Analyzing Economic Trends and Predictions for the 2030s

Every October, the US fiscal year turns over, so every year I sit down with the Treasury's numbers. In this episode from October 2025, I compare fiscal 2025 with 2023 and 2019, look at why the math barely moved across two very different administrations, and walk through why forecasters like ITR Economics expect a long, deep downturn in the 2030s. I close with a short update on what's shifted since, from the Supreme Court's tariff ruling to the pace of AI.

Chapters
(00:00) Revisiting last year's fiscal analysis
(04:18) Different stories, same math
(12:06) Tariffs, Congress and the two Santa Clauses
(15:40) How countries go broke
(17:54) Is your house in order for the 2030s?
(21:44) Forecasting a 2030s depression
(27:08) What's changed since last year

Connect with Paul
Website: https://www.secondnature.solutions
Subscribe to the newsletter: https://www.secondnature.solutions/join
LinkedIn: https://www.linkedin.com/in/paul-spencer-7252118/

#FederalDeficit #NationalDebt #FiscalYear2025 #NetInterest #GovernmentSpending #DebtCycle #EconomicForecast #2030sDepression #FamilyBusiness #ResilienceTalk

Creators and Guests

Host

Paul Spencer

Family Business Advisor

What is Resilience Talk?

From Paul Spencer of Second Nature Solutions, a conversation about the complexities and nuances of building resilient family enterprises, especially in the face of economic and political uncertainties that loom on the horizon. See more at secondnature.solutions.

Welcome to Resilience Talk hosted by
Paul Spencer of Second Nature Solutions.

Let's dive in.

We're sharing an episode from last year,
October 2025, where we talked about the

financial state of the United States.

Uh, it may n- may or may not know,
but the fiscal year for the US is

October 1st, so, um, every year
we've done that financial analysis.

This year we'll be looking
at 2026 in future episodes.

So we wanted to give this to you
now so that you had a little bit of

context about what we talked about last
year, where we were last year as we

move into the analysis for this year.

Enjoy.

So I started the Resilience
Letter, uh, newsletter and

Resilience Talk podcast, right?

And started doing these different
videos in October of '23.

And I'm sure you all remember because
you were very much paying attention and

probably watching all of my videos and
reading all of my newsletters multiple

times, and so it's, like, deeply
ingrained and burned into your brains.

But some of the initial things that
I was talking about was the economy

And thinking about, um, money and the
movement of money, which I think is fun,

and I'm always reading and interested
in that, um, the velocity of money,

right, M2, M1, and QE, all those things.

We, we had done a series
of videos on those.

And so, uh, the fiscal year for
the US government ends on, ends,

ends in September, September 30th.

And, uh, so we had looked at this, which
is the treasury report, uh, for '23.

So I thought it'd be interesting to
look at that, that was two years ago,

and compare that to where we are today,
'cause lots of things have changed

and shifted since then, and then, uh,
see what, see what all that means.

So here we can see just this is '23,
and the September of '23, uh, there was

a deficit of 171 billion, and you could
see that we had roughly 500, basically

half a trillion in total receipts, and
then 600 billion, half a trillion, right?

A little, a little-- Obviously,
there's the deficit here.

That's the difference.

Um, and, um, and you can see that when
we were talking back then, two years

ago, um, I was predicting that, uh, the
net interest, because interest rates

were starting to creep up at that time,
that the net interest was going to

balloon up into this top three, right?

Um, and if we didn't start thinking
about reducing the deficit, um,

because inflation's gonna continue,
uh, interest rates are gonna continue

to go up because of inflation.

That was my theory in, in '23.

And so then you could see for the,
the end of the year, the fiscal

year, um, there was, um, a $1.5

trillion deficit.

We had $4.5

trillion in receipts, $6
trillion in spending and outlays.

Um, you could see here we had custom
duties, which are the tariffs.

Um, those, I guess those were held
over from, uh, from Trump's first term.

So that was $80 billion.

And then you can see net
interest here is $700 billion.

So, um, Social Security is one, $1.3

trillion.

We bring in $1.6,

so pretty good, right?

We're bringing in $300 billion more
than we spend on Social Security.

Um, I'm sure that there's probably
more, uh, than just Social Security,

probably fits into some of the Medicare
stuff too, and, um, health, which

is, um, part of the, uh, Obamacare,
Affordable Care, Healthcare Act, um,

and then national defense, right?

