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Authored by Ben Shapiro via The Epoch Times,

The fate of the Trump administration – and perhaps Republicans in Congress – is tethered to how Americans feel about the economy.

And right now, it’s hard to find anyone who can say with confidence what the hell is going on.

Nov. 20 offered a fresh reminder of the chaos. As The Wall Street Journal noted, “Stocks surrendered gains and closed sharply lower after a whirlwind day of trading that began after Nvidia posted strong results. The Nasdaq composite led indexes lower after being up on the day more than 2 percent. It closed 2.2 percent lower. Nvidia gave up an even bigger gain and finished the day down 3.2 percent.”

Why the reversal? Because investors suspect there is, in fact, an artificial intelligence bubble.

It’s not an unreasonable fear.

History shows that every transformative technology—from automobiles to the internet—inspires waves of speculation. The presence of a bubble doesn’t mean the technology isn’t revolutionary; it simply means that early hype tends to sweep up both the winners and the doomed. For every Henry Ford, there were dozens of forgotten carmakers. The same was true of the dot-com era: Pets.com vanished, but the internet went on to reorganize modern life.

Artificial intelligence is inspiring the same mix of excitement and dread.

Some companies may never produce the margins to justify today’s investment frenzy. OpenAI, though not publicly traded, sits at the center of countless partnerships with massive firms like Oracle and Nvidia. If it stumbles, the shock could reverberate across the market.

The numbers fueling today’s optimism are staggering. As The New York Times reported, “It would not be a stretch to describe this period of hyperactive growth in the tech industry as a historic moment. Nvidia, which makes computer chips that are essential to building artificial intelligence, said on Wednesday that its quarterly profit had jumped to nearly $32 billion, up 65 percent from a year earlier and 245 percent from the year before that. Just three weeks ago, Nvidia became the first publicly traded company to be worth $5 trillion.” That’s more than Germany’s entire economy.

But even this explosion of wealth comes with a caveat. Much of the demand for Nvidia’s chips doesn’t mean consumers want AI right now—it means companies are racing to build massive AI systems in the hope that demand will materialize later. To some insiders, it looks less like a revolution and more like a house of cards.

This is the central question: At what point will AI’s promised productivity gains begin to match the scale of the investment poured into it? Until there’s clarity, markets will continue to swing wildly—and so will public confidence.

Workers, meanwhile, face their own concerns. Even if AI succeeds, technological progress has always brought job dislocation. Old roles disappear, new industries emerge, and the economy ultimately becomes more productive. People enjoy better goods at lower costs and work fewer hours than their grandparents did. But the transition is rarely painless.

Both truths can coexist: The United States may be on the cusp of a remarkable economic transformation, and the anxiety surrounding it may be entirely justified.

For now, Americans are left watching markets fluctuate, industries reorganize, and fortunes rise and fall… all while wondering what exactly the future will bring.

And no government policy can fully soothe that uncertainty.

Submitted By Thomas Kolbe

Germany’s public pension system is under mounting pressure. Amid a deepening economic crisis, uncontrolled poverty migration, and a rapidly aging population, a shrinking workforce is being forced to shoulder an ever-growing burden. Meanwhile, the number of pension recipients continues to rise and has now smashed through the 21-million mark.

The widening deficit in the pension fund — and the surging federal subsidies needed to stabilize it — shows the system is slipping out of control. Political pressure for reform is intensifying, yet Berlin offers nothing but costly giveaways, ignoring the structural rot turning the pension system into a fiscal nightmare.

Germany’s statutory pension scheme is revealing its true nature: a Ponzi structure drained by politically motivated “non-insurance” payouts and kept alive by constant cross-subsidies — a political shell game at its finest.

The Economists’ Appeal

Into this crisis step 22 leading economists and pension specialists. In a joint statement, they urge the government to take the pension package “off the table immediately.”
“For stability, reliability, and trust, we need long-term pension policy that is predictable and fiscally sustainable,” the document reads. The experts argue the government’s current proposal fails on every count and should therefore be abandoned.

Released Monday morning and obtained by Handelsblatt, the paper is a long overdue wake-up call in a debate trapped in coalition infighting.

High-Profile Critics

The list of critics — including pension experts like Bert Rürup, ifo chief Clemens Fuest, and Michael Eilfort of the Stiftung Marktwirtschaft — is long. Their main targets include the fiscally reckless “active pension,” which would allow retirees to earn additional tax-free income; a further expansion of the mothers’ pension; and a political fix that would lock in the current pension level at any cost.

According to the economists, these measures would raise the federal subsidy to the pension system by €10–15 billion annually — a burden Germany’s recession-ridden public finances can no longer tolerate.

