Black Friday Exposed The HARSH TRUTH About The US Economy

0:00Hello, everyone. Black Friday sales set new records this weekend. The US stock market can't stop going higher. Sentiment is in the toilet, and Professor Peter St. Ange is going to join us to break down what is really happening in the U.S. economy. We're live today from the desk of Anthony Pompliano.

0:25Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers. Right now, we're at 40 ,041 of you. I love that you're here, but we need more friends. So hit the subscribe button and let's get into today's show. All right, ladies and gentlemen, headlines show that Black Friday sales shattered all previous records with an estimated$11.8 billion spent online by American consumers during that one day event last week. Now, this$11.8 billion was spent exclusively online. We don't even have the in-store sales data yet, but all signs point to another record happening there as well.

1:00So this new record is noteworthy. Why? Well, it debunks all of the mainstream media reports about low consumer sentiment in the economy. The surveys are saying one thing, but the verifiable data at checkout registers, it's saying something completely different. So what's going on here? Which data point is right? Well, this may not be a popular answer, but right now, both groups are actually right. Wealthy citizens, they're doing really well, and they went all out in full force to purchase discounted products. This has been going on all year. It's not a new thing. In fact, almost half, 48 % of all e-commerce sales in Q2 of this year, they came from the top 10 % of people on the socioeconomic ladder.

1:38Rich people were buying. At the same time, these rich people are gobbling up the coolest clothes and electronics. Navy Federal's Heather Long points out that Americans are frustrated with the economy and they're also frustrated with the outlook for 2026. Every consumer sentiment gauge is saying the same thing. Sentiment is down to the worst levels since April of this year because of tariffs or as low as inflation during the summer of 2022. Why is that? She says it's because the middle class is feeling squeezed and lower income households are basically in a recession. First, it's hard to get a job.

2:08That is unless you work in healthcare. The second thing is that the cost of living is up, especially for the basics of food, utilities, and healthcare, also insurance and auto repair. And then third, real incomes are trending down as inflation rises and pay gains are getting stingier. That's the whole problem. is that sentiment is in the toilet. But there was something even more interesting about that Black Friday data that can't be ignored, and it addresses this point. Lower income consumers are using financing to purchase goods at an unprecedented rate. That means people outside of the top 10 % are still trying to consume.

2:41They wanna buy things. It's the American way. They're just doing it with credit. Boring Biz writes that headline numbers would make you believe that people are doing better than ever before. That would be good news. We should be celebrating that. But if you dig into the data, Buy Now Pay Later services saw a 9 % increase this Black Friday. 41 % of shoppers age 16 to 24 used Buy Now Pay Later. Younger millennials increased Buy Now Pay Later usage by 87 % versus last year. 38 % of households earning above$100K still use Buy Now Pay Later. And 25 % of Buy Now Pay Later users now use it to finance groceries.

3:16That's the story here, he says. People are relying on financing for consumer purchases more than ever before. All right, well, that's not good. but maybe there's a glimmer of relief for the otherwise negative story. Buy now, pay later was still only 6 % of total sales on Black Friday. So it's not a national crisis by any means, only 6%, but it is something that we got to continue watching. The broader story at the moment is that regardless of sentiment, the current administration's economic policies, they are creating a very positive impact on the U.S. economy. You saw it in the Black Friday sales, but also opening bells, Phil Rosen.

3:48He writes that the economy is booming right now. Atlanta Fed projects GDP near 4 % for the third quarter, following 3.9 % growth in Q2. The economy isn't working for everyone, but it's still growing fast, Phil says, and it remains historically productive. Now, here's what you got to remember. Economists were predicting economic collapse back in April due to tariffs, but now GDP growth projections are at 4%. Talk about a narrative violation. Life comes at you fast, and most of the doomsday predictors look ridiculous in hindsight. This GDP boom is carrying into the stock market too. Warren Pies says that the S &P 500 now sits at$67.50 and it's rising.

