How Trump's 'magical thinking' is destroying the economy

President Donald Trump and his billionaire backers are engaged in “magical thinking,” warned a conservative commentator on Wednesday — and their mindsets are putting America in danger.

Describing America’s economy, Jonathan V. Last in The Bulwark wrote that “the funniest part of this whole thing—the real sorcery—is that the world’s financial markets agree that we’re in a great place and the current status quo is amazing.” Since the start of the Iran war on Feb. 28th, Last noted that “America spent in the neighborhood of $30 billion on the war; the world experienced the worst oil shock in recorded history; inflation is running very hot; there’s been something like $58 billion in damage to infrastructure in the Middle East, which has curtailed industrial outputs independent of the shipping crisis; global companies have lost at least $25 billion in revenue because of the war; and yet the S&P 500 is . . . up since the war started? Way up?”

He added that, instead of the stock market reflecting the economic pain felt by ordinary Americans, “in two days’ time, we will have the biggest IPO in history. SpaceX will shatter records. It will be valued at close to $2 trillion dollars. It will make Elon Musk the world’s first (acknowledged) trillionaire. It’s going to be the most obscene financial orgy in a century. Like watching John D. Rockefeller and Louis XIV spitroast Caligula.”

Last concluded that SpaceX is pricing itself at an outlandish level, $28.5 trillion, even though “the sum total of all goods and services exchanged everywhere on the planet—is $123.6 trillion. So SpaceX is telling investors that the company could scale to a quarter of the entire planet’s annual economic output—give or take.” Characterizing this as practically impossible, Last compared the growing stock market with Trump’s ongoing characterization of the Iran war as successful despite common sense evidence to the contrary.

“This is true in the same way that it is true that Iran’s ‘anti-aircraft is gone’ and that ‘lots of oil is getting out’ of the Strait of Hormuz,” Last wrote. “For a bunch of structural reasons (which we will talk about tomorrow), I expect the SpaceX IPO will go great, even though the stock is, like Trump, full of s———.” He speculated that the magical thinking for both SpaceX stock and the Iran war cannot survive forever, although it is unclear what will end it and what the consequences will be for the world once that happens.

Last is not alone in saying that there is something suspicious about the stock market under Trump. Writing for The Washington Post in May, financial columnist Matthew Lynn said that “a Rose Garden announcement triggers panic on Wall Street, then a post on Truth Social sends stock prices soaring. A promise of upcoming news launches a market rally, which slumps when the actual news is delivered that evening.”

In short, it seems like investors are so intimidated by Trump that they buy and sell based on his whims rather than based on the natural ebb and flow of the markets. In this way, the administration can depict the economy as thriving regardless of the experiences of ordinary people.

“According to a recent report from the financial research firm Fundstrat, Trump was the driver of the five best trading days on the S&P 500 index since the start of his second term,” Lynn wrote. “And he was also responsible for its five worst trading days. Such as? On April 3, 2025, the S&P 500 fell 4.8 percent when Trump announced ‘Liberation Day’ tariffs, and it bounced back 9.5 percent when most were suspended six days later.”

He added, “None of the five best or worst trading days under Joe Biden were driven by one of his announcements. During Bill Clinton’s eight years in office, only one of the five worst days could be pinned on the president or his administration, and none of the best. Sentiment on the stock market was routinely driven by interest rate announcements, corporate earnings or economic data. Not by the guy in the White House.”