Will Consumers Recover?

Financial FAQs

“Retail trade sales were up 0.6 percent (±0.5 percent) from October 2025, and up 3.1 percent (±0.5 percent) from last year. Nonstore retailers were up 7.2 percent (±1.2 percent) from last year, while food service and drinking places were up 4.9 percent (±1.8 percent) from November 2024.” US Census Bureau

FREDretailsales

Retail sales were choppy in 2025, to say the least. Even the slight uptick in November after two months of contraction won’t stop President Trump’s wholesale destruction of the U.S. economy.

Sales declined or were barely positive in six of 11 months through November 2025, per the FRED graph of monthly retail sales and the future doesn’t look brighter for most Americans.

Suffering consumers and businesses have tried every which way to avoid the higher prices from Trump’s TACO tariffs (Trump Always Chickens Out) that can change on a whim and cause consumers to pull back their spending in the face of sharply rising prices caused in large part by Trump’s economic policies.

Or avoid rising insurance costs because Republicans won’t subsidize insurance premiums for some 20 million low-income Americans.

We report retail sales because it comprises approximately half of consumer spending and consumers support some two-thirds of economic growth. So consumer behavior is closely watched by economists attempting to predict the future.

But President Trump’s single-minded policy of levying import taxes on most of the world by fiat—to lower the trade gap between imports and exports which he claims is unfair—is not a good way to do business or run a country. And it continues the wholesale destruction, both at home and of our foreign alliances.

Take Trump’s return to “Drill baby drill” policies, for instance, that are not only causing Detroit automakers to lose $trillions in having to switch back to combustion engines but make more people sicker from the increased air pollution that we thought we had conquered with the EPA’s Clean Air Act.

Ford Motor has just announced a $19.5 billion charge to restructure its EV (Electronic Vehicle) and GM $7.6 trillion in losses over the past two quarters because of Trump’s war against electric vehicles, losses from higher tariff taxes on parts that go into its manufacture and removal of purchase incentives to buy EVs.

It’s hardly a surprise that many of Trump’s executive orders are ad hoc; not only meant to pay for the huge tax cuts in the Big Beautiful Tax Bill that have run up a record federal debt but to coerce our allies to pay for his empire building, such as levying 25 percent tariffs on NATO members that say they will protect Greenland from military seizure.

The question will be can consumers continue to shop in the face of so much chaos, with fewer entering the workforce? Less the half the number of jobs are being created monthly since last Fall’s government shutdown.

The Fed’s January Beige Book on the current state of our economy summed it up. Rising costs are the main elephant in the room.

“Cost pressures due to tariffs were a consistent theme across all Districts. Several contacts that initially absorbed tariff-related costs were beginning to pass them on to customers as pre-tariff inventories became depleted or as pressures to preserve margins grew more acute.”

Consumers are becoming very nervous in the face of such an unknown future, a future that depends on the actions of a man who can willfully destroy an economy to further his own interests.

Harlan Green © 2026

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

This inflation Isn't Going Away

Popular Economics Weekly

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in December, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment.” BLS.gov

FREDcpi

It’s no surprise that CPI inflation is still high—up +2.7 percent in a year. And I fear it can’t come down for ordinary Americans, at least, without another recession.

The gap in the graph shows why. In was in part because of the government shutdown when congress couldn’t agree on insurance policies that would bring down health care costs. And prices are rising elsewhere, especially in groceries and other everyday items without a Federal Reserve and regulatory agencies (such as the Consumer Financial Protection Bureau) able to do their job.

The inflation data gap is therefore the most important item in the CPI report. The ignorance of upcoming data could breed more inflation, especially during the ongoing wars; both domestic (tariffs), foreign (Ukraine), and Trump’s threat to fire more government statisticians he doesn’t like.

Why? Because it creates supply chain shortages, and there’s the upcoming budget battle for the full fiscal year. What if there’s another shutdown in February because congress can’t agree on a full year’s budget?

We know that data lapses increase the possibility of more bad news, which breeds only more economic uncertainty. That’s what businesses are fearing, and so not hiring more employees or knowing what to plan for the future.

And who takes the most advantage of the data blackout? Supermarkets that can sneak in higher grocery prices. That’s a main reason for soaring food costs that have risen +3.1 percent in the CPI report—in double digits for some products like beef and coffee. And don’t forget the ICE arrests of agricultural workers that farmers are complaining about and I mentioned last week that are contributing to the food shortages.

Electricity costs are up +6.7 percent, as well. These are the everyday items that make consumers unhappy. And why not? Candidate Trump promised to bring down prices on “day one” of his second term, and Americans are no longer believing him.