The economists also condemn the political choice to shift the costs onto the young: higher payroll taxes, higher income taxes, all to sustain benefits for an older generation. In doing so, they side with young CDU/CSU lawmakers who have recently ramped up pressure on Chancellor Friedrich Merz.

Short-Term Political Bribery

The experts don’t mince words: The pension package is not a reform but a short-term political bribe. With sinking poll numbers for both CDU/CSU and SPD and the steady rise of the AfD, the strategy is obvious: stabilize the voter base with last-minute giveaways.

What’s missing is a long-term, demographically sound strategy that addresses retirement age, private savings, and company pensions. The economists are particularly blunt about the minimum pension level: preserving a 48% benchmark through 2031 is unrealistic and likely untenable.
They highlight a deeper issue: years of economic decline have eroded Germany’s productive base. As prosperity shrinks, all groups — workers and retirees — will lose purchasing power. Political shell games no longer work in a shrinking economy.

“Non-Insurance” Burdens

The debate exposes another long-ignored truth: Germany’s pension system has been hollowed out for decades by political giveaways and ideological trench warfare. “Non-insurance” payouts — including benefits for illegal immigrants — have drained a fund intended solely to manage contributors’ money.

The pension system posted a €2 billion deficit last year. This year, losses may hit €7 billion. If current trends continue, the Bundesbank expects the deficit to exceed €10 billion by 2030 — assuming the economy doesn’t deteriorate further, which is far from guaranteed.

The contributor-to-retiree ratio is collapsing: from 5-to-1 in 1965 to 2-to-1 in 2022. The imbalance will worsen. The pension system is heading into severe turbulence. A looming loss of purchasing power will hit the working population through skyrocketing contributions while retirees see their real pensions erode.

A Moral and Economic Breaking Point

Germany now faces an ethical and economic impasse: How does a shrinking economy deal with rising old-age poverty? Politics offers no answers — this question has never been seriously

confronted.
That the country has reached this point is the result of decades of politicians living off the postwar system’s accumulated substance — while acting as a global welfare provider absorbing external crises into domestic social systems.

Now that the crisis can no longer be ignored, German society must fundamentally reassess. Without statist ideologues and welfare-state engineers, a new intergenerational contract is needed — one that acknowledges the growth needs of the young, the necessity of market-driven reforms, and the dignity of a minimum living standard for the old.

The 22 economists provide an important first step: Germany faces one of the most complex socio-economic challenges of the coming years — a balancing act between responsibility, realism, and morality. And economically, it means one thing: both young and old will have to make concessions.

* * * 

About the author: Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

It was back in February, when we explained to Elon Musk why his strategy to shock the US government into spending “efficiency” through DOGE, while noble, is ultimately doomed to wit: “What Musk is doing in trying to streamline the govt is admirable but ultimately it will be Congress that decides the endgame. And there things are as status quo as always.”

Status quo it was indeed, and it took the world’s richest man several months to realize it, and while there has been a heated fight in the press whether DOGE is still technically active inside the Trump admin, we have some bad news: after a valiant start to 2025, the US has regressed to its old drunken-sailor spending ways… and has seemingly done so on steroids.

Earlier today, the Treasury published the October budget data, and it was ugly. Not all of it, mind you: tax receipts were actually quite solid: at $404 billion, consisting of $217 billion in income taxes and $128 billion in social security receipts…

… government revenues were actually a solid 23.7% improvement to the $326.8 billion collected in October 2024. Of course, that includes the now solid monthly contribution from Trump’s tariffs which in October added $31 billion to the tally.

As usual, it was government spending that was the problem again, and at $688.7 billion, or over $22 billion per day, the October total was a 17.9% jump compared to the $584.2 billion spent a year prior. And just when the US was making some modest progress on merging the red (spending) and green (revenue) lines.

The combination of these two numbers resulted in a $284.4 billion deficit for the month of October, which was not only higher than the $257.5 billion deficit last October, but also higher than the record covid budget buster of $284.1 billion in October 2020! 

And since we are now (only) one month in fiscal 2026, we now have the worst budget-deficit start to a fiscal year in US history.

In other words, no matter what the official line is, DOGE has left the building. 

Taking a closer look at the causes of the October budget-busting deficit reveals the same usual suspects: spending across all major categories increased in October, but the most dramatic one was once again the relentless surge in the gross US interest, which is now a record $1.24 trillion in the last twelve months, and is rapidly approaching social security ($1.589 trillion LTM) as the largest source of government spending. 