4:25The 10-year yield is sub 4 % and it's falling. Oil is breaking down and gold is holding above$4 ,000 an ounce. Warren isn't alone in his enthusiasm either. Carson Group's Ryan Dietrich is predicting a Christmas rally. He writes the S &P 500 was up more than 10 % year-to-date heading into the last two months. November was just flat. The last two months have been up. the past 16 times it was up 10 % heading into the last two months. He still thinks that Santa Claus comes to town in December. So Black Friday was a resounding success. We broke all sales records. All eyes now turn towards the Cyber Monday reports.

5:02And that's all happening with the backdrop of the stock market and GDP continuing surging higher. The tale of two experiences in the U.S. economy is not going away, unfortunately. We just have to hope that people start understanding. You can only win if you own assets and you chill. All right, I've got a very special treat for you guys. We're about to sit down with Professor Peter St. Ange. He's an economist, but he's also an independent thinker. He's someone who evaluates things from first principles, and he comes to unique conclusions and insights that you're not going to hear anywhere else.

5:33In this conversation, we talk about the state of the U.S. economy, what's going on in financial markets, which assets he likes and which assets he doesn't like. And then he starts to try to diagnose what is driving everything happening in economics. Some of those things are related to politics. Some of it is related to policies coming from the administration. And other things may surprise you, like why elite kids all of a sudden like communism? All that and much more in this conversation with Peter St. Ange. Peter, a great place to start this conversation is we're entering the everything bubble in your eyes.

6:03It's something where all asset prices continue to go up at a very aggressive rate. Talk a little bit as to what are the benefits of this? And then also, what are the things that you're worried about? Or what are the areas that people should be paying attention to or risk-wise? Yeah, so the fundamentally what's driving the everything bubble, I think, is liquidity. And a lot of that is coming from the Fed. So the Fed is now veering back towards its sort of standard position of printing money and dumping it into markets. we had a couple years of relatively tight money when they were trying to bring it by inflation back down.

6:37But at this point, you know, the Fed, as of today, actually, December 1st, they're switching or they're ending quantitative tightening, which was where they were selling off assets they had previously bought with printed money. They were canceling the dollars that was bringing down inflation, essentially what broke by inflation. So they're ending that as of today. of course they're they're leaning towards lower interest rates partly by pressure from Trump partly also the new Fed chair the most likely guy Kevin Hath that looks like he's going to be a pretty easy money guy so what that does is dumps all this money into markets that makes essentially everything go up now the good part of that is that if you've got some kind of new technology coming in so specifically AI right now is kind of in that bubble phase it's almost a dot-com repeat.

7:27If you've got a lot of money coming in, then you can fund these new technologies and they can move very quickly. So we saw that in the 1920s. There are a bunch of techs like radio that really took off because of easy money. And we saw that in the 90s as well, where easy money dumped into the dot com. Now, the bad side of it is going back to those 1920s. If you dump all this money in, then it eventually converts into inflation. At that point, the Fed has to switch to tightening. that then sets off a recession. You get a whole bunch of business failures all clustered together. You get 10 % unemployment.

7:59You get social chaos. You get new policies that, you know, sort of tend to ratchet the state control over the economy. So that's the downside is that when you dump all this money in, yes, the tech can move very fast. The downside is that you're sort of inviting a recession down the line. Now, that's probably not coming for another two years or so. know that the media desperately wants there to be a economic crisis right now. If you look at a lot of the numbers, so we're currently bumping along at about 4 % on GDP growth, which is, that's pretty much Asia level. Job weakness, a lot of that is actually foreign-born workers who are going home that then removes the number of jobs because they're not going to Wendy's, they're not getting their hair cut.

8:45When you look at American workers, the numbers are actually pretty solid. So across the board, it looks like we're in sort of the boom phase. And that's really the downside is that the bigger the boom, the bigger the bust. Now, one of the things I've been talking about for a number of years now is it feels like the US government, the Fed and the Treasury have essentially outlawed prolonged bear markets. If you look at every time we get some sort of weakness in the market or these violent downtrends in April or for COVID, they step in and they've got a playbook now. They They are going to pump liquidity into the market.