All these things we've
already seen before.

So how does that compare to '25?

Well, um- If we, uh, look for the month,
we have a surplus of, say, 200 billion.

Um, we're bringing in half a
trillion and outlays of 350 billion.

So how does that compare up here?

Well, it's half a bill-
half a trillion, 600.

So, uh, half, uh, half a trillion.

And then this is, this is, uh, 350.

And the reason for that is because
we've got 200 here In a surplus.

And if you were to add that
up, right, you'd get, you'd get

about, um, uh, 550 there, right?

So it's about on par, uh, but
meaning the outlays and the receipts.

Um, but we have a surplus
in, in, uh, September.

And then you can also see
that custom duties, um, 30

billion compared to 80 billion.

Uh, well, actually, I think
that was for the year.

Uh, custom duties was 7
billion for the month, right?

So 80-- uh, 30 billion and,
uh, and then you can see Social

Security, health, national
defense, net interest, 37 billion.

So, um, good, right?

Uh, there's surplus for the month.

Uh, I'll show you later how that's
just part of natural variation.

Uh, but we're basically about the same.

So if you, if you consider, uh, the Biden
administration and its policies, the

Trump administration and its policies,
and, um, all the conversation about,

uh, one is terrible, one is the, the
other one's worse, and they're back

and forth and rah, rah, rah, rah,
is basically they're on par, right?

Nothing is much different
in terms of fiscal, right?

So then we look at, uh, the full
year is, uh, we still have a,

a near tr- $2 trillion deficit.

Um, and here we had…

It's about the same, right?

Um, the total receipts have
increased, uh, by about a trillion.

So we're, uh, you could say the economy's
improving, if that's what that means.

I don't know.

But it's just more that
we're bringing in more money.

Um, but then the outlays,
we're also spending more money.

So 7 billion, 7 trillion, and
two years ago it was 6 trillion.

So 1 trillion more, um, and receipts
are about 1 trillion more, right?

So again, if we look at the big picture,
we may say, "Hey, we're doing great.

The economy's great, but we're spending
just as much, so nothing has changed.

Nothing's changed."

Um, and, uh, some of the inputs, we
can see that the custom duties were

about 200 billion for custom duties.

So that's, that's the tariffs.

So that's a, that's a, um, a big
difference, I guess, if you could

call it that, compared to what it
was in, um- In '23, right, it was 80.

Um, and now it's, uh, more than doubled.

Um, but over here we can see the
net interest, like we're approaching

one trillion for net interest.

And this is going back to proving
the '23 theory that we had when we

were talking through this, is it's,
it's by a hair, uh, in fourth place.

It could very easily be number
two here, uh, taking over.

It's already taken over national
defense, not long before it will

take over health and Medicare.

Um, and then it'll-- it's approaching
one trillion, um, which, uh, is very

close to taking over the Social Security.

So again, the picture hasn't changed.

The stories have changed, the peoples have
changed, the philosophies have changed.

But when we look into what is
actually going on within, um, income

and spending, which is essentially
Congress, nothing has changed.

Um, and actually, uh, we are
increasing our burdens, right?

We're spending more, spending more.

Um, so I thought it would be interesting
to go back and look at 2019 because

that was our last, um, kinda normal, if
you wanna call it normal, before COVID.

Um, and so we had about a
trillion deficit, right?

Custom duties for the year, this is
for the year, was, uh, 71 billion.

Um, we were at three and a half
trillion in receipts and four

and a half trillion in outlays.

Um, so you can see how things have grown.

So four and a half trillion and six.

So here was three and a
half and four and a half.

So, um, again, we're still on par,
still on par for how things are.

You can see net interest back here is
376 billion Um, and then this is fun too.

This is dot matrix land.

So this is 2000, um, and we had a
$237 billion surplus for the year.

And obviously they don't break it
down quite like, like we have now.

Um, so then I, I put a little
chart together using AI, uh,

putting Claude into this, having
Claude do some, uh, some analysis.

So let's, let's just look at a, a visual.

Um, so 2001 was the last
time we had a surplus.

I didn't have it go back into the '90s,
um, but just thinking about 2000s, right?

And you can see that we've been running
a, a deficit, uh, for more than 20 years,

and huge deficits because of COVID.

