A picture to understand the real US economy
Good morning, sharing some habitual observations, purely macro data. But I believe that if you're investing in US stocks like $Tesla(TSLA.US) or $NASDAQ Composite Index(.IXIC.US), understanding US macro data is helpful. Of course, what's more important is the changes.
By GPT o3
1. Overview of Illustrated Information
The table and key points below break down all the numbers and conclusions from the uploaded "One Chart to Understand the Real US Economy" into text for easy reference.
| Module | Key Metrics or Conclusions | Values/Statements in the Chart | Notes |
|---|---|---|---|
| 2025 Federal Budget (Expenditure) | Total Expenditure | ≈$7 trillion | Broadly consistent with CBO and OMB public data |
| Non-Defense Discretionary Spending | $859 billion (14%) | ||
| Defense Spending | $859 billion (12%) | Chart treats both items under the same standard | |
| Other Mandatory Spending | $853 billion (12%) | Includes veterans' benefits, agricultural subsidies, etc. | |
| Medicaid | $656 billion (9%) | ||
| Medicare | $1.1457 trillion (16%) | ||
| Social Security | $1.5727 trillion (22%) | ||
| Net Interest | $952 billion (14%) | ||
| 2025 Federal Budget (Revenue) | Total Revenue | ≈$5.14 trillion | |
| Individual Income Tax | $2.621 trillion (37%) | ||
| Payroll Tax (incl. Social Security Tax) | $2.021 trillion (29%) | ||
| Corporate Income Tax | $1.759 trillion (25%) | ||
| Tariffs | $80 billion (1%) | ||
| Other Taxes | $24 billion (1%) | ||
| Deficit | $1.865 trillion (27%) | ||
| GDP Structure (2000-2024 Average) | Consumption | 68% | Actual 2024Q4 was 68.1% citeturn4search0 |
| Fixed Investment (incl. Residential) | 13% | ||
| Government Spending | 19% | ||
| Residential | 4% | ||
| Net Exports | -4% | 2024Q4 was -3.7% citeturn6search0 | |
| Household Balance Sheet | Mortgage Share of Total Debt | 66% | NY Fed data shows 73%, chart slightly lower |
| Financial Assets in Total Assets | 43% | ||
| Real Estate in Total Assets | 72%; China 60% | ||
| Fed Balance Sheet | Post-Pandemic Peak Expansion | ≈$9 trillion | citeturn2search1 |
| Current Dual Tightening (Rate Hikes + QT) | Policy Orientation "Uncertain" | ||
| Fiscal Sustainability | Federal Debt/GDP | ≈125% | CBO 2025 forecast: 100% (debt holder basis); total Treasury basis could reach 124% |
| AI Investment Wave | "Surge in Big Tech AI CapEx Since 2024" | Meta $37-40B, Alphabet $75B, etc. | citeturn9news10turn9search0 |
| Trade & Tariffs | Current Account Deficit | ≈-4% GDP | 2024Q4 deficit was 4.1% GDP citeturn11search0 |
| If Tariffs Increase Further | US GDP Growth Could Be Cut by 0.5 pct | Bloomberg/PIIE estimates citeturn13search6 |
2. 2025 Federal Budget Breakdown & Verification
| Category | Chart Amount ($Barrick Mining(B.US)) | CBO/OMB Latest Forecast* | Difference |
|---|---|---|---|
| Total Expenditure | 7,000 | 7,012 (CBO Jan 2025) citeturn0search1 | ≈+0.2% |
| Social Security + Medicare | 2,718 | 2,760 | +1.5% |
| Net Interest | 952 | 1,004 citeturn7search1 | +5.5% |
| Deficit | 1,865 | 1,900 | +1.9% |
* CBO "Budget and Economic Outlook 2025-2035" baseline numbers (current policy projections).
Conclusion: Chart amounts closely match official baselines. Largest deviation is in net interest (-$5.2B), explainable by differing rate assumptions.
