Good morning. President Donald Trump delivered his State of the Union address last night to a nation that’s increasingly skeptical about his handling of the economy and core business issues. Some key takeaways for leaders from the speech, the longest on record at one hour and 47 minutes and the first to be given amid a partial government shutdown:
On the economy: The president spoke of an economy “roaring like never before,” and it is doing relatively well, growing at an inflation-adjusted 2.2% last year while unemployment is 4.3%. But many voters are pessimistic amid tepid wage growth, with consumer sentiment running 20% below where it was when Trump was sworn in. As my colleague Geoff Colvin points out, that disconnect could create a backlash. Whether the economic growth is K-shaped or E-shaped, discontent and recession signals are brewing among the bottom 80% of consumers. One nod: a proposed $1,000 401(k) match for “forgotten American workers” without such plans. That could cost around $10 billion, a modest amount relative to the roughly $4 trillion in tax cuts over the next decade from the One Big Beautiful Bill act. Those cuts are likely to shorten the lifespan of social security, Medicare and Medicaid, and won’t help a national debt that now exceeds $38.5 trillion, with debt-to-GDP ratios on track to hit 130% within the next decade.) Takeaway: There’s an economic tailwind from tax cuts and tech, but the growing deficit and cost-of-living crisis could curb growth.