9:17They're going to cut interest rates. And we have yet to see in the last, I don't know, 15, 16 years, any sort of prolonged bear market. Now, the historians will say, oh, don't worry. It is coming. You know, it can't go on forever without it. But I do think that the central banks, they look at the stability of markets as a core part of what they're focused on. And so do you think we can get these kind of painful recessions moving forward? Or do you think that actually there is kind of this new regime that we've entered and the central bank is willing to destroy the dollar's long-term prospect by simply optimizing for not having, call it, 12 to 18-month recessions?

9:57Yeah, so saying that we're in a new age where recessions aren't going to happen anymore, that's pretty much happened since the beginning of the Fed for 100 years now. People said in the 1990s that we were in this new economic paradigm. We weren't going to have recessions anymore. So I think that's it's really risky to go with that. If that were true, then you should just go all in on risk. You should put, you know, the kids college fund in Nvidia stock or Nvidia options and just go to the moon. I think there's a risk to that specifically, which is that the Fed fundamentally, you know, the Fed pretends that it's taking actions for the good of the country.

10:34Fundamentally, it's taking actions for the good of the Fed itself. Right. It is a money printing cartel for the benefit of Wall Street. The way it operates is that it's kind of like a gasoline thief. Like if you go around and steal a half gallon every night, you're going to do fine. Right. But if you drain people's tanks, the gigs up, people are going to realize. And so the trick with the Fed is that it wants to inflate. It wants to print money, but it doesn't want to print too much. Right. It goes for two percent inflation, three percent. It doesn't do that for any scientific reason. It does that because otherwise people get upset.

11:05If people, voters get upset, that puts pressure on Congress and then Congress could trim the Fed's own wings. So the Fed could, in theory, just dump bazookas, you know, trillion dollar bazookas at every single crisis that comes along. It could keep doing that. But at some point, that does translate into ongoing inflation that then comes back to bite the Fed. So the Fed is constrained. I call it the pitchfork standard that in theory, it could print as much money as exists in the world. But in reality, it is afraid of the voters. So there is a limit to that ultimately. And so I would not call off the business sector.

11:44I think we're going to keep doing what we've done forever. Now, this is, you know, deeply perverse. Like, you know, a lot of people mention that whenever there's some kind of crisis in the economy, the stock market actually goes up. So that during COVID, we saw that during the government shutdown in sort of miniature form where everything went up during the shutdown. Gold, silver went up. Bitcoin went up. AI went up. Everything went up, which is weird because normally markets are not supposed to like drama, right? Markets like it when nothing is happening. And then as soon as the shutdown ended, where in theory, this giant risk to the economy was taken away, everything plunged.

12:19I think the reason for that was that markets were betting on what you're describing, which is the Fed put that if things get bad, the Fed will dump in trillions of dollars, whatever it takes. So that disturbs a lot of people because it kind of sets it up where bad things that happen are bad for regular people, right, for the losers who live in Indiana. But they're really, really good for Wall Street. So there's kind of this reverse Robin Hood effect going on where, you know, the Fed ends up bailing out the rich people who own the assets. They get their bags pumped no matter what happens. In fact, the worse it is, the more wars we have, the more economic crises we have, the better it is for rich people.

12:55We saw that in Living Color in COVID, where regular people got absolutely devastated. Small businesses got wiped out. But rich people made out any if you owned a house or stocks before COVID, you won the lottery. Now, one of the things that I always go back to is, should we go after the Fed and say, hey, stop bailing out the rich people? Or should we get everyone in the country to own assets and benefit from the same thing? Like there's kind of this two-part solution, if you will, right? We could tell the Fed, hey, stop doing what you're doing. I think it is very difficult to see a world where the Fed is going to stop printing money or the Fed is going to stop, you know, kind of helping their friends, if you will.

13:31Instead, it feels like maybe the thing that people with an audience, people who want to help those who are hurt in these scenarios is actually to get them a stake in the capitalistic system, get them assets, teach them the personal finance component. Is that the only path you see? Or do you think that there's actually a world where we could get the Fed to stop doing this and stop hurting half the country? So what you're describing, I think, is absolutely a great idea. Give people a stake in the system. You want to give people something to lose, for one thing. So, you know, if poor people have assets, then they have they have an incentive to save.

