Jay Shambaugh

Spike in oil and natural gas prices is a windfall…for Russia

Another example of how the actions of this administration may be driving allies away from us economically over time. It doesn’t cause a big economic shock today, but it erodes the position of US firms overseas over time.

Nice article from @sdonnan.bsky.social walking through the question of whether the conditions for use of tariffs under section 122 are met.

We have a floating exchange rate and an open financial account. It would be unusual to have a fundamental balance of payments problem in that setting. You can say you don’t like the trade deficit or negative NIIP, but that’s not a “international payments problem”.

Question of the day seems to be “does the U.S. have a fundamental international payments problem?” Answer is easy “no”. We have enough money flowing into the country via the financial account to fund the deficit in our current account. This really isn’t hard.

Has any country said yet what this means for deals they struck under threat of emergency tariffs?

This is good news. But there are many tools Trump can use where Congress has delegated tariff authority. The challenge for him is most of them cannot be jerked up and down and threatened on a whim. This might eliminate or at least slow some of the ad hoc threats.

Appreciate seeing your insights / reporting on Bluesky.

Q4/Q4 core PCE inflation was 2.9% last year (vs. 3.0% in 2024).

Trump's statement on the GDP report includes a parenthetical jab at the Fed chair, but there's not much of anything in this report that tells the Fed it needs to cut anytime soon.

This is for the econ stat nerds. GDP in 2025 grew at 2.2%. Normally, we’d ask, “is that annual average (the average in 2025 vs average in 2024) or q4q4 (the level in 2025:q4 vs 2024 q4). The latter is a better guide of what happened during 2025. This year, they were the same. So no need to argue

a member of Congress should introduce a bill that bans any federal agency or any entity receiving federal funds from naming anything after a sitting president. Make Trump veto that. Or make his supporters go on record supporting the cult of personality.

Fair, but I think if we are worried about market concentration, wealth concentration, or product safety, we’re better off dealing with directly via tax/regulatory/antitrust policy. Having others distance from our companies bc they don’t trust our government doesn’t seem good.

I keep pointing this out to people, but I don’t think it is getting enough traction. By making the U.S. an untrustworthy ally, Trump is making US firms risky partners. Even current allies are looking for ways to disentangle from U.S. tech. A bad long run outcome for the U.S.

Who could have predicted this? (Where “this” is the idea that indiscriminate tariffs bouncing up and down would raise input costs and uncertainty and hurt manufacturing). Oh right. Everyone. Everyone predicted this.

When I worked in the WH, lawyers asked me to resign as a Deacon at my church bc the Board of Deacons had fiduciary responsibility, & I couldn’t be a political appointee at the WH and have that for anything but the U.S. Some see the corruption & think “everyone does this”. No. This is awful & new.

Previously I said I thought the Board of Peace was the best example for @abenewman.bsky.social and goddard’s neoroyalism theory. But as this thread makes clear, we’re witnessing wholesale rewriting of national security policy away from Nation’s interest to Trump/famil/cronies.

YouTube video by Billy Bragg BILLY BRAGG - CITY OF HEROES

I wrote this yesterday about the hero city of Minneapolis

www.youtube.com/watch?v=IKOW...

Occupation of a city. Killing innocent people. Lying about the killing. I’ve never been more ashamed of my government. I spent 6 years in govt. 4 in politically appointed roles. If this had happened then, I’d have resigned. Anyone political in this administration there Monday is morally culpable.

Occupation of a city. Killing innocent people. Lying about the killing. I’ve never been more ashamed of my government. I spent 6 years in govt. 4 in politically appointed roles. If this had happened then, I’d have resigned. Anyone political in this administration there Monday is morally culpable.

I’ve found @abenewman.bsky.social ‘s neoroyalist frame very useful for thinking about Trump’s actions. I’m not sure anything fits the model better than the Board of peace. Not about US national interest at all. Purely for Trump and his family/cronies.

The reality of trying to make US manufacturing great again The fortunes of furniture makers in North Carolina and Foshan in China show the impact of Trump’s tariff regime

Companies now pay more for their parts as other businesses pass on the cost of tariffs — which include duties of 50% on steel and aluminum, as well as “reciprocal” tariffs of 10 to 50% on almost every trading partner.

Amazing reporting by @aimewilliams.bsky.social et al
www.ft.com/content/33ea...

CARNEY: “.. You cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination.” 🔥

As Carney notes, the U.S. has long had power through its economic choke points. We had primarily used this power to combat terrorism, nuclear proliferation, or violation of international rules. So others tolerated/supported this power. Trump is abusing it. The old order is gone at great cost to US.

Trump’s First Year Could Have Lasting Economic Consequences

Finally, from today: The full consequences of Trump's actions will take time to show up. Economists warn the undermining of institutions and alliances, erosion of the rule of law and cuts to scientific research (not a complete list) could do lasting damage.
www.nytimes.com/2026/01/20/b... #EconSky

This is just awful. Not sure which is worse, assume Bessent knows how awful the policy is and is just carrying water, or think he believes this is good policy. This is hurting our economy and shredding decades of alliances, and violates both our laws and international commitments.

Trump’s Greenland Pressure Blitz Reopens Tariff Wounds in Europe President Donald Trump’s fixation on Greenland offers an ice-cold reminder to leaders in Europe and abroad: No deal is ever final.

President Donald Trump’s fixation on Greenland offers an ice-cold reminder to leaders in Europe and abroad: No deal is ever final.

This from @pkrugman.bsky.social made me lol open.substack.com/pub/paulkrug...

Beyond being illegal and terrible strategy, this also highlights why it is and will be increasingly difficult for the U.S. to make “deals” with anyone. Trump cut a tariff deal with the EU a few months ago. Apparently that’s now null and void. Why would anyone trust what we say?

If the Court has not written its ruling on tariffs yet, I wonder how much more proof they need that if the President has this power to use on a whim, he will abuse it. Congress has not granted the President the authority to raise and lower taxes on Americans just because he feels like it.

Much like @atrupar.com says, this is not on the scale of importance as so many other awful things Trump is doing, but destroying the public golf setup in DC is really sad. I’ve never seen a more diverse (socioeconomic & racial) course in my life.