Wall Street started in 2025 with the predictions of the sun and a rainbow. Expected the revenue growth of the S&P 500 in 2025 than in 2024, which was the year of posters. But, for the period 2025, analysts' predictions have diminished. The prediction of the Wall Street Agreement for the annual revenue of the S&P 500 in 2025 stood by 17% in January, decreased to 13% by February, 12% in March, and currently, at the end of April, registered at 8% per year (see charts). Clearly, analysts see storm clouds on the horizon. But in our opinion, the original Wall Street prediction of 17% was never the same, and also not 8% today. Indeed, we predict 2025 revenue growth by 0%.
Is it? Why did we think Wall Street growth prediction 17% was bread in the sky? For one thing, it was built on a negative concept of strong economic growth. When it comes to national revenue decision, we look at the theory of a lot of money, which states that when money distribution agreements, actual economic activities and exposure will also get a contract. Since the establishment of the Federal Federation, there have only four funding periods: 1920-22, 1929–33, 1937-38, and 1948–49. They were all followed by a decline in the economy, and in one case, severe depression.
Today's case is no different. The decline of the frequency we are witnessing is now brought about by the decline, for the last three years, in the growth of the money distribution, measured by M2. Since April 2022, M2 has not grown. This shows that the decline of the American economy was put forward before Trump took over.
Tax and uncertainty
So, at the beginning of 2025, just looking at the money distribution course in the last few years, we already knew the drop of American was cooked on the cake. Since the start of the year, however, markets have been shaken by Trump's tax policies. Business policies and tariffs in them are anti-growth policies-after all, they are tariffs on international activities. But what's more, Trump has removed, or threatened to withdraw, government offices and general agencies, and has reduced many others. These actions, along with the large number of others in the presidency instructions, have created the government's uncertainty.
In his book Depression, War, and Cold War (2006), Robert Higgs defined Government uncertainty (also known as policy uncertainty) as “the possibility of investor rights in their capital and the revenue they provide will be more accessible by government measures.” It is a small part of the business confidence. High levels of government uncertainty are associated with low levels of business confidence, and the readiness of private parties to invest require adequate level of business confidence. In other words, an unquestionable government is sadly personal investment. Mit's Robert Pindyck Keep it Like this: “The use of investment at the overall level can be very sensitive to risk in various forms … (as well as) uncertainty on tax policy and future policy.” Higgs' mental book was none other than Joseph Schumpeter, who highlighted a similar comment in his book Capitalism, socialism, and democracy (1942). In fact, there are always pockets of uncertainty scattered in the economy, as is the character of any capitalist system. The government's uncertainty, on the other hand, is a systematic injection of uncertainty in the whole economy. If so, it's a rare event.
As it turns out, the government's uncertainty has already accumulated their bad head. Signs are everywhere. Baker, Bloom & Davis Index of uncertainty Currently it stays at its highest level in its 40th history, and on Tuesday, a self -confidence model of American users in April He fell at the lowest rate since October 2011. Business officials can no longer make long -term investment decisions, resulting in dealing activities Dry causing many companies to divorce Guide to revenue growth completely. April's April Fed of business officials in the TRISTATE area showed capital use plans to rise in rates only twice in the last two decades: in times of serious financial crisis and Covid locks. The uncertainty rate is so high that the companies have even suspension Invest in sale and advertising campaigns for their products.
Investment freezing
The best historical parallel with the current American situation is the case of severe depression. Indeed, President Franklin Delano Roosevelt's new second (1935-1940) also created the government's uncertainty. This resulted in what Higgs called “great time” from 1933-1940, while the American economy continued to work to a greater degree below its capacity for 12 consecutive years after the start of depression in 1929. Thanks to government uncertainty, personal investment between 1930 and 1940 was bad. Why? Because the new second plan brought about American economic localization. This restructuring left business officials and investors are not sure about what the game rules were. Trump's policies and recommendations have the same effect.
So we expect the actual growth of GDP to grind up to zero under a single punch-two-dimensional money laundering and the uncertain government enlightened by Trump's policies. And that, we hope revenue growth will fall to zero. In the last 30 years, while economic growth has slowed to the rate we expect, the S&P 500 revenue growth has always been slowing down.
With the revenue season in full swing, we expect the company more to pull the guide because of the increased uncertainty and increased business interruption. Even as soon as the Trump tax government is finalized – at any time that may be – the business will remain sure of its stability, be it under this president or future administration. Without long -term policy, companies cannot justify long -term investment. As a result, the prospect of the current Wall Street agreement for 8% revenue growth will soon be revealed as something more than bread in the sky, too.
Steve H. Hanke is a professor of economics used at the University of Johns Hopkins and the author, and Leland Yeager, ofCapital, interest, and waiting. Guy Pethato is a consultant for two Sigma's general investment teams.
Read more:
- Abolishing a American trade deficit and tariffs is impossible, and endangers Eliminate two long -term American extras
- Trump's tariff is not 'common sense'-And they put American trust and 'great preference' in danger
- Trump Tax Software is based on Wrong ideas on business deficit
- Taxes will not make America good anymoreChairman and former President of Export Bank
This story was previously shown Bahati.com
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