Why Trump’s 25% GDP Claim Is NOT As Absurd As It Sounds

0:00Hello, everyone. The president wants GDP to grow 25 % a year. AI job loss seems to be way overstated. we got a new way to think about the U.S. economy transitioning, and L.A. public schools, they lost their minds, and they proved the problem with big bureaucracies. We're live today from the desk of Anthony Pompliano.

0:27Before we get into today's episode, I need your help. My goal is to get to 1 million subscribers on YouTube. But today, today's a big day. We have 41 ,000 subs, exactly 41 ,000, zero, zero, zero. That means that you, you can be the one, you can be the one to put us over that. Hit the button and let's get into today's episode. All right, ladies and gentlemen, we need to have some tough talk here. Financial markets, they've learned to listen to the president of the United States. When he talks about asset prices or the economy, pull out your ears and just listen. When he said to buy stocks later this year, it was a great time to buy stocks.

1:00When he said that tariffs wouldn't lead to empty shelves of the Great Depression, you should have just shut up and gone long stocks immediately. It worked out. But this makes sense. The leader of the free world, regardless of which political party, Republican, Democrat, Independent, or an alien, the President of the United States has immense power and influence over financial markets. Simply, the President can make things happen. But every once in a while, this President, President Trump, he says something about the economy that sounds downright outrageous to start. The latest example was a few days ago.

1:30He said that GDP growth should be 20 to 25 % year over year. Here's the exact quote. And we're going to go back to the old days. When we announced great results, it doesn't mean we're going to raise interest rates and try and kill it. It means that instead of 4 % GDP or 3%, which I said it's so wonderful 3%, it should be able to be 20 % or 25%. I don't know why it can't be. You shouldn't kill it. Now, at first, when you hear him say this, this comment sounds absolutely ridiculous. Because you got to remember, the U.S. has averaged 3.2 % annual GDP growth since 1947. So the president is telling us that his economic policies could get us to a growth number that is 700 % higher.

2:12Sounds crazy, right? Well, maybe not. There's a possible path to significant GDP growth. It may be unlikely that we could get to 20%, but it's possible. First, Michael Arout highlights that the real driver on how we get to some higher GDP number, he says, hear me out, was the entire period since the great financial crisis just an unsustainable artificial debt binge? Look at this chart, that is crazy. But if that's true, the US economy could easily grow faster if we were willing to take on substantially more debt. Duh. That may sound like a crazy idea, but that's exactly what we've been doing for the last 25 years.

2:48Take a look at these numbers. The U.S.'s debt to GDP, it exploded from only about 55 % in the year 2000 to nearly 125 % in 2024. We're addicted to debt. There's no other way to describe the situation. But the Trump administration has somehow figured out a way to stimulate GDP growth upwards of 3.5%. And they've done this while reducing the federal deficit and doing so by about$600 billion less. Now, Kevin Hassett, one of the Fed chairman nominees, if you will, He went on television last week and he explained why this reduction in the deficit is important. Take a listen. We've got deficit going way, way down.

3:24So right now it's looking like the deficit for this year will be$600 billion lower than it was last year. That really helps lower inflation. We've got the trade deficit cut in half from last year. And so all these things are things that should continue to move us towards the Fed target of 2%. Now, this doesn't mean that they're going to balance the budget. Let's be clear. In fact, I went from being super excited about a balanced budget order this year, and now I'm very cynical about any president, whether it's this one or another one, in our lifetime being able to balance a budget in light of the structural challenges.

3:55But reducing the deficit by$600 billion is a very, very important milestone, something we should celebrate. So let's go back now to growing GDP at a substantially higher rate. The way you do this is pretty simple. You ease monetary policy, you encourage innovation like AI, and you deregulate as much as possible. Now, there's going to be trade-offs to these decisions, but this is the blueprint for growing GDP much faster. Is there long-term negative impact? Of course. But if you want to grow GDP, that's what you got to do. Take AI as one example. The explosion of innovation and investment from Silicon Valley, they've essentially saved the U.S.

4:30economy. More people should say thank you to them. More than 60 % of GDP growth is estimated to be from AI-related investments right now. And if you couple that with the interest rate cuts, the return of QE, and a Trump-friendly Fed chairman for 2026, I don't know, spells faster growth across the U.S. economy to me. We were promised an economic boom when Trump got elected, and it looks like we're going to get exactly that. You may not like his politics, but he is growing the economy. Now, do I think it's going to be 20 % or 25 % GDP growth? Absolutely not. Very doubtful. But I'll take 5 % to 7 % GDP growth any day of the week.