And here is the punchline: October gross interest was a record $104.4 billion, the highest for the month on record…

… and at $1.24 trillion in LTM interest expense, it means that 24 cents of every dollar in collected taxes goes to pay interest on the debt. 

Bottom line: after a brief period of irrational hope in early 2025 when Musk’s obsession with DOGE and cutting spending gave the US some hope that there just may some – very painful – way out of this Minsky Moment, we are not only back at square zero one and back on the fast-track to the debt-death of the United States, but the US fiscal picture has never been worse!

No wonder why in a recent public commentary, Musk fully agrees with us: the government is unfixable.

🚨ELON MUSK: “I haven’t been to DC since May. The government is basically unfixable. I applaud David (Sacks’) noble efforts…but at the end of the day if you look at our national debt…if AI and robots don’t solve our national debt, we’re toast.” pic.twitter.com/XKSes4fBfq

— Autism Capital 🧩 (@AutismCapital) September 10, 2025

Authored by Jacki Thrapp via The Epoch Times,

A board member who was part of Cracker Barrel’s controversial and short-lived rebrand has resigned.

Multicultural marketing expert Gilbert Dávila stepped down from his seat on the board of directors for Cracker Barrel Old Country Store Inc. on Nov. 20 as shareholders voted to shrink the governing body from 10 to nine directors.

“We thank our shareholders for their strong show of support today, electing 9 of 10 of the Company’s recommended director nominees, including the Company’s CEO, Julie Masino,” according to a statement issued on Nov. 20.

The Tennessee-based company’s 2025 Annual Meeting on Nov. 20 passed “every” proposal submitted to shareholders, including its incentive plan and executive compensation practices.

However, when the plan was made public, it was revealed that Dávila no longer had a seat at the table. Investors criticized Dávila for being part of a rebranding attempt that backfired over the summer, according to a filing with the U.S. Securities and Exchange Commission (SEC).

The board of directors thanked Dávila for being a part of the team since 2020.

“We also thank outgoing independent director, Gilbert Dávila, who has been a valued member of the Board through his five years of service to Cracker Barrel,” the Cracker Barrel board wrote in the Nov. 20 statement.

“Over that time, Gilbert helped oversee the formation of our strategic plan and led our Compensation Committee with skill and dedication. We are grateful for his many contributions.”

The statement did not explain exactly why Dávila is stepping down.

“We are more focused than ever on delivering high-quality food and experiences to our guests while staying true to the heritage that makes Cracker Barrel so special, ensuring we are here to welcome families around our table for generations to come,” the company added.

The Epoch Times has reached out to Dávila for comment.

Dávila’s departure from the company is a partial win for Cracker Barrel investor Sardar Biglari, who criticized the former board member and CEO Julie Felss Masino for what he called a “rebranding and remodeling fiasco.”

The rebranding outraged consumers beginning on Aug. 19 when Cracker Barrel announced it would remove the farmer leaning on a barrel from its logo.

The company’s market capitalization crashed by almost $100 million in 24 hours, prompting it to reverse its announcement and keep the original logo.

“The board has failed in every acquisition and in the opening of new stores, hired the wrong CEO, and approved a ‘Strategic Transformation Plan’ that has not only failed but has subjected the company to market ridicule and set the company back years in terms of its financial and stock price performance,” Biglari alleged in a letter filed with the SEC on Nov. 6.

Authored by Nick Giambruno via InternationalMan.com,

It’s hard to believe the United States government was ever debt-free.

But it happened once—in 1835—thanks to President Andrew Jackson. He was the first and only president to pay off the national debt completely.

One biographer says the former president viewed debt as a “moral failing,” a sort of “black magic.”

When he became president, Jackson was determined to rid the US of its national debt. After all, debt enslaves you to your creditors.

Jackson knew that being debt-free was essential to independence. This outlook resonated with many Americans back then.

With that in mind, Jackson attacked the institutions and powerful people who promoted and enabled the federal debt. This included the banking elites and the Second Bank of the United States, the country’s central bank at the time and precursor to today’s insidious Federal Reserve system.

While campaigning against the evils of national debt and central banking, Jackson miraculously survived an assassination attempt when an assassin’s two pistols both misfired. Shadowy interests tied to the central bank were almost certainly behind the effort.

However, Jackson survived and went on to “End the Fed” of his days. He successfully bested the central bank—and the powerful interests behind it—and shut down the Second Bank of the United States.

He also repaid the federal debt in full, which was no easy task.

Jackson couldn’t squeeze the American people with a federal income tax to repay the debt. It didn’t exist at the time and would have been unconstitutional.

He also couldn’t simply print currency to pay off the debt. Perpetuating such an insane fraud—which the Fed does on a massive scale today—likely never entered his mind.

