Peter Schiff: Consumers Trust in Trump
In the latest episode of the Peter Schiff Show, Peter dives into the latest on the U.S. economy and presidential race. He highlights the continued surge in Donald Trump’s polling numbers amid economic troubles, pointing to low job openings and increased consumer confidence as signs that Americans expect change. He also critiques the U.S. dependence on foreign financing and the dollar’s reserve status. While commenting on Trump’s pro-tariff policies, Peter, who is no fan of the income tax, points out that replacing it with tariffs would not be sustainable under current federal spending levels.
As betting markets grow more confident in a Trump victory, Peter recalls his early belief that Trump would blow out Biden and Harris:
“I’ve been saying that I thought Trump was going to win since the beginning, since before Biden dropped out. And then after Biden dropped out, when everybody was rallying around Kamala and she was the greatest thing since sliced bread, I just didn’t buy it. I didn’t think the public would buy it. I thought Trump was unbeatable. … I mean, with the weakness in the economy, it’s really hard to believe there could be any other outcome.”
Recent consumer sentiment metrics have also swung into more positive territory, arguably because of hope in a second Trump term:
“Why would consumers be so confident when the data is so bad? I think it’s because October is the month where Trump really started to shoot up in the betting markets and the polls, and where all the media coverage is now conceding that he might win. I think the reason people are now optimistic in an otherwise gloomy economy is because they think it’s going to change with Trump.”
Other economic data is not so good. The latest Job Openings and Labor Turnover Survey report came in far below forecasts, signaling that the economy is cooling down
“The consensus forecast was for 7.9 million job openings, which would have been a slight decrease from the 8.04 million reported the prior month. The prior month was revised down to 7.861 million, and the September number that we just got came in at 7.443 million, way below the lowest estimate because the range was 7.8 to 8. In fact, this number is so low. This is the fewest number of jobs open since January of 2021.”
Peter moves on to the US trade deficit, pointing out that our economy relies heavily on foreign countries trusting our debt:
“It’s the dollar’s reserve status. We pay for all this stuff with the money that we create out of thin air. If we couldn’t do that—if we had to balance our trade like a normal nation, if we had to pay for these imports with exports—we couldn’t do it, and so the goods wouldn’t be coming in. A lot of people still get it backwards. They still think the foreigners are dependent on us because we’re their best customers. … They’re vendor-financing a deadbeat customer who’s never going to pay them back.”
Implementing additional tariffs, aside from hurting American consumers, would also blow up the deficit without massive spending cuts. Indirect taxes are not sustainable, which is why they were abandoned as the federal government grew
“It’s only because they have that direct tax system that the government is able to get this big. That’s why the founding fathers wrote the Constitution to basically make it so difficult for the federal government to collect direct taxes. … They thought the federal government was going to run on indirect taxes like tariffs. But now, with an enormous government, it can’t be financed the way the founding fathers envisioned because we don’t have a country or a government that’s anywhere near what they envisioned. … And if Trump really wanted to make America great again, we would try to go back to that country.”
As we near the end of campaign season, it’s worth revisiting the wisdom of Austrian economist Friedrich Hayek, who spent much of his career arguing there are some problems that the government is fundamentally incapable of solving.