5:05Now, everyone's heard that artificial intelligence is taking everyone's job. That's why the job market is weakening. That's why the Fed's got to cut rates. everyone points to the big bad boogeyman, AI. They're taking everyone's job. But David Sachs, the AI czar, he recently was on a podcast and he explained that actually AI has not taken nearly as many jobs as everyone thinks. Take a listen. I remember about a month ago, there was a whole wave of very scary headlines, including in a publication I really liked, the New York Post. Nick, maybe you can put this on the screen, claiming that AI was wreaking havoc on US jobs.

5:37This was a headline from the New York Post last month based on the October report from Challenger Gray, which basically tabulates announced layoffs in the economy. And we had a spike in October, and about 20 % of those were attributed to AI. It wasn't even the majority. It was actually a relatively small number. It wasn't even the number one reason. But based on this, you got a wave of scare headlines that AI was wreaking havoc on U.S. jobs. Well, lo and behold, the November Challenger Grade Report has come out, and it makes clear that October was an anomalous spike. The number fell by 53%, and only about 6 ,000 of the layoffs that were announced in November in the entire country were attributable to AI.

6:19This is only a layoff, by the way. It doesn't include job creations. Okay? So, only 6 ,000. And if you look at the year to date in the Challenger Gray report, AI has only accounted for 4.7 % of total layoffs. And that number is self-reported by CEOs. So my guess is it's inflated because if you're a CEO, you'd rather blame AI for your company's non-performance rather than yourself. So 4.7 % is probably the high number. So what we're actually seeing in the data is a very small number of actual layoffs related to AI. and that was corroborated by a new study by Yale Budget Lab, which looked at the first 33 months after the release of ChatGPT, and it said there is no discernible disruption in the labor market.

7:06So that's, I think, a really important fact is regardless of what you want to claim will happen in the future, job loss has not happened yet, not in any meaningful numbers. And in fact, AI has been responsible for about half of GDP growth this year. So GDP growth is about 4%. That number would be at 2 % if it weren't for AI. So within that is a lot of job creation. You see that again with construction workers. So it's just not the case that AI is creating job loss in any meaningful way right now. And people do this Mott and Bailey thing where they're like, well, AI is creating tons of disruption, it's wreaking havoc.

7:46And then you point these facts out and say, no, no, no. I mean, in the future, it's going to. But then they revert to, well, no, it must be happening now, right? The disruption is so profound. So look, we can all argue about what's going to happen in the future, but right now it's not. So there you have it. Everyone keeps blaming AI, saying that AI is taking everybody's job. AI is taking some jobs, but only about 5 % of total layoffs, according to David Sachs. And so that makes the other 95 % of people losing their job, it ain't AI's fault. It's because of other reasons. And so it's really important to understand the drivers of these numbers.

8:18The labor economy is weak. The Fed does have to cut interest rates to actually go after that. But AI actually is going to take way more jobs in the future than it already is. I sat down over the weekend to talk to Jordy Visser. We talked about this idea of the U.S. economy going through a transition. I describe it as a snake that's losing its skin. Take a listen to what Jordy and I had to say about what's happening here and what it means for your portfolio. So financial markets are going through a transition from like an electronic and analog into this digital world. But it also feels like on a macro basis, the US economy is transitioning.

8:52We are going from something that is not digital, something that has not got software at the heart of it. And so in that transition, it just feels like there is immense disruption. And you're almost like shedding skin, you know, like a snake that's going to regrow their skin. It sucks. People lose their jobs. Companies go out of business, all stuff. But it does feel like if you unemotionally look at it, that's kind of what's happening in the economy. Is that a fair assessment in your mind? A hundred percent. But let's say what you're describing is what a recession is supposed to be. So the shedding of the skin, you're supposed to have the weak go out of business and the strong companies survive.

9:32If you have bailouts, you allow everyone to survive. And this got most people angry at the government because they're using the balance sheet to bail things out. That occurred during COVID, obviously. That occurred during the great financial crisis. It occurred during SVB. All of these times where the government or the Fed comes in and basically decides to save things, it's a problem. What you said at the beginning, and I just want to make sure people hear this, every single, unless I missed one, every single business of entrepreneurial thing that you mentioned could be done at home. So one of the things people have to remember is we have advanced because of the cloud.

