Trump's Terrible, Horrible, No Good, Very Bad Day

Cult leader, convicted felon, and failed President Donald Trump has had a terrible, horrible, no good, very bad day, and as I write this, it is not even 10:30 a.m. So far today, there has been nothing but bad news for Trump, most of it relating to the economy. White House staff has likely been forced to make Costco runs in order to get sufficient quantities of ketchup bottles to be thrown at the wall. This morning, gross domestic product numbers have come in lower than expected, inflation has been higher than predicted, and the U.S. Supreme Court has ruled that Trump's tariffs — his absolute favorite policy to wield on any occasion — are unlawful.

Trump has been suggesting that 15% growth in Gross Domestic Product is possible. Today's release of GDP numbers, however, showed that in the fourth quarter, GDP only grew at a 1.4 percent annual rate. This is down from a 4.4 percent rate in the third quarter. For 2025 as a whole, GDP increased 2.2 percent, compared with 2.3 percent for 2024.

Looking inside the numbers, however, shows that things are even worse than they first appear. As the New York Times says, "Two forces drove the strength of the economy last year: consumer spending and artificial intelligence." In addition, "The A.I. boom helped mask weakness elsewhere in the economy. Construction of new factories fell in 2025. So did home building." Spending on artificial intelligence has been keeping the stock market afloat and, as the Times said, hiding problems elsewhere in the economy. But such spending is unlikely to continue at such rates. Moreover, the AI boom has harmed consumers elsewhere. The demand for electricity to power AI data centers has caused electricity rates to skyrocket in many parts of the country. AI spending has also driven up the cost of computer components. What is happening is that the economy is rapidly dividing between winners and losers, and the strength of the winners has been overshadowing what has been happening with the losers.

This winners and losers phenomenon has occurred in the other growth sector, consumer spending, as well. As the Times says, "Consumer spending is being driven primarily by wealthier households." Increasing income inequality is resulting in the rich getting richer and the poor getting poorer. While the less well-to-do struggle to pay bills, the wealthy are on a spending spree and driving GDP upwards. This is not an indication of a healthy economy.

Trump received further bad news this morning related to inflation. Trump has been claiming to have inflation under control. He has declared "affordability" to be a hoax and something that nobody had ever heard of previously. Yesterday, he held an event in Georgia to highlight his progress lowering inflation (and also the benefits of tariffs, but I'll address that later). Like most Trump events, it devolved to a whinefest about stolen elections and his usual litany of complaints. It's probably just as well because a Commerce Department report released this morning showed that inflation remains a problem. As the Associated Press reports:

A key inflation gauge accelerated in December to the fastest pace in nearly a year, showing how prices are still rising more quickly than most Americans would prefer — and faster than the Federal Reserve’s target of 2% a year.

Prices rose 0.4% in December from the previous month, up from 0.2% in November, the Commerce Department said Friday in a report that was delayed by the six-week government shutdown last fall. The monthly increase was the highest since last February. Compared with a year ago, inflation rose 2.9% in December, up from 2.8% in November. That is the largest yearly increase since March 2024.

As for what is propelling inflation, the AP explains:

In December, prices climbed for furniture, clothing, and groceries. Gas prices fell, but the cost of electricity rose and natural gas costs soared 3.7% just in December from the previous month.

Lest we forget, Trump was elected on a promise to lower the price of eggs. He has repeatedly said that he could reduce inflation. Instead, the opposite has happened. Moreover, there is a bit of a Catch-22 here. Some of the increases are self-inflicted by Trump. Many of the price increases were a result of his tariffs. Electricity prices are being affected, as I said above, by AI data centers. But another contributor has been Trump's war on renewable energy. By creating roadblocks for renewables, Trump has slowed the growth of new electrical generation sources and forced suppliers to rely on outdated and expensive coal-fired plants.

The last of the bad news for Trump this morning that I will address was probably the most important. The U.S. Supreme Court has ruled that Trump does not have authority for the tariffs he has been imposing willy-nilly on imports. Trump has been relying on the International Emergency Economic Powers Act to justify his tariffs. This has always been clearly illegal; the act doesn't even mention tariffs. Today, in a 6-3 decision, the Court confirmed that the act does not authorize tariffs. Chief Justice John Roberts ruled that tariffs are taxes, and only Congress has the power to tax, and IEEPA does not delegate that right to Trump.

Many thought that the Court might find a middle ground that would give Trump at least a partial victory. But this was a complete and total defeat, at least as far as tariffs under IEEPA are concerned. The Court left no grounds on which tariffs might be available under that act.

Trump, of course, is angry about the Court's decision. As I am writing, he is in the midst of a press conference decrying the outcome. For some reason, he is condemning the Democratic members of the court. But there are only three of them. Two of Trump's own appointees voted with the majority.

Trump is also promising to find an alternative method of implementing tariffs. This is the first occasion on which Trump will have to contend with the fact that, regardless of his desire, he is not a king. Tariffs are taxes, and he cannot unilaterally impose taxes. He will, therefore, need to find an authority that is not the IEEPA. Bloomberg listed a few options, but none of them grant the type of sweeping authority that Trump desires. More than likely, Trump will simply impose tariffs, claiming authority that the law does not allow, and then wait for his action to be litigated in the courts. If this case is any example, that would buy him another year. Indeed, Trump has already announced plans to impose a new 10% "global tariff" on all imports. At the time I am writing, it is not clear why the authority he claims allows this.

One thing that the ruling doesn't do is answer what happens next with regard to tariff money that has already been collected. Businesses that were charged tariffs presumably have the right to seek a refund, but no mechanism for that was described by the Court. This could lead to a rash of lawsuits.

There is at least one administration-connected personality that is probably not shedding any tears over the Court's decision. As Talking Points Memo and others have reported, Brandon Lutnick, the son of Commerce Secretary Howard Lutnick, has been going around buying the rights to tariff refunds. The deal is that he offers businesses some money right now in exchange for the rights to any refunds that might materialize. Apparently, Lutnick has been paying between 20 and 30 cents per dollar for the rights. Now he will have the ability to collect millions of dollars if he can figure out how to get the refunds.

The irony for Trump is that if he would just accept the court's ruling, it might solve the other two problems highlighted by today's economic reports. Removing the tariffs would cause prices to drop, slowing inflation. Businesses that are no longer forced to divert funds to pay for tariffs could invest in expansion, adding to GDP growth. While Trump is too stupid to realize it, the Court is essentially trying to save him from himself. But he doesn't appear willing to accept the Court's help.

I am far from a business or economics expert. But one thing that I have always been told is that businesses like stability and certainty. Trump offers none of these. You never know what you will wake up to find after he has spent a night "truthing." For a year, U.S. businesses and consumers have had no idea what they might have to pay for an import a week from now, let alone months down the road. This has certainly impacted the broader economy, which has been kept afloat by AI investments and the spending of wealthy people. Trump has a golden opportunity to create certainty, which, in turn, could create stability. But it does not appear that he will seize that chance.

Update: Trump's 10% global tariffs that he announced today are under the authority of "Section 122" which allows tariffs up to 15% for 150 days. However, this section applies to international payment problems, which does not seem to be a factor here. So I would expect these tariffs to also end up in court.