Who Won the Shutdown?

 Financial FAQs

“What if conservatives succeeded in repealing Obamacare? “Republicans' Obamacare repeal bill would leave 17 million more people uninsured next year, and 32 million more in 2026, the Congressional Budget Office said in an estimate Wednesday. It also said premiums would double by 2026. …By 2026, three quarters of the population would live in areas with no insurers participating in the non-group market, due to upward pressure on premiums and downward pressure on enrollment, the report found.” Huffington Post

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Republicans didn’t win the recent government shutdown because they don’t understand how important affordable healthcare has become to all Americans, not just the wealthy.

They were in fact attempting to take down Obamacare (ACA) once again by not including the subsidies in the continuing resolution that made it available for middle and low-income folk.

Republicans have proven time and again that they want non-senior Americans to pay for health care out of their own pockets, if not through their employer or business. Their extreme dislike of the federal government providing any public healthcare is most evident in Trump picking a very demented RFK, Jr. to lead the Department of Health & Human Services, while slashing Medicare and Medicaid benefits.

It reveals why they are the party of wealthy oligarchs. They are not at all interested in the health of their constituents. It’s why Republican administrations have attempted to repeal Obamacare more than 30 times and why many of the Republican red states haven’t enlisted in the Obamacare premium subsidies that would enable their own citizens to afford Obamacare

So I cited above a CBO estimate from my 2017 Huffington Post article of the benefits to Americans’ health from Obamacare resulting from its passage.

A 2016 Commonwealth Club study said “…evidence indicates that the ACA has likely acted as an economic stimulus, in part by freeing up private and public resources for investment in jobs and production capacity. Moreover, the law’s payment and other cost-related reforms appear to have contributed to the marked slowdown in health spending growth seen in recent years.”

Some of those benefits are:

· Health care spending growth per person—both public and private—has slowed for five years.

· A number of ACA reforms, particularly related to Medicare, have likely contributed to the slowdown in health care spending growth by tightening provider payment rates and introducing incentives to reduce excess costs.

· Faster-than-expected economic growth and slower-than-expected health care spending have led to multiple downward revisions of the federal deficit and projected deficits.

· These trends have also been a boon to state and local government budgets, as job growth has improved state tax revenues while cost growth in health care programs has slowed. At the same time, expanding insurance to millions of people who were previously uninsured has supported local health systems and enhanced families’ ability to pay for necessities, including health care.

We now must wait for the November 20 release of the delayed September unemployment report to learn just how much the shutdown hurt the American economy.

But the almost complete ignorance of Obamacare’s importance by Republicans during the shutdown enabled Democrats’ big win in the November elections.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

U.S. Economy Is Freezing!

 Popular Economics Weekly

“…while the economy is growing thanks to AI spending, it’s a K-shaped expansion: People who were already affluent are becoming more so, but the less well-off are under severe pressure. For example, there are clear signs that middle-to-low income consumers are struggling: car loan and credit card delinquencies are rising, and grocers report that shoppers are buying cheaper varieties of food. At the same time, the affluent are spending freely: the top 10% of the income distribution now accounts for nearly half of all consumer spending.” Paul Krugman

PBS.org

This was the wrong season for President Trump’s Republicans to freeze Democrats out of the just passed continuing resolution or demolish the East Wing. We already have a record fall freeze hitting the Midwest and southern states.

Americans already feeling the freeze is also a good way to describe the Democrats landslide victories in the November elections. The record government shutdown put the U.S. economy on pause, but in fact much of the damage was already done, says Nobel Laureat Paul Krugman, just as Trump seemed oblivious to the timing of the damage being done to the White House,.

Republicans had been losing in the popularity polls this year because they chose to ignore the signs. So they believed that flying blind by keeping the federal government closed without official economic data on employment and inflation was the better option than knowing the truth.

But there are other data to fill the government void in data collecting that affect how consumers behave. The ADP, for instance, a private sector payment provider said private-sector employers shed an average of 11,250 jobs a week in the four weeks ending Oct. 25.

This hit the “middle-to-low income” consumers particularly hard that Krugman is talking about. What about inflation?

Ordinary grocery prices are climbing, forcing consumers to shop for “cheaper varieties of food.” Grocery prices have risen 18.2 percent since January 2022, making a $100 grocery bill approximately $118 today, per CBS News.

And President Trump is flailing in his attempt to mask the damage his tariff war is causing. Overall consumer inflation is stuck at 3 percent in large part because of the tariffs, so he wants to offer $2,000 rebates to consumers while the Fed is cutting interest rates. This would cost more than the import taxes he has already collected, enlarging the federal debt that has ballooned from his Big Beautiful Bill tax cuts.