USA Today reported that the New York Times' Dec. 23 average, which includes the Gallup numbers, found Trump had a 42% approval and 54% disapproval ratings. RealClearPolitics' daily average is similar, at 43% approval and 53% disapproval.

USA Today also cited Gallup’s Economic Confidence Index, which summarizes Americans’ evaluations of current economic conditions and their perceptions of the economy, hit -33 in the recent poll. It marks a 10-point decrease from October, and a 19-point dive from June's numbers. It has a theoretical range of -100 to +100, says USA Today.

Can prices come down this year? No, unless there’s a recession, as I said. My biggest fear is a repeat of the last two busted asset bubbles created in part by lax regulations that created more wealth for its wealthiest supporters and took away the protections for ordinary Americans.

Trump’s new Federal Reserve Chairman in May will continue to push down short-term interest rates, which will only create higher inflation, as did former Fed Chair Allen Greenspan to finance the GW Bush terror wars in early 2000. Memories are short in the financial world.

It created massive asset bubbles and ultimately the Great Recession, as the AI buildout is doing today that will create an oversupply that ultimately outdistances demand, which always happens. People forget that it was the busted Dot-com asset bubble in 2000 followed by the housing bubble that led to the 2008-09 Great Recession.

And ordinary Americans ultimately pay the price of such battles—domestic or foreign.

Harlan Green © 2026

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

 

Where Are the Jobs?

 Financial FAQs

“Both total nonfarm payroll employment (+50,000) and the unemployment rate (4.4 percent) changed little in December, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in food services and drinking places, health care, and social assistance. Retail trade lost jobs.” BLS.gov

FREDpayrolls

We’re now seeing the first ‘clean’ results of the damage to the job market in the December unemployment report from the Trump tariffs and immigration deportations since the 42-day government shutdown.

Approximately half the jobs are being created than before the April 2 tariff announcements that is shown in the FRED graph of total nonfarm payroll jobs. That will not make those who are looking for work happy. There are fewer available jobs, in this instance.

Employment continued to increase in food services and drinking places, health care, and social assistance. But retail and everything else lost jobs.

The bottom line is payroll employment rose by just 584,000 in 2025 (an average monthly gain of 49,000), less than the increase of 2.0 million in 2024 (an average monthly gain of 168,000), said the Bureau of Labor Statistics.

Our population may be shrinking, but not enough to absorb all those looking for work—not just to replace the jobs lost to the tariffs, but replacing those jobs lost from deported workers.

There are fewer agricultural workers to harvest the crops, for instance. What does that do to grocery prices? According to Michigan State study cited by The Idaho Capital Sun, more than half of surveyed farmers said in 2021 that they were experiencing some sort of worker shortage, It found that when domestic farm employment declines by 10%, food prices of labor-intensive crops increase by around 3%.

We can now see the damage Trump’s attempt to make his own laws is doing to the U.S. economy. He cannot legally levy most tariffs that haven’t been approved by congress. They are supposed to be negotiated by the trade partners involved, not by executive order.

That’s why Trump has driven up prices on housing construction and auto manufacturing, for instance, because of higher tariffs on steel, aluminum, and lumber, and why the goods producing sector, such as in manufacturing and construction, lost -21,000 jobs in December.

But consumers in the top 10 percent income bracket with assets in real estate or the financial markets are continuing to dine out and travel, as I’ve been saying.

Employers aren’t hiring more workers, in other words. Those taking part-time jobs because they couldn’t find full-time jobs rose 980,000 and those that want jobs but haven’t been looking for jobs recently rose 684,000 in 2025.

Businesses are supposed to expand and hire more employees this year because they can write off capital expenditures in the same year they are spent in Trump’s new tax law.

But AI cannot replace all those jobs that businesses will need to grow this year and beyond, because it takes time to automate production, though the stock prices of those AI companies that have been rallying of late don’t know that yet.

So the question will be can consumers still shop and spend as they did last year, which is why GDP growth of late is surging? Will the level of consumer spending, capital investments, and higher exports hold up unless companies begin to hire more workers?

A lot of consumers are already unhappy with the higher prices in everyday items. This is even though University of Michigan’s first New Year’s gauge of consumer sentiment rose to 54 in a preliminary January reading from 52.9 in the prior month.

“It is the second straight gain and the highest level of sentiment since September. Consumers perceived some modest improvement in the economy,” the survey found, although sentiment remains nearly 25% below last January’s reading, said MarketWatch’s Greg Robb.