14:06They can actually look forward to things like buying a house or getting out of debt. So all of those, I think, are absolutely positive. It erodes this sort of communist instinct where, you know, if people don't own anything, they don't feel like they have a stake in the system and they say ask her, burn it all down. So I think that's all absolutely positive. We have ended the central bank. Andrew Jackson did it back in. What about the 1830s? It's ironic that they put his face on the$20 bill, which, of course, a Federal Reserve note that's almost a troll. But he did end it. And the reason is that people back then, voters, understood that the central bank was causing these boom-bust cycles.

14:42They used to call them panics back then. Now we call them recessions. So it is possible. Unfortunately, if you look back in history, it would take a series of really bad recessions, number one, that would get people upset, the pitchforks. And number two, people would actually have to comprehend the role of the Fed in that. There was a survey recently, a couple of years ago, by the Fed, and they found that 90 percent of Americans say that they have no idea what the Fed does. So in that kind of world, it's going to be difficult to get voters to actually do something about it. So, you know, short answer, it's possible, but it's probably not going to happen unless there's a really serious crisis where voters actually connect the dots.

15:23Now, we are going through a period where there are two deflationary forces that are smacking the U.S. economy in the face. We have artificial intelligence, and we also have deportations and kind of the immigration policies that this administration is putting in place. Let's start with AI. Is AI going to take all the jobs? Is it going to gobble up all the electricity, which I've seen you talk about? How do you look at AI's role in the U.S. economy going forward? Yeah, so kind of big picture, if you look at technology through the ages. So there have been panics about new technology taking all the jobs for thousands of years.

15:56In ancient Greece, it was oxen that were going to take all the jobs from the agricultural workers. In the Middle Ages, it was water mills that were going to take all the jobs because, you know, there's you don't need people to grind the wheat. I mean, this is an age old. And throughout the general pattern is that it looks like an escalator where every so often people have to take one step down. Okay, in other words, yes, some people's jobs are going to be replaced by AI. They're going to have to take a step down and take some job that is not paying as much. But the automation itself is raising all of the wages.

16:32So if you look at, say, Uganda and Africa, it's a very low automation society compared to, say, Japan, and the wages are much, much lower. So are there lots of jobs in Uganda? It's actually fewer jobs, even though you have almost no machines. So without a doubt, automation will ultimately, it'll replace the jobs. It'll replace them at much higher pay. The trick is the space in between. So we have two really nice case studies, Detroit and Hong Kong. So both of them in the 1980s lost their manufacturing sectors. In fact, the collapse was bigger in Hong Kong. When I was a kid, everything, all the junky toys were made in Hong Kong.

17:11That all got wiped out. It was about twice the number of jobs lost compared to Detroit. Now, what happened in Hong Kong is that within 10 years, they were all replaced with service jobs at twice the pay. Hong Kong today is much richer than Detroit. Detroit, they did not replace the jobs. So a lot of it has to do with public policy. How easy is it to start a business or to expand a business or to get into some kind of gig work? If you can do those things, then you're benefiting from that escalator where things that today don't pay very much in the future do. So my grandmother, for example, was a nurse.

17:46And in the 1950s, nursing paid nothing. It was scut work. It was like it's what we would think of as an orderly today. It was very base pay. Today, registered nurses make one hundred thousand dollars. Right. It's across the board. You can look at all these jobs, child care, construction, things that used to pay poverty wages. Construction workers would sleep in flop houses today. If you're skilled, if you're a drywaller or doing tile or something, you can make six figures. Plumbing used to be a lower middle class job, almost blue collar. Today, plumbers make six figures. So that escalator is the key.

18:22The problem is the part in between. And there you need public policy so that it is very, very easy to start a business. Essentially, you should have no regulations on people starting businesses. Just start doing something. If you're defrauding people, then that's a fraud issue. Other than that, get rid of licensing, the requirements, reduce taxes as much as possible, reduce red tape. Right. Now, when we look at the other side of the deflationary force, this whole idea of immigration policy and deportation, you mentioned earlier that there are people who are leaving the workforce. Right. And I've said publicly that everyone keeps asking, like, why did the Biden administration let so many people into the country?

