The US Economy according to the State of the Union

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He gave the longest speech in modern history at the event and covered many different topics. My personal favorite moments were the patriotic acknowledgement of various American heroes. The USA mens hockey team that recently won gold medals were in attendance and received a standing ovation. Scott Ruskan, the Coast Guard rescue swimmer who saved 165 lives during the Camp Mystic floods, was recognized. Air Force Staff Sgt. Andrew Wolfe who was shot in the head in Washington DC last year got similar treatment. And Chief Warrant Officer 5 Eric Slover, the heroic helicopter pilot who was seriously wounded during the Maduro raid in Venezuela, was awarded the Medal of Honor (the military’s highest honor) in front of the Commander in Chief and the nation’s leaders. This spectacle was a complete cultural victory for patriotic Americans who want to see the country continue to thrive and understand that our country is built by courageous men and women who are willing to do the impossible for the flag on their chest. President Trump also spent a substantial amount of time discussing the US economy. He reiterated his belief that the administration has led a strong economic turnaround, including bringing inflation down substantially. Here were some of the key quotes: He described inheriting “a nation in crisis with a stagnant economy, inflation at record levels” from Biden, calling it “the worst inflation in the history of our country.” He stated: “Inflation is plummeting,” and “in 12 months, my administration has driven core inflation down to the lowest level in more than five years. And in the last three months of 2025, it was down to 1.7%.” On gasoline: “Gasoline, which reached a peak of over $6 a gallon in some states… it is now below $2.30 a gallon in most states and in some places $1.99 a gallon. And when I visited the great State of Iowa just a few weeks ago, I even saw $1.85 a gallon for gasoline.” He highlighted specific food prices coming down, such as: “The price of eggs is down 60%,” and “even beef, which was very high, is starting to come down significantly.” Now I know there will be an incredible debate about what numbers are accurate and whether the President was “right” or “wrong” in his claims. I am not interested in the political nonsense. I am merely viewing this State of the Union through the perspective of an investor, so I immediately go to the data source I trust most: Truflation. According to the real-time metric, inflation was 2.3% a year ago and it now sits around 0.9%, which is a significant drop in just 12 months. But more interestingly, Truflation is reporting deflation is already here in a few sectors. There is a -1.5% year-over-year growth rate in the median sales price of existing homes. The Truflation Breakfast Index, which tracks real-time price movements across eleven essential breakfast components, including Milk, Lean Hogs, Live Cattle, Eggs, Oats, Orange Juice, Cocoa, Coffee, Sugar, Wheat, and Tea, has seen a substantial decrease in prices over the last 12 months. These are just a few examples where the real-time, alternative metrics are telling a compelling story about the direction for consumer prices. With that said, you will still here many people complain about how expensive everything is right now. Both things can be true at the same time. Prices can be coming down on a relative basis over the last year, while consumers are still feeling the negative effects of the substantial increase in prices over the last half-decade. This is where so much of the controversy and debate around economic data lies in my opinion. Both sides are partially correct, so they each dig their heels in and vigorously defend their position. The most important thing for investors right now is avoiding the rearview mirror. It doesn’t matter what happened 5 years ago, nor does it matter what happened over the last 12 months. The only thing that will impact your portfolio is what happens next and the current risk is deflation. If that becomes reality, the government will print more money and advocate for lower and lower interest rates. Things are about to get even crazier, so buckle up. The State of the Union may have been a spectacle, but you haven’t seen anything yet compared to what is likely to happen in the market. Hope you have a great day. I will talk to you tomorrow. - Anthony J. 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