Two Economies, One Country

Chris has written several times about how differently Democrats and Republicans view the U.S. economy. That was confirmed in the May 13th edition of The Economist….“Before the presidential election 50% of Democrats believed that the economy was getting better, against just 6% of Republicans. Today 8% of Democrats and 49% of Republicans respond in the same way…. Democrats are expecting much higher inflation than Republicans…. In Quinnipiac University’s latest national poll 80% of Republicans approve of Trumps handling of the economy while only 2% of Democrats approve.” 

This letter is being written to provide some insight into just how deep the division is between Democrats (so called liberals) and Republicans (so called conservatives), and how far the division has evolved economically. The U.S. now has two separate economies, one liberal and the other conservative. People on each side are thinking about the economy differently, buying differently, and increasingly work in different industries. 

Here are some examples, extracted from a recent article in The Economist, “If Google and YouTube have become too woke for you, consider ditching them for Rumble. Before paying your monthly AT&T bill, you might want to switch to Patriot Mobile, the nation’s one-and-only Christian conservative wireless network. Rather than fruitlessly scouring Hinge for fellow right-wingers you can now make a profile on the Right Stuff, a dating app that helps users get to know each other by eliciting responses to prompts like “January 6th was” or “favorite liberal lie”. To get java roasted by veterans, consider sipping on Black Rifle Coffee’s “Silencer Smooth” (light roast), “AK-47” (medium roast), or “Murdered Out” (extra dark roast). And to protest against Hershey honoring a transgender activist on international women’s day, you can instead buy Jeremy’s Chocolate, where the HeHim bar contains nuts and the SheHer one is unequivocally nutless.”

“And that’s just the beginning. PublicSquare, an online marketplace, is home to 40,000 firms devoted to freedom, the family unit and the constitution. Click through and you can find skin care and artisan jerky, probiotics, banks, app developers and accountants. The businesses listed hope to capture the hearts and wallets of as many as 100m patriots, who together, according to Michael Seifert, PublicSquare’s founder, make up “the third-largest economy in the world by GDP”. Its CEOs, sellers and most avid customers dream of a parallel economy where conservatives need never buy from liberals.” 

Donald Trump Jr. is a financial backer and investor in PublicSquare and was appointed to its board of directors in December of 2024. “As an investor since before PublicSquare's IPO, Trump Jr. has shown commitment to the company's mission and growth. PublicSquare, a platform valuing life, family, and liberty, operates as a woke-free marketplace and payments ecosystem, aligning with conservative values Trump Jr. supports.”

Want to move from a blue state to a red state? Check out Conservativemove.com. That is their specialty. They ask, “Are you tired of your woke workplace?...We understand just how difficult the decision is to move away from a home and State you’ve loved. Our founders left a community they once loved too. We get it. You’re choosing to start a new life somewhere better.”

The deep divide has also found its way into the publicly traded stock market. The MAGA exchange traded fund (ETF), also known as the Point Bridge GOP Stock Trader ETF was started on September 7, 2017. The Point Bridge website calls MAGA “politically responsible investing. The innovative strategy behind the MAGA ETF that allows you to invest in companies that align with your Republican political beliefs. The MAGA Index is made up of 150 companies from the S&P 500 Index whose employees and political action committees (PACs) are highly supportive of Republican candidates.”

On November 3, 2020 Reflection Asset Management launched the first Democratic Large-Cap Core Fund ETF (DEMZ). “The Democratic Large-Cap Core Fund is the first investment product that strives to replicate the S&P 500, without the GOP. It’s a fund that is designed to provide similar risk and performance as the S&P 500, but it only includes companies that have made over 75% of their political contributions to Democratic causes and candidates. We believe the large companies that are run by executives who contribute to Democratic politicians and PACs have been, and will continue to be, more profitable in the future.”

MAGA and DEMZ are both pretty small, with $30.8 million of assets in MAGA and $42.7 million in DEMZ, as of May 19, 2025 (Source: ETF.com) Here is a table that shows the top 10 positions in each ETF:

Just the fact that they exist is intriguing and symbolic of how deep the divide has become. Governor DeSantis, of Florida, exemplified the rift between liberals and conservatives when he brought legal action against Disney in 2023, “Old-fashioned corporate Republicanism won’t do in a world where the left has hijacked big business. He not only spoke those words; he took the fight to Disney, a big business he considered hijacked by the left.” (Source: The Economist) Today, Tesla is probably showing the power of partisanship more than any other company. TD Cowen, an investment bank recently forecasted that Elon Musk’s alliance with President Trump will likely reduce sales by more than 100,000 vehicles a year in Democratic leaning counties but boost sales by twice as much in Republican counties. 

The Economist has analyzed data that shows entire industries have leaned into one camp or the other. For example, places that voted Democratic in 2024 have taken “a greater share of knowledge-intensive forms of economic activity, while dependence on manufacturing has risen in Republican counties". They estimate that “Democrats have two-thirds of American GDP, but that still leaves Republicans with around $10 trillion, making them the world’s third largest economy”.

The next question for both economies may be how much they get hurt or helped by the Trump administration’s trade policies and tariffs. We’ll all see how that goes over the next several months. In the meantime, we are one country with two economies, and the divide could easily get wider and deeper. 

All the best, 
Paul

Paul Krsek
CEO
5T Wealth, LLC
Main (707) 224-1340
595 Coombs St
Napa, CA 94559

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