So this year may be a tossup, in spite of the chaos sewn by a President who doesn’t seem to know or care about basic economic truths. There’s a bit of irrational exuberance in this New Year, so that consumers may keep shopping and corporations make record profits.

The question is what they will do with those profits, expand their markets by hiring more employees or buy back stocks to keep elevate their profits and that of their stockholders?

Harlan Green © 2026

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

Too Few Jobs!

 

Financial FAQs

“The number of job openings was little changed at 7.1 million in November, the U.S. Bureau of Labor Statistics reported today. Over the month, hires were little changed and total separations were unchanged at 5.1 million each.” BLS.gov

CalculatedRisk

The Labor Department’s JOLTS survey is the first look at job formation before the official December U.S. unemployment report, and it isn’t pretty. The number of job hires equaled the number of ‘separations’, or those leaving the workforce for various reasons—voluntary or involuntary. 

(The blue line is Hires and red bars are Layoffs, Discharges, and other in the Calculate Risk graph. The black line is the total number of Job openings. It has fallen from its high of 12,000,000 job vacancies in 2022 after the COVID-19 pandemic.)

This means existing job positions are being replaced but no additional hires. Companies are holding on to their workforce, in other words, replacing those that are leaving for various reasons, but not expanding their workforce.

Trump’s Labor Department doesn’t tell us why but we can surmise that tariffs are the main culprit, since without the Supreme Court decision, companies don’t know if the existing so-called retaliatory tariffs enacted on April 2 are even legal. Imagine the refunds that the Trump administration has promised to return to importers if SCOTUS rules against him!

The number of hires decreased in state and local government, excluding education (-39,000) and in state and local government education (-31,000). Hires increased in federal government (+11,000), said the Bureau of Labor Statistics.

U.S. manufacturing activity fell to 47.9% in December, the Institute for Supply Management said Monday. This is the lowest reading of the year and the 10th straight month of contraction in the factory sector. Any number below 50% signals contraction.

“Looking at the manufacturing economy, 85 percent of the sector’s gross domestic product (GDP) contracted in December, compared to 58 percent in November, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI^® of 45 percent or lower) increased to 43 percent, compared to 39 percent in November,” said Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

ADP, a private payrolls purveyor, has said that just 41,000 jobs were added to payrolls in December. They were mostly in Leisure/hospitality and Education/healthcare, which means the service sector is still limping along.

This is in fact job stagnation, and with the manufacturing sector still in recession and inflation continuing to rise, it’s looking like overall economic stagflation is afoot.

How is a return of stagflation not inevitable with Republicans and Trump continuing to break up the existing world order? He has basically invaded Venezuela and threatened other countries with military intervention, how could it not be otherwise?

Who will want to do business with America at the point of a gun?

Harlan Green © 2026

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

Equality Is Good for Everyone--Part II

 Popular Economics Weekly

“Nineteen states will increase their minimum wages on January 1, boosting earnings for more than 8.3 million workers by a total of $5 billion. In addition, 47 cities and counties will raise their minimum wages, adding to the number of workers likely to get larger paychecks because of lawmakers—or in some cases, voters—taking action to lift state and local wage floors.” EPI.org

 

Happy Happy New Year’s greeting is to those 19 states that increased their minimum wage, and my condolences to those Republican-run red states that haven’t ever increased their minimum wage but relied on the federal minimum wage of $7.25 per hour that was last increased in 2009.

Minimum wage hikes went into effect in 19 states on January 1, 2026: Arizona, California, Colorado, Connecticut, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia, and Washington.

Only four are Republican red states. The rest of the red states still have the federal minimum wage that is worth just $5.25 per hour in today’s dollars.

The advocacy group One Fair Wage (OFW) said  “According to the MIT Living Wage Calculator, there is no county in the United States where a worker can afford to meet basic needs on less than $25 an hour. Even in the nation’s least expensive counties, a worker with one child would need at least $33 an hour to cover essentials like rent, food, childcare, and transportation.”

Yes, equality is good for everyone, but can this happen in this New Year 2026? We will have to move out of the second Gilded Age that Donald Trump is touting to support his tariffs that has enriched his robber barons.

We know how we got here; the huge transfer of wealth beginning in the 1980s with massive Republican tax cuts that is obvious in this historical graph of budget deficits from 1980, when Big Business CEOs took over the running of our government.

Ronald Reagan’s Republicans created the first deficits beginning in 1980. The Clinton administration balanced the budget, creating a federal budget surplus in the years 1997 to 2000.

GW Bush then plunged US back into debt in 2000 with additional massive tax cuts while paying for the invasion of Iraq and Afghanistan. The annual deficits plunged further beginning in 2008 with the need to pay for the 2008-09 Great Recession (large gray bar).

