I spent a good deal of time researching and writing about the 2025 tax bill. And then I saw the Atlanta Federal Reserve’s GDPNow chart for March 3, and decided you can read my summary next week. 

Recently, I was sitting with a friend who’s an Italian immigrant. She was reading me texts from her friends there, asking why Americans were not in the streets over what is happening in our country.

Up to now, there’s been noisy chaos, but it’s not been quantitatively clear that things have taken a turn.

Five weeks ago, we had a generally strong economy, with 4% unemployment and strong GDP growth. The only country in the world to land softly after the pandemic.  Not perfectly, but relatively gently. 

The Atlanta Federal Reserve makes a forecast based on weekly GDP reports called GDPNow. I watch it, because I am a big ol’ nerd. Here’s where we are as of Monday,

March 3:

That’s a swing in gross domestic product (GDP)—the amount of stuff we make and consume—from +3.8% to -2.8% in five weeks. 

This is a self-inflicted wound. We’re NFL star Plaxico Burress putting a loaded handgun into the elastic waistbands of our sweatpants and ruining our careers by shooting our own groins. (Twenty months in jail for shooting himself. True story.) 

Our ability to function has been impaired by 7% due to uncertainty, tariffs, and scattershot federal workforce reductions. And that’s before the aggressively stupid 25% tariffs with our entwined trading partners Canada and Mexico (and another 10% with China) kicked in on March 4.

Ferris Bueller fans: anyone, anyone? Tariffs have been disproven as an economic tool for almost 100 years, since they were a major factor in starting the Great Depression.

Were you counting on lower food prices? Guess where we get 80% of fertilizer? Canada. Guess where we import most of our fresh food from in the winter? Mexico. You can play this game across industries. We’re 30 years into the North American Free Trade Agreement (NAFTA). Even if you disagree with it or don’t like its effects, it’s not possible in a month to unwind our open border trade or establish large-scale, cross-industry domestic manufacturing capabilities. 

Back in November, I wrote about how uncertainty creates functional freeze. This is what that looks like across a large economy. Consumers are reducing their spending. Sentiment is down by 10% and expectations for inflation are up.

Business leaders are unsure. You are one—how are your mentals, as the kids say? We’re seeing unanticipated Q1 budget freezes for the fourth consecutive year. Marketplace called it an “economy of caution.” 

This is just obnoxiously unnecessary and aggressively stupid. Mentally stable people don’t break things for 97% of the population to make self-fulfilling conditions for their saviour complexes. But here we are, in an emotionally and financially abusive executive relationship.

These are my strategy questions now:

• Which customers will be impacted by a downturn? By how much? 

• Who will have disposable income / budget in the next 12-24 months? Do we have those relationships?

• How will 5% price inflation impact us? 10%?

• What aspects of the proposed tax bill impact this business and the owner’s and employees’ finances, either positively or negatively? How will that impact our compensation plans? (More on this next week.) 

• Do we have adequate financial reserves? Should we get a 7A loan and/or line of credit? Should we underpay our taxes and use a payment plan? (Yes, you can do that, as long as you arrange it before you miss a deadline.) 

Proactively, increase your pipelines, secure your contracts, and make time weekly to  quickly check in with partners and clients. 

If you have the cash, keep investing in your retirement plan so you get the benefit of dollar cost averaging (DCA). If you’re nearing retirement, or your stomach can’t take another downturn, it might be time to move some funds into bonds. We’re certainly going to be issuing a lot of them. TIPS could be a good strategy.

I’d like to have better news than that ugly chart. And it’s not too late. I cannot stress how aggressively stupid and entirely unnecessary these tactics are. We were on our way to managed inflation and step-down progress on interest rates. Just take the nicely inflated ball with the downfield blocking and run, man. All you had to do was pick it up. (Sorry for all the football. I need to lay off Mina Kimes’ Bluesky.) 

As we’ve seen over the past few weeks, executive orders can be rescinded as fast as they’re written. Enough angry constituents should eventually wake up your Congressional representatives. Continue to actively contact them and be direct about your concerns. Don’t worry about a script—you’re a business owner in their district and you are concerned about [pick something above.] “These aggressively stupid trade policies” is legit and acceptable.

If you’d like to hearten my Italian friend and yell in the street with me and others, join your local version of these national protests (one and two and three) over the next week.

March Deadlines

Deadlines coming up on March 15:

• For S-corps and LLCs taxed as S-corps, your Form 1120S corporate tax filing is due. This deadline can be extended to September 15.

• For multi-member LLCs and partnerships, file Form 1065. While no payment will be due, this is the basis for the K-1 you’ll need to file with your personal taxes. This deadline can also be extended.

• If you have an existing LLC and you want to switch to being taxed as an S-corp in 2025, file your conversion paperwork.

All those strategy questions? I’ll cover them in next week’s AMA, on Thursday, March 13 at 10 AM PT. If you’re a newsletter subscriber, you’ll receive the Zoom link and a reminder in advance. 

If you got this newsletter from a friend, register to join here. Send your questions to [email protected].

Speaking of aggressively stupid government situations, the BOI filing requirement is both on and off (because of course it is). This was my last advice; it still holds.

BloombergBusinessweek: When it comes to change, businesses respond faster than governments. Voting with your wallet is highly effective. Check out this story on how large CPG companies like PepsiCo and Kraft Heinz Foods are hustling to cut out artificial food dyes based on consumer demand. 

Teen Vogue: Want to pay your kids? Illinois and California have relatively new laws guaranteeing fees and legal rights for kids appearing in family influencer videos, with six more states under consideration. This should make it even easier to pay your kids when they appear in your marketing. 

ESPN: In a tough Los Angeles winter, we are lucky to have two of women’s college basketball’s top five teams, UCLA and USC. This week, watch them in the Big Ten Tournament, fighting for top seeding in March Madness. For the first time ever, women’s teams will be compensated for their participation. Here’s a sweet Nike hype video for USC guard JuJu Watkins, coming off two stellar performances in defeating higher-ranked UCLA. I approve of the use of AI to make a version of this for your business bestie.