Instead, Jackson had to rely on tax revenue from other sources, mainly import tariffs and excise taxes, to pay down the debt. He also drastically cut federal spending and frequently vetoed spending bills.

Jackson’s determination worked. By January 1835, the US was debt-free for the first time.

Unfortunately, it didn’t last much more than a year. After that, the US would never again be debt-free—not even close.

Revenge of the Central Bankers

After Jackson succeeded in ending the Second Bank of the United States, anything associated with a central bank became deeply unpopular with the American public. So, central bank advocates tried a new branding strategy.

Rather than call their new central bank the “Third Bank of the United States,” they went for a vague and boring name. They called it “the Federal Reserve” and managed to hide it from the average person in plain sight. As a result, over 100 years since its founding, most Americans have no idea what the Federal Reserve is or what it actually does.

Ironically, Jackson’s face has been on the $20 “Federal Reserve Note” since 1928. So in a sense, this symbolic move is central banking advocates giving the middle finger to one of their most steadfast opponents.

After all, the Fed is really the “Third Bank of the United States.” No doubt, Jackson would have been disturbed at having his face on its fake confetti money.

In any case, most Americans today have no idea who Jackson is, what he did, or why he did it.

To the extent he is ever mentioned, the media, academia, and the rest of the establishment unjustly besmirch him as—you guessed it—a “racist.”

That’s exactly what the Deep State—the permanently entrenched bureaucracy—wants. It doesn’t want the average citizen to understand why Jackson shut down the central bank and (temporarily) freed Americans from national debt bondage. Doing the same thing today would be a mortal threat to their power.

This is one of the reasons the establishment will try in the coming years to replace Jackson on the $20 bill with the more politically-correct Harriet Tubman… pushing Jackson further down the memory hole.

Trillions and Trillions

You often hear the media, politicians, and financial analysts casually toss around the word “trillion” without appreciating what it means.

A trillion is a massive, almost unfathomable number.

The human brain has trouble understanding something so huge. So let me try to put it into perspective.

Suppose you had a job that paid you $1 per second, or $3,600 per hour.

That amounts to $86,400 per day and about $32 million per year.

With that job, it would take you 31.5 years to earn a billion dollars.

With that job, it would take you over 31,688 YEARS to earn a trillion dollars.

So that’s how enormous a trillion is.

When politicians carelessly spend and print money measured in the trillions, you are in dangerous territory.

And that is precisely what the Federal Reserve and the central banking system has enabled the US government to do.

It took 146 years after Jackson fully paid off the debt in 1835—or until 1981—for the US government to rack up its first trillion in debt. The second trillion only took four years. After that, the next trillions came in increasingly shorter intervals.

Today, Congress has normalized multi-trillion dollar federal spending deficits. It’s politically impossible to even slow the federal spending growth rate, let alone cut it.

As a result, the US federal debt has gone parabolic.

The US federal government has the largest debt in the history of the world. And it’s continuing to grow at a rapid, unstoppable pace.

The debt will keep piling up as the US government continues to pay for political promises regardless of who sits in the White House. It’s virtually inevitable.

The federal debt also represents an outrageous crime inflicted on the next generation. They are the ones who will be stuck with this massive unpaid bill from today’s spending, and it will turn them into indentured serfs.

It’s doubtful Congress considers this even for a second. They are always eager to send billions to faraway foreign lands or the latest boondoggle.

Of course, this is not a groundbreaking revelation. People like Ron Paul have warned Americans about the dangers of the federal debt for a long time.

It’s just that nobody has heeded these warnings. And no one has taken serious political action to address the problem. Nor is anyone likely to.

The interest expense on the federal debt is now larger than defense spending and is about to exceed Social Security to become the BIGGEST expenditure in the federal budget. And it won’t stop there.

In short, the US government is approaching the financial endgame and can no longer disguise its bankruptcy.

If we step back and zoom out, the Big Picture is clear.

We are likely on the cusp of a historic shift… and what’s coming next could change everything.

That’s precisely why I just released an urgent report on where this is all headed and what you can do about it… including three strategies everyone needs today. Click here to download the PDF it now.

Authored by Evgenia Filimianova via The Epoch Times,

House lawmakers have asked fast-fashion retailer Shein to explain how childlike sex dolls were allowed to appear on its e-commerce platform and whether any were sold to U.S. customers, escalating an international controversy that earlier this month led France to suspend the company’s online marketplace.

In a Nov. 20 letter to Shein CEO Xu Yangtian, Reps. Vern Buchanan (R-Fla.) and Debbie Wasserman Schultz (D-Fla.), joined by 32 other members of Congress, sought clarity on the retailer’s internal controls and whether U.S. consumers were exposed to illegal content.

