Voting Against Self-Interest: The Economic Consequences

The Predictable Recession

When I first wrote about this early in the term, recession odds were already climbing, sitting at 45% according to Goldman Sachs, with identical warnings echoing from Moody’s and the Conference Board. At the time, many people brushed those numbers off as political noise, but as we look around in March 2026, those early projections didn’t just hold true; they accelerated.

By late 2025, the Bureau of Economic Analysis was already tracking a clear slowdown, confirming what I had warned about from the start: a recession was unavoidable.

We hadn’t felt the full financial pinch back then, but the writing was on the wall. I predicted that by May or June of that first year, prices would skyrocket as the first wave of tariff surcharges hit online retailers. Groups like the National Retail Federation and the U.S. Chamber of Commerce warned that these tariffs would bleed into every sector, and they were right.

We’ve watched those costs ripple through retail and manufacturing, and because wages never kept pace, the average household budget took a $1,000 hit last year, a number now projected to exceed $2,500 by the end of 2026. This squeeze is being compounded by a fuel crisis driven by the Israel-Iran War, with the Department of Energy now signaling that we shouldn’t expect relief at the pump until the summer of 2027.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

(This article was written early in the administration. It has been updated on March 15, 2026 with outcomes and factual anchors.)

Listen: The Professor’s Audio Briefing.

Key Takeaways: The Cost of Chaos (2025–2026)

• The Predictable Recession: What began as a 45% probability in early 2025 has become a 2026 reality, with Q4 GDP growth stalling at 0.7% and a “Supply-Shock” recession driven by aggressive tariffs and labor shortages.
• The $2,500 Household Tax: The “nickel and diming” I warned about has materialized. Tariff-driven price hikes and surging fuel costs (impacted by the Israel-Iran War) have added an estimated $2,500 to the average annual household budget this year.
• The $14.5 Trillion Miscalculation: While mass deportations were framed as an economic win, data now shows that removing the immigrant workforce guts a 30-year $14.5 trillion fiscal surplus they contributed to the U.S. government.
• The “Efficiency” Myth: DOGE’s promise of $2 trillion in cuts has failed to materialize as the national debt has increased $2.4 trillion.
• A “Repair Rather Than Replace” Economy: Uncertainty has fundamentally changed consumer behavior. Household debt is at $18.8 trillion and foreclosures rising for 12 straight months.
• A $150 Billion Brain & Tourism Drain: Political instability has turned the U.S. into a “do-not-visit” zone for many. Between record-breaking student enrollment in Canada and a $72 billion travel trade deficit, the U.S. has lost a combined $150 billion in international revenue.

The “Nickel and Dimed” Debt Trap

I have said consistently that we will get “nickel and dimed” into debt. When you add $2,000 to a household budget every year for four years, you aren’t just looking at an $8,000 deficit; you’re looking at $10,000 or more in total debt once you factor in the current high interest rates.

By the start of 2026, household debt in the U.S. had climbed to a staggering $18.8 trillion, with credit card balances alone surging as people try to bridge the gap between their stagnant wages and rising costs.

To keep your head above water, you either have to earn an extra $2,000 per year or find a way to cut $2,000 from a budget that is likely already stretched thin. That is much easier said than done, especially when essentials like electricity have risen nearly 5%.

Political Chaos as an Economic Driver

Back when I first warned that political chaos would spill into economic instability, the administration’s attempt to classify Harvard as a political organization to strip its tax-exempt status seemed like a symbolic fight. In hindsight, we can see it was the beginning of a much broader pattern that has fundamentally disrupted the financial stability of our universities and local economies.

This trend of instability was never limited to campus grounds; I talked early on about an incident where an undocumented immigrant’s car windows were smashed by agents. Now that’s a common occurrence, and how lawyers were being stopped at airports to hand over their phones. At the time, these felt like isolated events, but by March 2026, they had morphed into a full-scale economic emergency, perhaps nowhere more visible than in Minnesota.

Under “Operation Metro Surge,” we have seen what happens when militarized enforcement overrides local economic health. In the Twin Cities alone, city leaders recently released data showing that this surge caused a staggering $203 million economic impact in a single month.

That’s $47 million in lost wages from workers too terrified to leave their homes and $81 million in lost revenue for small businesses and restaurants. In Minneapolis’s cultural districts, some immigrant-owned businesses reported revenue declines of 80% to 100%, with many being forced to close their doors entirely.

The ripple effect has hit the very industries that keep the state running. Home builders in the Twin Cities are falling months behind schedule due to a sudden shortage of roofing and drywall trades, while the long-term care industry is seeing its stability threatened as a workforce that is 30% foreign-born goes underground.

What I warned about then, that chaos and efficiency cannot coexist, is now documented with shuttered storefronts in Minnesota, proving that when the government treats the law as a tool for terror, the entire economy pays the price.

The $14.5 Trillion Miscalculation

When I wrote this article initially, I asked: “Has anything improved financially?” And the answer, even now in March 2026, is still a resounding no. Early in the term, I questioned why people would vote for policies that directly harmed their economic self‑interest.

Historically, Bureau of Labor Statistics data shows that job growth has been stronger under Democratic administrations, while Republican ones have seen more frequent recessions. That pattern didn’t break this time; the political instability I warned about unfolded exactly as predicted, leading us straight into the financial volatility we see today.