Um, but we're about on
par with 2008, right?

These are the deficits that
were created due to, um- The,

um, the cycle of debt, right?

Which is bailing out private companies,
bailing out the private economy, uh, the

recession, and those debt levels, uh,
went up and then they came down, right?

And so they're, um, I
would call them stable.

They're, they're moving, right?

But we're not getting any--
We're operating below surplus.

We're not coming up above.

Um, so then I thought it was
interesting to look at September.

Uh, so September has, um, actually it says
right here, "Typically a surplus month

due to quarterly tax filing deadlines."

So if we look at that, another control
chart here where you've got ups and

downs, um, where sometimes we have
deficits and sometimes we have surpluses.

And you can see the deficits are
related to, here's the 2008, right?

Um, and then here's 2020.

So those are significant events
that occurred that create deficits.

So anyway, it's very interesting, um,
not dissimilar to what we do with our

business, which we're looking at things
and we're, we're creating change, we're

running PDSAs, we're making improvement,
but are we really moving the needle?

It may feel like we're doing things
differently, but are we really?

Um, and is, are, do we
get lost in the noise?

Um, and then I thought
this was interesting, too.

Um, a couple of things here.

This was an article, um, around, um,
basically around whether this pers- It's

an, it's an op-ed, whether this person
thinks that, um, the Supreme Court will

rule in favor of Trump or not, the Trump
administration on the, on the tariffs.

So, um, he believes not, and he
thinks that, uh, they'll, they'll

take away the, the ability for the
executive branch to impose tariffs.

Um, so anyway, that's, that's into the
weeds, but I thought this was interesting.

He said that if the court does strike
down Trump's import tariff hikes, the

administration will have an even more
serious twin budget deficit, um, because

the revenue that's been increasing Right?

On these duties, the,
the tariffs will go away.

And so that will also increase the
deficit, um, and then will also

increase the, the, the disparity
between outlays and receipts.

Um, so that's basically what
he's talking about, um, which

I thought was very interesting.

Um, and, um, this guy, this
was, this guy was talking about

from the Washington Examiner.

Found this out on the internet.

But, um, the, his whole premise was
really in order to get Congress to

reduce spending, so he was talking about
that now we've got a shutdown with the

government and, um, we've got the, uh,
the Republicans pass the big beautiful

bill, which actually added more spending
because even though it's not necessarily

quote-unquote spending, it's just keeping
the current tax rates as they are.

And so that is a spending item.

And with the cur- with the
continuing resolution that they're

battling over for shutting down
the government, it keeps spending

levels at current spending levels.

Um, but then the Democrats say they want
to increase spending for healthcare,

and they wanna add another, what, I
forget what the number is, 200 to $500

billion in, uh, spending on healthcare
to add even more on the outlays.

And so his whole thing is that,
uh, this is, there is no basis in

reality in our government policies,
especially within Congress.

Um, they s- uh, this, this is really good.

So the two Santa, Santa Clauses, um,
from this economist, Jude Wanniski.

So he says they, being, uh, the
politicians and Congress, try to

boost their popularity and get
reelected by giving more government

services while lowering their taxes.

So we've got Republicans wanting
to r- lower taxes, and they do that

always, and the Democrats wanting to,
um, provide more government services.

And they're both, uh, winning, right?

They're both lowering taxes, and
they're both giving services,

um, which is unsustainable.

And so his whole thing was, uh, even
though it's really difficult to pass a,

uh, constitutional amendment, maybe that's
a way to get them to, um, to be able to

balance, uh, the budget and to rein in the
spending, um, which is not gonna happen.

Um, so then one other thing, uh,
John Mauldin, thoughts on From

the Frontlines, awesome economic
kind of investing newsletter.

I would recommend it.

Um, but he did a little kinda
writeup on Um, Ray Dalio's book.

Um, and I wanted to share that with you.

So "How Countries Go Broke" is
the name of Ray Dalio's book.

So he's just kind of summing this up,
um, that-- I'm not gonna go through all

of these, but there's basically, uh,
he outlines, Ray Dalio outlines nine

ways, nine cycles, steps, stages of how
governments eventually go broke, right?

Um, and it's not necessarily
that they go broke.

They can survive, uh, but they, the,
the balance has to drastically shift

in terms of their debt in order to
come out the other side and survive.