Founded in China and now headquartered in Singapore, Shein is known for its low-cost, rapid-turnover fashion and for hosting thousands of independent vendors on its marketplace.

The lawmakers said the request follows reports earlier this month that access to Shein’s French site was temporarily blocked after authorities found dolls resembling children offered for sale by third-party vendors.

Buchanan, who is leading the bipartisan inquiry, said in a statement, “It is incredibly disappointing that a major global retailer allowed childlike sex dolls to be sold on its platform, products that are known to fuel pedophilia and endanger children.”

He added that companies that fail to stop such items “must be held fully accountable and prevented from ever enabling this kind of behavior again.”

Wasserman Schultz said the sexual exploitation of children cannot be stopped while such products continue to be made and sold, stressing that e-commerce companies must not allow their platforms to be used to distribute items that encourage abuse.

Letter Flags Breaches

In their letter, lawmakers said French authorities discovered on Oct. 31 that Shein’s website was selling sex dolls with a childlike appearance.

One listing described a product as a “sex doll … male [expletive] toy with erotic body …” and showed an image of a doll resembling a young girl holding a teddy bear.

Rep. Vern Buchanan (R-Fla.) arrives for a hearing on Capitol Hill in Washington on May 13, 2025. Madalina Vasiliu/The Epoch Times

The lawmakers said a Shein representative confirmed that third-party vendors began selling childlike sex dolls on the platform on Oct. 16.

They noted this directly contradicts Shein’s policies, which ban illegal or restricted goods, including items that promote child abuse and exploitation.

They added that the listings raise concerns that similar items may have been available in the United States, including in states such as Florida, Tennessee, Kentucky, Utah, and Hawaii, where the sale of such dolls is explicitly banned.

The letter cites research warning that childlike sex dolls can have a “reinforcing effect” on pedophilic ideation.

Although the lawmakers acknowledged Shein’s later decision to ban all sex dolls and suspend its adult-product category, they said it was unacceptable that the dolls were ever allowed to be listed.

They asked the company to clarify by Dec. 20 whether the dolls were sold to U.S. customers, whether law enforcement was notified, how the company plans to recall any completed sales, and what measures it will adopt to prevent future violations.

The letter also urges Shein to commit to a permanent, global ban on childlike sex dolls, even in countries where such sales are not explicitly illegal.

The Epoch Times contacted Shein for comment but did not receive a reply by publication time.

Suspension in France

France said on Nov. 5 that it was suspending access to Shein’s online platform unless the retailer proves its content complies with French law.

The government’s announcement coincided with the opening of Shein’s first physical retail location, a pop-up inside Paris’s Bazar de l’Hotel de Ville (BHV) department store.

Under French law, regulators can require online platforms to remove clearly illegal content such as child pornography within 24 hours, and failure to comply can result in orders for internet providers and search engines to block or delist the site.

Arnaud Gallais (C), president of Mouv’Enfants, a movement fighting against all forms of violence against children, gestures next to Suzanne Frugier (R), general secretary of Mouv’Enfants, holding a placard which reads as “Protect children. Not Shein,” at the Bazar de l’Hotel de Ville (BHV) department store in Paris on Nov. 5, 2025. Dimitar Dilkoff/AFP via Getty Images

A day later, on Nov. 6, France’s finance and digital ministers asked the European Commission to launch an urgent investigation, calling the listings “serious breaches” of European regulations.

Shein told The Epoch Times on Nov. 6 that it had taken note of the government’s decision and was cooperating with authorities.

“We are committed to working with the French authorities to address any concerns swiftly as we have always done,” the company said.

It added that it had temporarily suspended listings from independent third-party vendors on its French marketplace while it reviews and strengthens oversight of their activity.

Authored by Lance Roberts via RealInvestmentAdvice.com,

The U.S. economy’s recent growth has a distinctive engine: large‑scale capital expenditures (capex) tied to artificial intelligence (AI). Firms such as Microsoft, Alphabet (Google), Meta Platforms, and Amazon have announced massive investments in data centers, servers, networking equipment, and AI infrastructure.

As noted by Investing.com:

“Artificial intelligence is consuming capital faster than investors can recalibrate. Bank of America now sees global hyperscale spending rising 67% in 2025 and another 31% in 2026, with total outlays climbing to $611 billion. That is a $145 billion increase in just one month’s estimates.

