse. For example, the U.S. is most likely on the cusp of the next industrial revolution. Such will transform the economy, work, and labor in ways we can not imagine currently. The impact of Artificial Intelligence on employment, productivity, and wage growth could be transformational. However, we must also consider the impact of AI on highly capital-intensive infrastructure needs. As we explored in “Electricity May Cure Debt Concerns.”

“Generative artificial intelligence has the potential to automate many work tasks and eventually boost global economic growth. AI will start having a measurable impact on US GDP in 2027 and begin affecting growth in other economies worldwide in the following years. The foundation of the forecast is the finding that AI could ultimately automate around 25% of labor tasks in advanced economies and 10-20% of work in emerging economies.”

They currently estimate a growth boost to GDP from AI of 0.4 percentage points in the US. Such would undoubtedly reduce the impact of rising debt levels.

The CBO’s debt and deficit projections have value, but they are deeply limited by the assumptions they rest on. Their forecasts ignore how politics evolves, how economies adapt, and how unpredictable the future truly is. They exclude meaningful liabilities, fail to account for economic feedback loops, and assume a rigidity in fiscal policy that doesn’t exist in the real world.

Conclusion

For investors, policymakers, and citizens alike, the key is not to discard the CBO’s work, but to understand its limitations. Notably, consider the following for those like Dalio, pontificating on the rising debt levels as a percentage of GDP.

Japan is a relatively small country compared to the U.S.

• It is not the world’s reserve currency issuer.

• Does not have the economic growth capacity or resources of the U.S.

• Lacks the military strength to defend its sovereignty.

• Has a pressing demographic issue.

Do both countries have financial concerns? Absolutely. Yet, despite all of Japan’s shortcomings, they have not fallen into bankruptcy or faced economic devastation. In other words, as an investor, betting on the demise of the U.S. at 120% of debt to GDP, in the face of the rise of Artificial Intelligence and its potential impact, will likely be a losing bet.

It is also crucial for investors to understand the data they view and use to build investment assumptions. As with Dalio, assuming a “debt crisis” is looming, has severely impaired individuals’ wealth-building process. Will the CBO and Dalio eventually be correct? Will a debt crisis finally happen? Maybe. Anything is possible. You must answer whether that will occur during your investment time frame. More crucially, what will you do after it happens?

The choice is yours to make. However, a wrong decision can severely impact your wealth-building process and the pursuit of your financial goals.

For more in-depth analysis and actionable investment strategies, visit RealInvestmentAdvice.com. Stay ahead of the markets with expert insights tailored to help you achieve your financial goals.

The Fed’s favorite inflation indicator – Core PCE – fell once again in April to its lowest since April 2021 at +2.5% YoY…

Source: Bloomberg

Services inflation is slowing rapidly…

Source: Bloomberg

Headline PCE fell to +2.1%…

Source: Bloomberg

The downturn was triggered by a large deflationary impulse in non-durable goods…

SuperCore PCE also tumbled to four year lows with its first MoM decline since April 2020…

Source: Bloomberg

SuperCore PCE was driven down by a big drop in Financial Services & Insurance costs…

Source: Bloomberg

Finally, for all the terror of tariffs in the soft survey data, spending continues to increase and incomes are growing strongly…

Source: Bloomberg

On the income side, both govt and private workers saw compensation accelerate…

Source: Bloomberg

Given the outperformance of income over spending, the savings rate rebounded strongly to its highest since April 2024…

Source: Bloomberg

…it’s gonna be hard for Powell to justify the ‘pause’ now.

Following earlier comments by TsySec Bessent that trade talks with China had “stalled”, President Trump took to social media to explain his position:

Two weeks ago China was in grave economic danger!

The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace which is, by far, number one in the World.

We went, in effect, COLD TURKEY with China, and it was devastating for them.

Many factories closed and there was, to put it mildly, “civil unrest.”

I saw what was happening and didn’t like it, for them, not for us. I made a FAST DEAL with China in order to save them from what I thought was going to be a very bad situation, and I didn’t want to see that happen.

Because of this deal, everything quickly stabilized and China got back to business as usual.

Everybody was happy! That is the good news!!!

The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!

The reaction was swift – US equity futures dumped…

And crude crashed…

So much for ‘TACO’! No more Mr Nice Guy does not sound like “chickening out”.

Will PCE rescue the markets?

U.S. non-residential construction is expected to soften through the second half of 2025, but UBS analysts project a meaningful reacceleration beginning in 2026. Structural tailwinds—including investment in data infrastructure, energy, life sciences, and public-sector projects—are expected to drive the next phase of growth, even as commercial construction remains pressured by high interest rates and broader macro uncertainty. The anticipated rebound in activity has Goldman analysts forecasting upward pressure on machinery pricing later this year. 

According to UBS analysts Steven Fisher, Amit Mehrotra, and others, the latest industry outlook for construction spending is expected to remain soft through 2025, with nominal growth projected at just .8%, while real growth is anticipated to decline by 3%. The weakness is primarily attributable to a slowdown in manufacturing project starts over the past year, as well as continued headwinds facing commercial projects across retail, office, and warehousing.

“More slowing before reacceleration in 2026,” Fisher wrote in a note, adding, “We expect stimulus and structural forces to drive the rebound, while cyclical factors remain weak.”

Analysts forecast construction growth to reaccelerate to 4% in 2026. They noted some of those growth drivers:

• Structural changes are driving spending on Manufacturing, Power and Data centers/Telecom; potential upside from tax incentives/bonus depreciation

• Stimulus funds are flowing and should contribute to spending growth in 2025 -26

• State finances in stable to good condition for now; sets up for modest Public growth

• Still high interest rates likely continue to drag on housing, developer-led and related construction areas for some time

The reacceleration in construction spending is expected to begin in the second half of 2026. 

What will drive the reacceleration? It’s very easy: Power, Data Centers, Infra, Semis… 

We’ve laid out multiple themes for readers to capitalize on this:

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Trump has secured commitments for $1.8 trillion in investments from major corporations, with projects either shovel-ready or nearing that stage. This pipeline of development is expected to generate significant construction tailwinds next year.

Top themes in the construction world for next year:

One senior executive at an asset management firm backing a major data center project in Texas described the anticipated pace of construction during Trump’s second term as a “sprint.”

“The market in 2025 and 2026 will continue to be reliant on large projects,” the analysts noted. 

Separately, Goldman analysts have issued a note describing how the tightening of used equipment inventories will send prices higher over the next 6 to 9 months. This aligns with UBS’s view that a surge in construction activity is expected to begin next year. 

Great news for the Trump administration: construction tailwinds are expected to build momentum in the economy next year. However, a lag is anticipated before the full impact materializes.