Um, and so thinking about what I was
just talking about with, uh, Congress

doesn't seem to understand this or
care about it, is that, uh, eventually

they will have to care about it.

And, um, the only way to, uh, get through
that would be to deleverage, which means

spending has to come way down, taxes
probably have to go up, and then, uh,

as part of that deleveraging process is
that the value of money, um, will also go

down, and that's a depressionary cycle.

Um, so, uh, very interesting.

Uh, John, as through his-- John
Mauldin is going through this, says

that we've already gone through
stages one, two, three, and four.

Five is already underway.

Stage seven may be starting at
some of the riskiest, uh, private

borrowers starting to hitting the wall.

Um, and stages six, eight, and nine are
still over the horizon, meaning they

haven't happened yet, and those are the
big ones that I just, just talked about.

So very interesting.

Um, the other thing too I think that's
important is, um In 2023, the same

time when I was putting the whole
resilience talk and newsletter together,

is I did a little, um, presentation
at different roundtables, kind of

a speaking tour on this topic, and
I named it "Is Your House in Order?

And How to Thrive in the 2030s."

So there's a lot of converging, um,
opinions that, um, the 2030s are going

to be this dramatic shift, and it's gonna
have to be a reset for, for, um, for the

United States and essentially because
of that will be for the world as well.

And, uh, so anyway, the talk was
basically around family businesses,

of course, but just understanding
that what they're calling a Great

Depression, um, in the '30s.

And this is, this is really powerful
to just to be thinking about, and

this is not, um, Chicken Little
falling from the sky type stuff.

This is just to be looking at the
reality of things is we're at 7 trillion.

We're keeping on par with our
spending and our receipts.

Um, tariff money may go away, right?

Uh, that's still a drop in the bucket,
but at 7 trillion, how are you possibly

gonna be able to keep up with that, right?

Even if-- Let's just
go back and look at it

7 trillion.

We are almost 2 trillion in deficit.

We bring in 2 trillion just
in income taxes, right?

You can't make up 2 trillion.

It's impossible.

And, uh, you could say, "Let's
tax the rich," but the rich don't

have the money either, right?

You can't tax them $2 trillion a year
and expect, uh, these other items, these

other income, uh, receipts to stay afloat.

So it's, it's impossible.

It's impossible.

The-- Our biggest income source is,
uh, well, our second one, right,

is, uh, is consumed by our deficit.

1.775

is bigger than 1.748

And so there's-- it's nearly impossible
at this point to make this up by a growing

economy or by different, if you wanna
call them, creative income, uh, ideas.

And so really where, where we have
to get to is, uh, we're, uh, I, uh,

I don't even have an opinion on this.

I would prefer less taxes, right?

Less spending so that we can grow
and we have more money, then we

can make decisions and investments.

That's the ideal.

But what will happen is hard choices
will have to be made, cuts on this

side will have to happen, and increases
on this side will have to happen in

order to get this to balance, right?

That's, I mean, it, it's a, it's
third-grade math here, right?

We're gonna have to cut, uh,
$1 trillion in spending and

increase $1 trillion in taxes.

These are all taxes.

It has to be taxes.

It's the only type of income we have.

Taxes.

$1 trillion more in taxes, $1
trillion less in, um, in spending,

and that just gets us to parity.

That's not even surplus, right?

So anyway, back, uh, to the talking
points here is the theories out here,

and, uh, another, another useful,
um, is ITR, which I have down here.

Um, it's a, it's a economic,
uh, consulting group.

They do, uh, business consulting
around business cycles for

manufacturing and all that.

So they've got this whole concept
of the 2030s Great Depression, and

they're not the only ones saying this.

But it's also very
interesting to go look, right?

So deeper and significantly longer
than the 2008 recession, right?

Something nobody living
has experienced today.

Nobody living today, nobody in
our generations, the multiple

generations alive, has experienced,
uh, this type of recession, right?

And, uh- It's gonna be a
7 to 8 to 10% GDP decline.

This is what they're predicting.

Uh, it's twice as deep as the
2008, uh, Great Recession, right?

And that was, uh, 4% decline.

And instead of it being one
year, it's gonna be six years.

So you can just imagine that it's not just
one year and then we get back to growth.