19:04It kind of seems like a decision that was intentional, but also unexplainable. I actually think that maybe there was a thought process like we need more workers. And so just let everyone into the country so we get more workers. Now, again, I'm not saying that that was the right decision, but that seems to me to be kind of the most plausible reason why you would simply open the borders outside of the political kind of voting, you know, districting type stuff. If we are now removing people from the workforce, that is a deflationary force. I saw that you posted some data that suggested that for every one person who is actually deported by the government, something like five people are self-deporting.

19:40They're actually leaving. So it's, you know, kind of this 5x multiplier. Talk a little bit as to how does this change financial markets and the U.S. economy as this immigration policy gets implemented? Yeah, so right. The 5 to 1 or even 10 to 1 is historical. So we've had a couple of mass deportations in American history, including FDR, Eisenhower. and across the board, about five to 10 leave for everyone that you deport. It's consistent with estimates now saying that about 2 million have left. Now, what's interesting, I think, about migration is that, you know, if you read The Economist magazine or something, they seem to assume that migration is a way to fix a labor shortage.

20:18But think about it for a second, right? Let's say that we annex Canada tomorrow, right? Donald Trump's dreams come true. We get the whole country. We are not going to have 20 million extra workers sitting around waiting for a job, right? Everybody in Canada has jobs. They're doing stuff for each other, right? They're dentists. They're working at McDonald's. They already have jobs. Now, what if you import 20 million Canadians, but not the country? You just take all the people. Same deal. They're going to be occupied doing stuff for each other, right? The mere fact that you've taken away the country doesn't change the situation.

20:47You still don't have 20 million extra workers. So this is what people miss. When the worker first steps off the bus or crosses the river, they look like an unemployed worker, an extra worker. But the thing is that they're going to consume stuff. They're going to get haircuts. They're going to go to the dentist. They're going to go to the emergency room. They're going to get mortgages. They're going to end up occupying as much labor as they create. So you don't actually solve a labor shortage that way. What you do do is you rearrange wages at different levels. So if you bring in a million illiterate migrants, you are going to crash wages for the people that compete with, which are low skilled Americans.

21:27You're going to raise wages. In other words, create new shortages for dentists and nurses and skilled people. So ironically enough, the skilled classes, the white collar, the elite, they love unskilled migration as they should, because that raises demand for their labor. You need more pharmacists, more dentists if you have another million people coming in. the people who are hurt by it are the low income. So now when you remove those people, you do a couple of things. One of them is that you raise wages for the low income people. You lower wages for the high income people or the high skilled people because there's actually less demand for them.

22:05Overall, it's unclear whether that's going to be deflationary or inflationary across the economy. It should all things equal be zero because remember, you didn't actually solve labor shortage. You just redistributed income between different classes in the society. Now, what you will absolutely do is that you will reduce headline GDP because GDP doesn't discriminate between who's doing it. It just says how much is being transacted in the economy. This is also similar with government workers. If you lay off a bunch of government workers, it mechanically subtracts from GDP, but you're actually richer because you've gotten rid of all these parasitic government workers.

22:42It's very similar with deportations. You have lower headline GDP, but the country is richer. The key there is what a lot of people, a lot of financial analysts even do, is they sort of lazily confuse GDP with wealth. Like if the GDP is going up, then we're all rich. OK, that's true in general, but it's not true if the GDP represents low skilled people who you're bringing in, who are then consuming all these government benefits and creating extra debt for everybody else to cover. So not all GDP is equal. So a point that I've been making throughout the year is that even the GDP growth we're seeing, the reality is better than that, right?

23:20Because it's being hit by the government layoffs and by the deportations. But, you know, in terms of inflation or asset prices, I think it's going to be relatively neutral across the board with pockets. So, for example, McDonald's and Wendy's are warning that, you know, not as many people are buying. Yes, that's going to happen because you have fewer low income people in the country. Now, one of the questions that I think people are asking themselves is if you look at 2025 year to date, we've seen gold do really well. We've seen stocks do really well. We've seen Bitcoin not do well. And I think that people are asking themselves, you know, is there this AI bubble?