The surge shows how cloud giants are doubling down. Google raised its 2025 capital budget to $92 billion, Microsoft plans even faster growth into fiscal 2026, and Meta now expects spending of about $100 billion in 2026. Amazon’s data center capacity is on track to double by 2027. None show intent to slow down, even as capex intensity approaches 30% of sales, roughly triple historic norms.

That level of investment is extraordinary. At its peak, the 5G telecom buildout consumed about 70% of operating cash flow, AI infrastructure is now approaching the same strain.

While we can certainly discuss the magnitude of those investments and the risks associated with repeating another “Dot.com” overbuild, the point I want to address with you today is how those capital expenditures are masking broader economic weakness.

For example, a recent estimate places U.S. AI‑related capex for fiscal 2025 at about 1.2% of GDP. (The chart below uses the Atlanta Fed GDP Now estimate for Q3 of 4% nominal GDP growth and assumes the same in Q4.) If we subtract out the AI-related Capex spending, growth is significantly weaker than advertised.

In raw terms, the global AI investment by key players already exceeds hundreds of billions of dollars. Analysts forecast global AI spend at around US $360 billion in 2025 with growth into 2026 and beyond. For instance, data center capex is projected to grow at a 21% CAGR to reach US$1.2 trillion globally by 2029. Such figures highlight real spending momentum, and that momentum has helped the U.S. economy avoid a steeper decline in growth. But this growth is highly concentrated. Only a handful of large tech firms comprise the bulk of the capex. Therefore, the headline numbers require deeper interpretation. Investors must recognize that, while the impact on economic growth is real, spending will eventually slow down.

Still, the rise of AI-driven investment is significant for the economy and for investors alike. It signals a shift in the composition of growth from consumption and broad business investment toward heavy‑asset, tech‑centric investment. Recognizing how that shift works is critical for understanding risks and opportunities.

What the Boom Masks – Underlying Weakness in the Economy

Although the surge in AI investment is impressive, it masks several structural weaknesses in the broader U.S. economy. First, the AI‑capex boom is concentrated among a small number of firms and sectors rather than being broadly diffused across all industries or geographies. The bulk of spending is going into servers, data‑centers, and networks. While those assets are capital‑intensive, they are not labor‑intensive in the way large manufacturing or services growth might be. As noted above, while analysts estimate that AI-capex may be 1.2% of GDP in 2025 under a standard multiplier, the real economic benefits in productivity or employment outside of the tech sector remain limited so far. We observe that in the dispersion of expected 2026 earnings growth between the largest market-capitalization-weighted stocks in the S&P 500 index and the rest.

In other words, if AI capex spending reached a broad swath of the economy, the earnings expectations for the bottom 493 companies would not be negative. It is also crucial to note that forward earnings estimates are ALWAYS overly optimistic, so the results are likely to be worse in the future.

Second, much of that investment relies on imported equipment, components, and technologies, which means the domestic multiplier of the spending is weaker than the headline number suggests. Although AI-capex is large, much of it is still classified as intermediate goods, which aren’t fully captured in GDP statistics. However, while AI capex spending is robust, spending by the rest of the economy remains muted.

Third, when you look beyond the tech sector, the traditional engine blocks of growth are weaker. Residential investment is under pressure as housing affordability remains an issue. As noted above, since business investment outside the large tech players remains muted, that is weighing on employment growth, which continues to show signs of softening.

Fourth, while AI capital expenditures (capex) are high, the economic payoff has not yet been fully proven. Productivity gains, revenue gains, and sustainable earnings from this wave of infrastructure spend have not been fully realized. One Vanguard analysis notes that to move U.S. growth above trend via AI alone would require approximately US$1 trillion in AI-related spending, which lies ahead, not behind.

Thus, the underlying condition of the economy is more fragile than the capital‑spend numbers imply. The risk is that when the tech‑capex boom slows or fails to deliver a broad spill‑over, the rest of the economy will feel the weakness more sharply.

Therefore, as an investor, the risk of assuming broad-based resilience may be critical to consider when developing your investment thesis.

Implications for Investors

For investors, the mixed nature of this growth wave presents both opportunity and risk. The current opportunity for investors is to invest directly in firms closely tied to AI infrastructure, such as chip manufacturers, data center operators, and cloud services companies, all of which are likely to benefit. Their growth trajectories may outpace the broader economy because they are at the heart of the capital expenditure surge. But these opportunities come with important caveats.

One risk is concentration. If a narrow subset of companies or sectors is driving the growth story, then portfolios that lack diversification towards non‑tech may expose investors to sharper corrections. If the tech-capex wave slows, valuations tied to presumed growth may reverse quickly, especially among firms with aggressive capital expenditures and uncertain near-term returns. For example, analysts at Goldman Sachs warn that the current contributions of AI to GDP are likely understated; however, the actual economic benefit remains modest, and future risks remain high.