And his proposed cuts to legal immigration from the longer term, historical average of one million to 7500 annually, will continue to shrink the workforce, even the number of H-1B work visas for highly qualified workers that are badly needed in the tech sector.

All of this will continue to damage economic growth at a time when worldwide economic growth is being affected by the chaos Trump has generated in tearing up existing foreign trade agreements.

No economy can tolerate such uncertain weather over the longer term. Hence investment decisions remain frozen while consumers find shelter for the coming economic winter. How severe will it be?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Why Make America Weak?

 

Financial FAQs

“This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Franklin Delano Rooselvelt

theguardian.com

The Democrat’s election sweep on November 2 is proving that American voters  heeded President Roosevelt’s famous warning at his first inaugural address, that the Democrats' paralysis after the loss to Trump II is over and fear, the greatest enemy of Democracy, can be conquered.

The November 2 elections showed just how illusory were those fears that Donald Trump and Republicans wanted Americans to believe, that the largest, most prosperous country in the world had grown weak. Americans were now in danger and only he and his oligarchs could save US.

In fact, Donald Trump and the Republican Party have been attempting to weaken everything that makes America the oldest constitutional democracy since his first day in office.

He began by slashing of essential government services via Elon Musk’s DOGE computer hackers (such as social security, Medicare, Medicare) that benefit all Americans, the attempt to eliminate the the Department of Education that supports our basic universal K-12 and early childhood educational systems, while picking the most unqualified to run the FBI, Department of Homeland Services, and Health and Human Services so that they are no longer fully functional. 

The brutal roundup of undocumented immigrants, whether they have a criminal record, are decimating the ranks of workers that fill agricultural, manufacturing, and service sector jobs needed to maintain economic growth.

The biggest financial threat to ordinary Americans are the rising prices on basic necessities that most Americans depend on due to tariff rates now at Great Depression levels, impoverishing the majority of Americans that live from paycheck-to-paycheck.

It’s become obvious that the Trump administration’s intent has been to instill as much fear as possible in the most vulnerable Americans that the federal government won’t work for them and only Trump and his oligarchs can same them.

But the recent election and huge protests at the last No Kings rallies are a sign that millions of Americans haven’t been cowed or paralyzed.

In fact, they have said, as did Howard Beale, the News Anchor in the movie Network, “I’m as mad as hell and not going to take this anymore!”

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Are We Flying Blind?

 Popular Economics Weekly

"The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop." Marriner Eccles

 

wallpaperaccess.com

The famous above quote by Roosevelt’s Federal Reserve Chairman, Marriner Eccles on what he believed caused the Great Depression is a warning that the U.S. economy is now flying blind during this government shutdown.

Eccles should know. He guided Federal Reserve policy during the Great Depression that implemented the New Deal.

Economic downturns occur when consumers are tapped out and begin to borrow more than they spend. It is the reason that retail sales and consumer confidence surveys are important signs of whether consumers will continue to shop, or drop, as the saying goes.

And given the economic chaos being sown by the Trump administration during what looks like a record government shutdown, we don’t have any official data being released on when it might happen and what it will look like. So we are flying blind.

There are past recessions that economists look at; the Dot-com bubble that burst in 2001 from over investment in fiber optics that didn’t pan out immediately because it took years for the Internet to be adopted. Now there is over-investment in AI that could follow the same path as the so-called Dot-com recession.

And the Great Depression was largely due to the Herbert Hoover administration allowing tariff rates to rise to unacceptable levels that choked off foreign trade on which many countries, including America, relied on.

There was also the too easy credit conditions of the “Roaring Twenties” that weren’t regulated yet, which allowed the American public to borrow and invest in the stock market for the first time. The October 1929 “Black Friday” market crash followed that precipitated the Great Depression.

So we can take our pick: Trump’s too high tariffs, or too little market regulation allowing shadow lending markets (or junk bonds) to flourish outside of regulated lending channels might cause the next downturn.

Trump’s newest Federal Reserve pick, and former chief economic advisor, Stephen Miran, is even sounding the alarm in calling for larger Federal Reserve rate cuts.

“If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession,” Miran said in a recent interview cited by the NYTimes.

Another danger sign is The Institute for Supply Management’s (ISM) latest report that American manufacturers contracted for the eighth month in a row with no end in sight because of the Trump administration tariffs, reports MarketWatch, which cited several anecdotes in the ISM Manufacturing report.

“Business continues to be severely depressed. Profits are down and extreme taxes (tariffs) are being shouldered by all companies in our space,” said one executive at a maker of transportation equipment.

“Steel tariffs are killing us,” another manufacturer told ISM.