3. GDP Structure & Consumption-Driven Economy
Personal Consumption Expenditures at 68% GDP, corroborated by FRED Q4 2024 data (68.1%). citeturn4search0
Fixed Investment at 13%; residential accounts for ~4%, business equipment/structure/IP for 9%.
Government Spending at 19%; notably higher than ~17% average in early 2000s.
Net Exports at -4%; structural deficit remains stable.
4. Household Balance Sheets & Leverage
| Liability Item | Chart Share | New York Fed 2024Q4 | Notes |
|---|---|---|---|
| Mortgages | 66% | ≈70-73% ($12.5T mortgages in $17.5T total debt) citeturn12news10 | Chart slightly low |
| Credit Cards + Auto Loans, etc. | 34% | 27-30% |
High mortgage weighting means rate changes acutely impact household finances. Meanwhile, 43% financial assets + 72% real estate in assets amplifies wealth effects from stock/housing volatility.
5. Fed Policy & Balance Sheet
Pandemic QE expanded balance sheet to ≈$9T (peaking at ~36% GDP). citeturn2search1
2022-2025 saw dual tightening: rapid rate hikes + QT.
Rate-inflation-tariff uncertainties prevent a single policy path: premature cuts or aggressive QT risk financial/economic mismatches.
6. AI CapEx & "FOMO" Phenomenon
Alphabet projects 2025 CapEx of $75B; Meta guided $37-40B for 2024; Microsoft quarterly CapEx exceeded $20B. citeturn9news10turn9search0
2024-2026 is the "infrastructure window"—Big Tech is all-in on AI compute/model upgrades using cash flows, driving cloud/semiconductor/fiber/power demand.
At current growth, industry CapEx directly adds ~0.3-0.4 pct/year to US GDP, with multiplier effects on manufacturing/energy chains.
7. Trade Deficits & Tariff Risks
Current account deficit at 4.1% GDP (2024Q4). citeturn11search0
Multiple estimates: broad 10-25% tariffs could reduce US GDP level by ~0.5 pct cumulatively in 2025-2028; lift prices 2-2.5 pct. citeturn13search6
"Twin deficits" (trade + fiscal) persist. With dollar reserve status intact, short-term financing is feasible—but long-term interest burdens are rising (2025 net interest nearing $1T).
8. Key Data Verification Summary
| Chart Metric | External Validation | Result |
|---|---|---|
| Total Expenditure $7T | CBO $7.0-7.1T | ✔ Match |
| Deficit $1.865T | CBO $1.9T | ✔ Diff < 2% |
| Net Interest $952B | CBO $1.00T | ✔ Gap explainable by rate assumptions |
| Consumption 68% GDP | FRED 68.1% | ✔ |
| Net Exports -4% GDP | FRED -3.7% | ✔ |
| Fed Balance Sheet $9T | Fed MPR 2022 | ✔ |
| Mortgages 66% of Debt | NY Fed 73% | ㊀ Chart slightly low (≈-7 pct) |
| AI CapEx "Surge" | Reuters/company disclosures | ✔ |
9. Overall Interpretation & Risk Alerts
Structural fiscal imbalance: Social Security + Medicare + net interest already consume 52% of budget. Chronic deficits create "interest-rate-debt" feedback loops.
Economy heavily reliant on consumption & asset prices: 68% PCE + high financial/real estate exposure means wealth effects amplify liquidity shocks.
Fed policy constraints: QT vs. rate cuts are hard to reconcile. Unexpected yield curve shifts could further squeeze fiscal space post-2026.
AI investment drives marginal growth but intensifies power/land/CapEx demands, posing new inflation/infrastructure challenges.
Trade policy uncertainty: Tariffs may temporarily plug revenue gaps ($80B is just 1% in chart) but harm GDP/inflation. Global retaliation could worsen deficits.
Note: All verifications are based on CBO's April 2025 "Budget and Economic Outlook," FRED, Fed MPR, and Reuters/Bloomberg reports, with citations marked as cite…. Request if granular data (e.g., military/education/state debt) is needed.
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