Weekly Market Update by Retirement Lifestyle Advocates

US Government on Track for a $2 Trillion+ Deficit

         While the deficit trajectory has improved from the beginning of the calendar year, when the US Government’s operating deficit was on a track to total $3.5 trillion, the 2025 fiscal year operating deficit is still on a path to total more than $2 trillion by the end of the year.

         Ryan McMaken, writing for Mises (Source:  https://mises.org/power-market/federal-government-still-track-2-trillion-plus-deficit), notes that the United States Government is now six months into the 2025 fiscal year and the deficit is already $1.3 trillion.

         That’s an increase of 23% over the same period last year and puts the likely end-of-year deficit number at $2.6 trillion.

         Over the first six months of the fiscal year, Federal Government spending totaled $3.6 trillion, up from $3.3 trillion from the same period last year.

         McMaken points out that supporters of the Trump Administration will point to the deficit numbers for the months of February and March and point out that for those two months, the deficit numbers are lower.  In 2024, the government’s operating deficit for the months of February and March was $532 billion, compared with $467 billion this year.  McMaken also notes that the reduced operating deficit was not due to a decline in government spending but instead due to larger tax revenues.

         As far as spending is concerned, actual federal outlays decreased only .4% over the first two months of the Trump term, compared to the same period one year prior.  McMaken also notes that the Department of Government Efficiency, headed by Elon Musk, initially suggested a reduction in government spending of more than one trillion dollars was possible, but recently altered that savings forecast to $150 billion.

         What does that mean for you?

         As I have been stating, it probably means that the US is stuck in a debt death spiral from which it can’t recover.  Operating deficits lead to greater levels of debt, which lead to higher interest rates, which will eventually lead to a loss of confidence in US Government debt.

         This is a topic that I discuss in detail with my RLA Radio Program guest, Mr. Martin Armstrong, this week.  Check out the interview at www.Retirement:LifestyleAdvocates.com if you missed the broadcast on WOOD radio in West Michigan or WJNO radio in Palm Beach County, Florida.

Panama City, Panama Approves Cryptocurrencies for Payments

         The Panama City Council in Panama City, Panama, has approved the use of Bitcoin and other digital currencies for payment for municipal services.  (Source:  https://bitcoinmagazine.com/news/panama-city-approves-bitcoin-and-crypto-payments-for-taxes-fees-and-permits)

         Panama City Mayor, Mayer Mizrachi, reported, “Panama City council has just voted in favor of becoming the first public institution of government to accept payments in crypto. Citizens will now be able to pay taxes, fees, tickets, and permits entirely in crypto, starting with BTC, ETH, USDC, and USDT.”

         If you aren’t familiar with crypto abbreviations, that’s Bitcoin, Ethereum, a stablecoin, and cryptocurrency linked to US Dollars.

         Does this mean that you should invest in crypto?

         My opinion remains that cryptocurrency investing should be done with only the speculative portion of your portfolio.

         Voltaire, in the 1600’s stated that all currencies eventually return to their intrinsic or tangible value, and Warren Buffett suggests that investors should avoid investing in non-productive assets.

         While cryptocurrencies may go higher, perhaps even much higher for much longer, I am confident that both Voltaire and Buffett will ultimately be correct when it comes to cryptocurrencies backed by nothing tangible.

Housing Starts Plunge

         Housing starts dropped a staggering 11.4% month-over-month in March.  (Source:  https://www.zerohedge.com/personal-finance/us-housing-starts-plunged-most-covid-march)

         While housing starts were expected to decline due to rising mortgage interest rates and declining homebuilder confidence, the magnitude of the drop was a bit of a surprise.

         The chart shows that homebuilder confidence is at the same level as at the time of the global health crisis, but home buyer confidence has fallen to a much lower level.

         Home builders are slowing down on projects.  The number of single-family homes under construction is now at the lowest level in four years, continuing a decline that began in 2022.

         Homebuilders are offering incentives to clear excess inventory, which now stands at the highest level since 2007, when the housing market absolutely tanked, as many of you will remember.

         Given these statistics, it’s hard to imagine an interest rate cut by the Federal Reserve helping at this point.

RLA Radio

         This week’s RLA radio program features an interview that I did with Mr. Martin Armstrong, founder of Armstrong Economics.  Mr. Armstrong’s forecasting track record is, in a word, impressive.

I know you’ll enjoy and appreciate his perspective on the current economy and investing markets. 

The interview is posted at www.RetirementLifestyleAdvocates.com.

Quote of the Week

“They broke it to me gently.  The manager came up to me before a game and told me they didn’t allow visitors in the clubhouse.”

                                             -Bob Ueker, a.k.a. “Mr. Baseball”