“The tariffs are still causing issues with imported goods into the U.S.,” an executive at a chemical maker said. “The inflation issues continue.”

The closely followed manufacturing index slipped to 48.7% in October from 49.1% in the prior month, the Institute for Supply Management said Monday. Any number below 50% signals contraction.

I’ve already reported that consumers are feeling less confident in the University of Michigan Sentiment survey.

“Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances, the highest reading in a year. Interviews this month highlight the fact that consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labor markets,” said Survey Director Joanne Hsu

The real danger is that we are gleaning all these signs from industry reports outside of the ‘official’ government reports on employment, inflation, and consumer spending just before the holidays.

So, the U.S. economy is flying blind without the usual flight data that tells us where we are headed. Is there a soft landing, or crash landing ahead?

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Will Fed Give Up the Inflation Fight?

 Financial FAQs

 “Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances, the highest reading in a year.” University of Michigan Sentiment Survey

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Federal Reserve Chair Jerome Powell said at his most recent press conference (after the Fed’s October FOMC meet) that they were still committed to achieving a 2 percent inflation target.

Why ? Because inflation is still too high and Chair Powell, et. al., see too much uncertainty ahead. That’s no surprise given the government shutdown, and continuing tariff wars.

The last period of moderate inflation was the decade after the Great Recession, as seen in the Fred Consumer Price Index chart (large gray bar is GR)—that ended with the COVID-19 pandemic. It was during the Obama administration when regulations were created that required banks to play by the rules and hold more capital.

But what if the rules are changed again that allow higher inflation and fewer regulations that the Trump administration says it wants?

The moderate inflation ended because of the COVID-19 pandemic when massive liquidity was injected into the economy during the first Trump and Biden administrations to speed up the recovery. Inflation jumped to a high of 9 percent before declining until the retaliatory tariffs, rising again to its current 3%.

So now there is growing doubt that the Fed can maintain the 2 percent inflation target, since the newest members of the Fed Governors that vote on interest rates were Trump-appointed. And a Trump pick will become the new Federal Reserve Chair next year.

This is while President Trump has been calling for lower interest rates, which with higher tariffs would lead to higher inflation.

Trump claims that won’t happen even though he has raised tariffs to Taft-Hartley, Great Depression levels (thus raising import prices), has raised federal debt because of his Big Beautiful Tax Bill, and is loosening financial regulations that limit market speculation (e.g., in Bitcoin).

Add all this to the chaos generated by a White House that almost daily revises its decisions (e.g., TACO Trump), which makes it almost impossible to predict what will happen next.

Trump won’t admit he is responsible for the rise in consumer prices since April 2. But it happened at the same time that he announced his retaliatory tariffs on the rest of the world.

There is pushback from the bond market, which doesn’t like inflation because it reduces the value of bonds. We can see that certain financial markets are already reacting to the inflation uptick with higher interest rates, which is making consumers increasingly unhappy, even with the second -0.25 percent rate cut in October.

This translates into higher mortgage rates as well, which won’t make the housing industry happy either. So, who will lobby against more easy money to prevent another Great Recession, which happened the last time Republicans pushed through such an easy money agenda by blatantly ignoring financial regulations?

Though no one was punished for it, and American taxpayers paid for the bailout of our financial system. Will that happen again, now that Republicans are once again in charge?

Consumers don’t like higher prices, period, and there is another election in 2026. They might even remember the eight million job losses that followed what was the worst economic downturn since the Great Depression.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Truth About High Tariffs

 Popular Economics Weekly

“High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. Then the worst happens: markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs.” President Reagan

Reagan Library

Was President Reagan predicting what would happen in Trump’s second term as president?

President Trump didn’t like Ontario Prime Minister Dog Ford’s posting of a 1987 radio address by President Reagan criticizing high tariffs that went viral because it was describing what was happening with Trump’s illegal, retaliatory tariffs that are destroying the American economy and chasing our allies into deals with China.

It was obvious President Trump didn’t want his public to know that starting a tariff war with all 180 countries in the world would trigger “fierce trade wars” and sow economic chaos.

Add the job losses for “millions of people” his massive downsizing of the federal workforce that provides the benefits that protect all Americans, while attacking our institutions of higher learning that prepare us for the future, we can see where this can lead.

His actions are already contributing to a skilled worker shortage and the shrinkage of huge segments of the U.S. working age population with his attacks on immigrants that make up 40 percent of our agricultural workers and a large part of our service industry workers.

Is the chaos he is causing designed to destroy the U.S. economy as we know it, “markets shrink and collapse, businesses and industries shut down,” so that all or most power will be concentrated in the hands of the oligarchs and close allies that support him?