It's gonna be grinding, uh, low GDP
or no GDP or negative GT- GDP for

three, four, five, or six years.

That's what they're predicting.

And you can see that as a comparison,
we were in minus 2% in the '80s, right?

Uh, minus four, 3.7%

in the s- in '70, '73, and '75.

That was bad, right?

Just thinking about the stories,
and you can go look those things up.

People listening have lived
through, lived through those things.

Um, they're say- that was
over two years, right?

They're saying this is
over five, six years.

So it's gonna be something that,
um, is going to be a big shift

for Americans And America as a
nation and for, for the world.

And so why is that?

What are the inputs into that?

Demographic shifts.

So we've got the boomer generation.

They're, um, they're leaving the
labor force, and they're leading--

they're leaving the leadership angle.

That's a huge amount of people
leaving, and so that's a huge

strain on the economy, productivity,
and it's a huge strain on our

government, um, safety nets, right?

So you can see, like what we saw
before, uh, Social Security, health,

Medicare, those are the top three.

Those are all funding large
demographic, um, of, uh, of our seniors.

And then we're also gonna have new
leadership and values coming in because

the millennials, the next big gener-
uh, generation, they're gonna start

taking over because they have to.

Uh, Gen X will be a mentorship-type
value because they're not

as big as a population.

And then you have the Gen Z, and
they're gonna think and value

things in a different way, and
there's gonna be shifts in that.

Uh, we're gonna have China,
India, US global shifts.

We're already experiencing that.

Um, a-again, I wrote this in
20thir- '23, so two years ago.

These things are still occurring,
and they're getting more intense.

Um, industry and
technological shifts, right?

AI, of course.

We're, we're AIing it all
over the place right now.

Um, and then the bene-
government benefit solvency.

Can they remain solvent?

Which we just said, right?

We gotta reduce a trillion on the
spending, increase, uh, a trillion on

the taxes in order just to break even.

And so what, what's going to happen there?

Um, and then government debt.

So 130% government debt, if you remember
in 2008 when s- uh, Greece, Italy, um,

Spain, I believe, had some issues, uh,
going bankrupt, government bankrupt.

And, uh, Greece went bankrupt,
and they had 130% GDP.

So all of this is happening.

It's not gonna go away.

And the reason why, um, this whole
thing up here is a long de-leveraging

cycle, um, and they're calling it a
depression, is because we're gonna

have lots of inflation, and because of
the demographics, uh, there's gonna be

changes in ownership, where the money is.

Um, there's gonna be changes with AI.

There's gonna be changes
on where the spending is.

And in order to gather all the momentum
that we have with the debt The money

is gonna have to be devalued, right?

And that's a depressionary cycle.

So anyway, very interesting to
talk about and to think about, and,

um, time has gone on two years.

It's exactly two years since
we talked about this last time.

And, uh, the theory is, is at
this point, thumbs up, right?

It's being proven.

Um, it's not what we want, it's not
what we like, um, but we can-- we

still have time to prepare for it.

Although, uh, we may say, "Well,
2030s are a long time away," huh?

It's four years from now.

Four years before we're in 2030,
and this is a plus or minus.

It could happen one, two years
sooner, one, two years later, right?

So we're, we're right on
the cusp of all of that.

Well, that was something
to think about, right?

Keep in mind that everything that
we talked about last year, there are

things that have changed, right, that,
uh, that are different from today.

The first thing is we did get a ruling
from the Supreme Court, uh, and they

did rule against Trump on those tariffs.

Still to be TBD, right?

Still to be, uh, determined on what
they're gonna be doing, what, how

the administration's gonna-- They're
still applying some of those tariffs

in some ways, but not in other ways
that they were doing some of that.

And there are still some payments
going back to, um, different,

uh, suppliers and, um, countries.

So that's still in flux.

The second thing is, uh, talked a lot
about the d- the demographic strain

as the boomers start to exit both
ownership and leadership positions

and that potential productivity loss.

So even from last year to today, we
have had a huge, huge advancements

in AI, and still to be determined,
but that is looking like, uh, we're

gonna get a lot of productivity
advancements with less people, right?

Less labor through technology.

All right.

So, uh, we'll be looking at in, uh, next
episode, uh, maybe one, probably two or

three episodes, we're gonna do a deep
dive into, into this year's fiscal state.

Um, so stay tuned for that