Secondly, as we saw during the dot-com bubble, not all companies that jumped into the internet market survived. Those failures also included some of the largest companies at the time, such as Enron, World.com, and Lucent, among others. The current AI cycle will likely be the same; there will be some big long-term winners, but there will also be quite a few companies that are mainly trading on “hope” for future results that are far from guaranteed.

Another investor implication concerns earnings quality. Heavy capital expenditures do not guarantee near-term earnings improvement or productivity gains. Some firms may carry high depreciation, amortization, and idle capacity risk. A report notes that capital spending growth now may generate returns only years down the road. This remains one of our primary concerns, as expectations for future earnings growth are incredibly elevated. This leaves an enormous amount of room for disappointment when combined with already high valuation multiples, making the downside risk not inconsequential.

(The chart shows the current deviation of earnings growth from its long-term exponential growth trend versus the trailing P/E ratio, which is inverted. When the “E” reverses, valuations will skyrocket as they did during the Dot.com bust, the Financial crisis, and the Pandemic shutdown.)

Third, investors should monitor the masking effect. The fact that AI‑capex is propping up headline growth means the rest of the economy remains vulnerable. As shown, the economically weighted ISM index (70% services/30% manufacturing) remains in expansion territory, but just barely. If consumption or non‑tech business investment falters, the broader weakness may surface suddenly. Portfolios built only around tech optimism may lack cushions from areas less tied to the boom.

Fourth, valuations need discipline. As noted above, investors are currently pricing in the most optimistic of future outcomes. That exponentially increases the risk of disappointment at some point in the future. The correction potential rises if growth disappoints, returns are delayed, or macro weakness intensifies. Investors should consider whether the current growth base is sufficiently broad to support the expected outcomes. Are earnings projections realistic? How much is the stock’s valuation already assuming perfect execution?

In short, you must not assume that because one part of the economy is booming, everything else is strong. Please recognize that the growth narrative is narrow; therefore, as investors, we should consider some practical steps to manage future risks.

One can debate how effective Trump has been in following up on his various campaign promises, but one place where he has been steadfast is reversing the Biden admin’s disastrous labor policies which favored foreign-born workers (mostly illegal aliens) over native-born workers.

Today’s jobs report, which had something for everyone, including forecast-busting payrolls offset by the highest unemployment rate in 4 years at 4.4% (driven by another jump in black unemployment), was indisputably strong when it comes to one thing: the rotation from foreign born workers to domestic ones. 

To wit: in September, the number of native-born workers surged by 676K (after the August drop of 561K), while foreign-born workers dropped by 70K.

Now since the month-to-month changes are largely driven by seasonal factors, they don’t convey the full picture. What does, is a longer-term study such as the one below, which shows that since Trump entered the White House and his policies started impacting the economy, the number of foreign born workers has slumped from a record 33.7 million in March 2025 to 32.1 million, a drop of $1.6 million. This has been offset by a slow but consistent increase in native-born workers which had been unchanged for six years since 2019 until the start of 2025, at which point it started to rise again, and has increased from 131.2 million in March 2025 to a new record high of 133.2 million in September.

As a reminder, right before the covid crash the number of foreign-born workers was about 28.7 million, and increased by a whopping 4.5 million under Biden, while the number of native-born workers was actually down, a decline which serious “economists” blamed on demographics, a lack of willingness to work, and anything else.

It turns out, the number of native-borns could have very easily gone up if only someone remove the massive overhang of millions of illegals flooding through the border and taking away jobs (at a massive paycut) which perfectly capable native-born Americans would have taken. 

 

Authored by Mani Basharzad via CapX.co,

Ha-Joon Chang recently wrote an article in the Financial Times criticising the state of economic education, which drew considerable attention. What went almost unnoticed, however, was a letter published in response. Surprisingly, one of the most prominent Austrian economists, Mario Rizzo, agreed with Chang. He wrote:

“Recently, I had a chance to look at some exams in undergraduate economics courses, including the first course, generally called ‘Principles.’ What I saw was disturbing. The students were given, mainly or only, problem sets of a completely mathematical nature. The emphasis was on mechanical problem-solving. There were no questions involving critical reflection on the ideas or frameworks taught.”

What explains this unlikely agreement between two economists from opposite schools of thought? The simple answer is that there is something wrong with economic education. But the deeper problem lies not in what is taught, but how it is taught.