It happened in Russia after the collapse of the Soviet Union. Its collapse caused Russian oligarchs and Putin to snap up whole industries for pennies on the dollar, thus concentrating their wealth where Putin could control it.

Why can’t it happen here? Trump adores Putin as his model, but he would need a cowed tribe of supporters similar to Russia’s serb population, the serfs of old, liberated little more than 100 years ago, to sustain his power. Right now, it’s Trump’s White Christian Nationalists (like Putin’s Russian Orthodox supporters), but they are a small minority.

President Trump will only succeed in his scheme if he can convince enough Americans that his tariffs against the rest of the world (and higher inflation) are good for US because it would bring back better-paying industrial jobs to his base in the Midwest that had suffered from the globalization of manufacturing.

But that’s not what President Reagan said. He would also have to convince enough Americans that destroying large segments of the U.S. economy—in public health, environmental protection, social services—is worth the cost of higher tariffs, rather than live as his red state supporters have suffered under Republican rule; many with no minimum wage, minimal or no health care, no environmental protection from increasingly frequent natural disasters, and above all, a distrust in science that would provide them a better future.

We should ask ourselves, why would President Trump enact his agenda outside of most customs and laws, demolish the East Wing of the White House to build a 90,000 square foot ballroom without approved plans or permits?

Trump can only be stopped from his attempt to set up an American version of Putin’s Oligarchy, if enough Americans will believe in President Reagan’s predictions.

Harlan Green © 2025

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Housing Market Is Recovering

 The Mortgage Corner

WASHINGTON (October 23, 2025) – Existing-home sales increased by 1.5% month-over-month in September, according to the National Association of REALTORS® Existing-Home Sales Report. The Report provides the real estate ecosystem, including agents and homebuyers and sellers, with data on the level of home sales, price, and inventory.

FREDexistinghomes

It’s about time. We are seeing a housing revival with existing home sales on a 7-month high for the first time since the 2008-09 Great Recession (wide gray band in FRED graph), as reported by the National Association of Realtors (NAR).

The housing market has been stuck in part because the Fed held off cutting interest rates until its September FOMC. The cut was just -0.25%, and two more rate cuts are expected this year.

That may start a more sustained housing recovery, as fixed mortgage rates are also beginning to decline despite rising inflation since April and Trump’s retaliatory tariffs. (Bond holders don’t like inflation because it reduces the value of bonds.)

"As anticipated, falling mortgage rates are lifting home sales," said NAR Chief Economist Dr. Lawrence Yun. "Improving housing affordability is also contributing to the increase in sales."

Affordability has improved because "Inventory is matching a five-year high, though it remains below pre-COVID levels," Yun added. "Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth."

The 30-year conforming fixed mortgage rate for best credit holders has dipped below 6% to about 5.875% for 0 pts. in closing costs, or 5.50% for a 1 pt. origination fee. The 15-year fixed rate is now 5.25% for 0 pts., and 4.875%, 1 pt. at this writing.

This year’s housing revival first showed up in a boost in new-home sales, according to the National Association of Homebuilders (NAHB). Sales of newly built single-family homes jumped 20.5% earlier in August, to a seasonally adjusted annual rate of 800,000 from an upwardly revised reading in July, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Much of the new-home sales boost was due to a construction surge to as much as 1.9 million annual units after the COVID-19 pandemic, seasonally adjusted. That and record low interest rates during the pandemic caused bloated inventories that builders are attempting to reduce. So they are offering interest rate buydowns to reduce mortgage rates. It cuts into builders’ profits but adds little to the sales price.

Housing construction has declined since then, decreasing 8.5% in August to a seasonally adjusted annual rate of 1.31 million units and construction will probably remain lower until more buyers come into the housing market as mortgage rates decline further.

What about mortgage rates? That hasn’t stopped homebuyers before. The 30-year conforming fixed rate hovered between 7.5% to 5.0% from the beginning of the housing bubble in 2000 to 2010 when homebuyers went wild with subprime loans, until the Great Recession.

The moral of this tale is that homebuyers and lenders have always found a way to finance a purchase with an almost infinite variety of mortgage choices. But the U.S. population is beginning to shrink because of the immigration restrictions. Builders and governments must find more creative solutions to affordable housing to bring more young adults into the housing market.

Challenging affordability conditions have always created headwinds for the housing sector, but that never stopped those that wanted to own a residence during the era of double-digit interest rates in the 1980s and 90s.

The average 30-year conforming fixed rate mortgage didn’t drop below 10% until the 1990s and 7.5% until 2001.

I foresee lenders finding creative ways to finance more homebuyers in the coming years as well.

Harlan Green © 2025

Follow Harlan Green on: https://twitter.com/HarlanGreen