10:10So if you go through the iterations of the smartphone, and the reason I brought up going from 3G to LTE, 3G to LTE, people should think about as Blackwell being like 4G, like you're going to open up so many new businesses. There is no Uber working without LTE. And the reason is people probably forget this, but do you remember when we first started using Uber before LTE and the car would be stuck and it's not moving or the app would just kind of freeze? That was because there wasn't enough bandwidth for everything that was going on. All of the apps that have now become mega companies, they depended on this next stage.

10:48What you're describing coming out of COVID is the remote work from home. That was not a thing before 2019 in a major way. Now it's normal. My LLC, you know what the business address is? It's my apartment. I mean, everything can now be done at home. I spend most of my time, if I'm not in meetings, working from home because it's the easiest way because the way I've set it up for me to do the time there. And I save the commute time. I save everything. So I think the economy is changing rapidly. One thing I do want to bring up to people, since I've mentioned this a bunch of times, and whenever there's kind of negative things that are out there in terms of views, I think whenever people talk negatively about technology, most traders get, you know, they get kind of pissed.

11:38And the reason is because they want to belong Palantir and belong these things. Next year, I think people have to start to understand that it's going to be a historic 12 to 18 months for IPOs. We're going to have Anthropic come out. We're going to have XAI come to the market. We're going to have OpenAI come and we're going to have SpaceX come. If you take their market caps now, I mean, you're talking a trillion and a half, a trillion, two, two to two and a half trillion dollars of companies that would go public. Why are they going public while Stripe's not going public? So let's get back to your point.

12:15These companies are going public because they need the capital to build out this physical framework to support the intelligence for their businesses. Why did Cursor just raise$3 billion at a$30 billion valuation on the fastest company ever to 500 million ARR? Why did they have to do that? It's a code company. These are new things. And the reason that these are important and the reason that I'm really more negative on tech, you're going to be bringing a lot of supply to the market next year in terms of of IPOs that just has not occurred. And these tech hyperscaler companies, they're doing something they never needed to do, which was borrow money.

12:53So back to your original question, the economy is changing rapidly. And I think the age of software dominating is now getting into a reality that at some point the physical world still exists and you still need power to fuel all this technology. You want to be focused on energy. You want to be focused on transportation. You want to be focused on small cap companies that make LIDAR and make sensors and a whole bunch of things along those lines. They've been left for dead. And that's why I keep coming back to the fact that if you want to find one index that represents everything that you're saying, it's the PMIs.

13:27If the PMIs break above 50 after three years sitting below 50, that is your trigger point that something different is going on in the economy. Now, here's where I think that this is important. Anytime an economy goes through some sort of transition, there's a disruption, there's new technology that's introduced. there's going to be things that are dislocated in asset prices. There's going to be things that are mispriced. Your job as an investor is to go find those mispriced assets. Find the things that the market does not yet realize how valuable they are. Buy them. And then when they go from a contrarian asset to a consensus asset, you capitalize.

14:00See, the thing about investing is that all the financial advisors will tell you to avoid risk, to avoid asymmetry, to avoid volatility. But the best investors in the world, they understand. You want to run towards risk. You want to run towards volatility. You want to find the things that are mispriced and out of favor. And you want to do it before everybody realizes that you got a thing that they're eventually going to want. All right. Every once in a while, I see a data point and I just literally can't believe that it's true. And I got to go do a bunch of research to confirm it. The latest one, LA public schools.

14:31Think about what I'm about to say here. They have lost 26 % of their students since 2014. One out of every four students in LA public schools are gone since 2014. Yet at the same time, LA public schools, the great capital allocators, they've increased their staffing by 19%. So one out of four students are no longer in the school district, but they increased staffing by 19%. As you see here, the government school system is just a jobs program for adults. How is it that you can shrink your actual number of students in a public school, but you got to increase all the bureaucracy, all the staffing, all the administrators by 19 %?

15:09It makes no sense. This is horrible capital allocation. And my guess is the actual salt in the wound is the schools didn't get better. The students didn't learn more. And ultimately it is the population. It's the economy. It's our society that is worse off. We have more government spending and we have less educated students. We got to fix this problem or else it's just going to become this death spiral where education is actually not doing its job. And the government continues to spend more and more of our taxpayer money. And they do it at the ultimate demise of the very kids over the long run that they're supposed to be helping.

15:43That's it for today's show. Thank you guys so much for following along. I appreciate you guys subscribing on YouTube. Please remember to hit the subscribe button and I'll see you guys live tomorrow from the desk of Anthony Pompliano.