I asked then why anyone believed we could elect chaos and somehow expect it to work out in our favor. Analysts at major financial institutions have since confirmed that this “policy uncertainty” was a primary driver of the market hesitation that stalled our growth. I also said that if you think removing immigrants is a good idea, the consequences would be financial, and they would not be in your favor. We now have the data to prove it: a major 30-year study recently released by the Cato Institute revealed that between 1994 and 2023, immigrants actually contributed a $14.5 trillion fiscal surplus to the U.S. government.

They didn’t drain the system; they were essentially keeping it afloat by paying more in taxes than they ever received in benefits.

By removing that labor force, we are gutting our own tax base and inviting the labor shortages now plaguing agriculture, construction, and service industries. As organizations like the American Farm Bureau Federation have documented, this reduced labor supply has directly contributed to the higher prices at the grocery store and the slower GDP growth we are all enduring.

Some argued that mass federal firings were necessary to “trim the fat.” Total federal civilian payroll accounts for only about 5% of the federal budget and roughly 1% of our GDP. Even if you eliminated the entire non-defense civilian workforce tomorrow, you wouldn’t touch the structural deficit.

The $150 Billion Cost of Incompetence

Everything in the economy is connected, and we are now seeing that when you pull one thread of stability, the whole fabric begins to unravel. Early in the term, I noted that applications for colleges in Canada were rising sharply among U.S. students, a trend I had never seen in all my years in education.

Today, Canadian universities have confirmed record-breaking enrollment from the U.S., citing political instability and safety concerns as the primary drivers. When those students leave, they take their tuition, their rent, and their future economic contributions with them. This drain isn’t limited to education.

I estimated tourism losses would hit $100 billion, and by March 2026, the U.S. Travel Association had confirmed a staggering $72 billion travel trade deficit. The math is simple: less tourism, less revenue.

We’ve seen this play out in real-time, from the $150 billion hole left by missing foreign students and tourists to the administration denying work visas to groups like the Mexican band “Los Alegres.” By labeling culture as “narco-propaganda” and canceling multi-month tours, the government didn’t “protect” anyone. They simply starved the local venues, hotels, and small businesses that rely on those events.

I’ve always said that chaos and efficiency cannot coexist, and the “Department of Government Efficiency” (DOGE) has proven me right. Elon Musk initially promised $2 trillion in cuts, but by 2026, he’s walked that back significantly, with actual savings barely registering while the “cost” of the department has ballooned. But the real price isn’t just a budget line; it’s the massive breach of trust. Whistleblower complaints have surfaced alleging that DOGE staffers, referred to in depositions as “DOGE bros,” uploaded sensitive Social Security data of nearly every American into an unauthorized private cloud that was subsequently compromised.

Watching the recent deposition videos of these staffers is a horrifying insight into this “efficiency.” When asked to define the very “DEI” programs they were tasked with dismantling, they couldn’t provide a single coherent answer, admitting they simply used AI to scan for keywords like “Black” or “LGBTQ” to flag grants for termination.

This recklessness has led to the story I told of the disabled federal employee whose pension was cut in half. It is one of thousands of pension disputes and abrupt terminations reported by watchdog groups.

In the end, we didn’t get efficiency while our private data was hacked, and the national debt has increased by $2.4 trillion in 13 months.

 Reacting to a Recession: The Cost of Uncertainty

I said early in the term that we were in uncharted territory. While we’ve faced fuel crises and high interest rates before, economists are now describing the 2025–2026 downturn as structurally different, a “Supply-Shock Recession” driven by aggressive tariffs, self-inflicted labor shortages, and administrative disruptions.

I predicted that the sheer weight of this uncertainty would cause people to pull back, and that is exactly what happened. We’ve seen a massive shift in consumer behavior: families are skipping vacations and big-ticket purchases, choosing instead to “repair rather than replace.” Retail has had a substantial slowdown as giants like Saks Fifth Avenue has filed for bankruptcy. Demand for professional repair services has surged while new appliance and vehicle sales have hit a three-year low.

This isn’t just a change in shopping habits; it’s a financial survival tactic. I warned that people would stop paying creditors to save cash for essentials, and by March 2026, the Federal Reserve has reported that delinquency rates have climbed to 4.8%, with credit card and student loan stress hitting their highest levels in over a decade.

Serious delinquencies, those 90 days or more past due, are surging as major banks and credit-reporting agencies document a wave of collections lawsuits. Bankruptcies have surged across the board, whether for large corporations, small businesses, individuals, and farmers. Foreclosures have risen 12 consecutive months.

The fallout has reached into the very future of the American middle class. I warned about trillions lost in the stock market, and we saw that reality hit in early 2025 when a global trade war triggered a historic $3 trillion wipeout in retirement account values.

By now, analysts at firms like Fidelity and Schwab have confirmed that the average 401(k) balance has struggled to recover, with many participants seeing $8,000 or more in expected gains evaporate due to market volatility and “policy uncertainty.”

Final Thoughts

When I wrote this early in the term, I wasn’t making guesses. I was connecting dots based on data, historical patterns, and economic fundamentals. Now, in 2026, those dots form a picture that is impossible to ignore.

The economic consequences we’re living through, increased costs and an affordability crisis,  and the $18 trillion in total household debt, didn’t come out of nowhere. They were predictable, they were preventable, and they are clearly tied to a political choice to prioritize chaos over competence.

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