Let’s go back to one of the most influential economics books ever written—a book on the scale of J.M. Keynes’s “The General Theory of Employment, Interest and Money” or Alfred Marshall’s “Principles of Economics”—“Economics” by Paul Samuelson. It became one of the bestselling textbooks of all time, making a fortune for its author. But more important than its commercial success was its intellectual influence, prompting Samuelson to declare: “I don’t care who writes a nation’s laws, if I can write its economics textbooks.” He was right. He is, in Keynes’s phrase, the “defunct economist” still shaping how we think. What truly mattered about his book was how it redefined the economist’s role.

Samuelson wrote: “No immutable ‘wave of the future’ washes us down ‘the road to serfdom,’ or to utopia. Where the complex economic conditions of life necessitate social coordination and planning, sensible men of good will can be expected to invoke the authority and creative activity of government.” In Samuelson’s world, the economist’s task is to assist the “men of good will” in government to solve social problems. Deirdre McCloskey captures this mindset best in her memoirs, recalling that when she studied for her Ph.D. at Harvard, her classmates all imagined they would go to Washington to “fine-tune” the economy.

Economic education since then has trained students to see themselves as assistants to these “men of good will,” solving technical equations for equilibrium and absorbing the idea that economics is an engineering problem rather than a coordination problem. Engineering problems deal with optimal solutions and data, but coordination problems deal with trade-offs and dispersed knowledge.

As Peter Boettke argues, in a world where all means and ends are known, the only task left is an engineering one. That is, essentially, what students learn in Econ 101—a world of perfect knowledge, known preferences, known prices, and calculable costs, where solving equations yields all the answers. But the real wisdom of economics lies in understanding deviations from this perfection.

This is where it gets tricky. Economists like Ha-Joon Chang criticise the field because perfection doesn’t exist, and therefore they deem the models useless. But economists such as Frank Knight and Friedrich Hayek also start from the assumption of perfection—yet they do not stop there. They recognise the significance of market institutions precisely because we live in an imperfect world.

The market is one of humanity’s greatest achievements for dealing with imperfection. In a world of perfect knowledge, markets would be meaningless. But in the real world, prices perform a miracle—they coordinate millions of decisions and “get Paris fed” without a central planner. Knight begins “Risk, Uncertainty and Profit” by imagining a world without risk, uncertainty, or profit, and then shows how markets function when those elements exist.

The problem is not perfection itself, but treating it as a policy goal for governments to achieve. In the Samuelsonian worldview, markets are full of imperfections—information asymmetries, externalities, monopolies and so on—but government is seen as perfect. The economist’s role then becomes helping the state reach that imagined perfection. Perfection, in this mindset, ceases to be a theoretical tool and becomes a political mission. That is what is wrong with economics education. Perfection is a means of understanding the market’s value, not a utopia to be imposed.

This misunderstanding leads students to forget their limited knowledge about how to design human institutions. A sound economic education begins by viewing the market as a process, not a static state. It should show how our “propensity to truck, barter, and exchange” gives rise to miracles—from airplanes to iPhones—things unimaginable to those living just decades earlier. The beauty of economics lies not in trusting “men of good will” in government, but in trusting free individuals to make daily life better.

As the father of modern economics Adam Smith wrote, we should “allow every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice.”

That hardly sounds like a “dismal” science to me.

Taught this way, economics is revealed as the story of human cooperation, with division of labour, profit, and loss guiding us toward more productive activity. But over the last half-century, Adam Smith’s optimistic science of wealth creation has become the pessimistic science of choice under scarcity. In the latter, the problem is allocation, not coordination. And when economists see their task as calculating optimal allocations, they forget “the lesson of humility which should guard … against becoming an accomplice in men’s fatal striving to control society,” as Hayek warned.

As the macro data engine slowly starts to grind back into motion, we are given glimpses of what happened ‘months’ ago. Earlier we got some jobless claims data from four weeks ago, and now we get Durable Goods and Factory Orders data from August…

…and the data we got was kinda meh…

August Factory orders rose 1.4% MoM (a big swing from the 1.3% MoM decline in July and an even bigger drop in June) but in line with expectations. This bounce lifted Orders by 3.8% YoY…

Source: Bloomberg

Core Factory Orders also rose (just 0.1% MoM), lifting orders 1.53% YoY in August…

Source: Bloomberg

More broadly, durable goods orders (final for August) rose 2.9% MoM (up from -2.8% in July) while Core Durable Goods Orders (ex-transports) rose 0.3% MoM (slightly less than the 0.4% expected) but remained solid for the fifth month in a row…

Source: Bloomberg

Finally, we note that Core shipments, an input for the GDP calculation, declined 0.4% (vs. +0.6% prior).

So, August was solid, but as a reminder, it’s November!