Yet the Obama administration paid the annual deficit back down to its 2004 level. The Trump I era then increased it with more massive tax cuts being paid for once again by the American public. The graph portrays the obvious. The largest annual deficits were created during the years of Republican tax cuts.

More than $9 trillion will be added to the public debt in just the two Trump administrations from the renewal of the Trump tax cuts. So it is obvious that Republicans are mainly responsible for the $36 trillion public debt Americans are saddled with today that must be paid for to maintain the good faith and credit of the U.S. government.

Those tax cuts have benefited the few and lowered the living standard of many Americans, especially in those red states that haven’t raised their minimum wage. So it’s time to pay our enormous debt down that was created by those tax cuts. But that can only happen when enough Americans realize what has been stolen from them.

Can the tide begin to turn in this New Year, another Progressive era and a Teddy Roosevelt appear to end this Gilded Age of corruption? What will it take? Let us hope it won’t be another Great Depression to wake us out of our sleep.

Harlan Green © 2025

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

A Better Economy For Whom?

 Popular Economics Weekly

“…in going from the Biden Administration to the Trump Administration, we have traded an economy that disproportionately benefited low-income workers to one that disproportionately benefits the well-off (particularly those who own a lot of stocks).” Paul Krugman

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Second and Third quarter Gross Domestic Product growth surged (see graph), mainly due to a jump in consumer spending as shoppers rushed to get ahead of the holiday and rising prices.

But this will only confuse the real economic picture. The third quarter is June to September, before the government shutdown. And it didn’t benefit everyone in this K-shaped economy. Some economists are predicting a coming slowdown and maybe recession next year, despite the good news.

That’s in part because fifty percent of the consumer spending is by 10 percent of American shoppers today, according to Moody’s economist Mark Zandi. Incomes of the middle and low-income earners have lost ground from the higher inflation that has reduced their spending power.

Zandi estimates 22 states plus the District of Columbia are now experiencing enough persistent economic weakness from the federal job cuts and shrinking job market that their economies are close to or in recession, mostly in the North and East states. But even New York and California’s economies have slowed and if they follow the trajectory of the 22 states would tip us into an outright recession, says Zandi.

It's hard to equate this prognosis with the Q3 burst in GDP. “Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the third quarter of 2025 (July, August, and September), according to the initial estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent.” BEA

That’s why the bulk of the consumers are spending most on necessities such as healthcare, insurance, clothing, car repairs, gas, housing and utilities. And the prices of most of these goods and services have consumers complaining big time.

The alarm bells are ringing that the worse is yet to come, in other words, if we look under the hood of Chevy, as well as Mercedes owners. With record household debt and a sharply reduced workforce due to government firings and immigrant deportations, the K-gap will only grow worse between the well-off and low-income workers from the rising inflation.

The price index for gross domestic (GDP) purchases increased 3.4 percent in the third quarter, compared with an increase of 2.0 percent in the second quarter.

The personal consumption expenditures (PCE) price index that the Fed uses to gauge inflation also increased 2.8 percent, compared with an increase of 2.1 percent in Q2.

The rising cost of living is also hurting consumer confidence, per the Conference Board’s confidence index; another danger sign. “Consumer confidence weakened for a fifth consecutive month as perceptions of business conditions were negative, and apprehensions about jobs and income deepened,” according to the Conference Board.

Americans blamed their unease on “prices and inflation, tariffs and trade, and politics,” said Dana Peterson, chief economist at the Conference Board.

That is why largest share of consumers—those anticipating that recession is “somewhat likely”—grew again and the small percentage stating that the US is “already in one” crept higher, said Peterson.

Yet the stock indexes are at record highs and the Wall Street rally continues in the hope that AI investments will boost production and bring down the prices of goods and services. Oh goody for the oligarchs!

Many of the low-income workers have only themselves to blame in voting for a man that never intended to improve the lives of workers. His record of bankruptcies to avoid paying investors and workers was well-known before Trump’s first term, so why again?

This administration will soon find out what that means when the other 80 to 90 percent of working Americans realize they have been left behind in this recovery. Actually, the polls are showing maybe they already know.

Harlan Green © 2025

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

Equality Is Good For Everyone!

Answering Kennedy’s Call

“And on the tax front, it’s time for rich people like me to pay more.” Mitt Romney

Getty/Bettmann

This quote from a recent NYTimes Mitt Romney Op-ed is my Christmas message: Equal opportunity hasn’t been available to many Americans, even though it is part of the American Dream—America is the land of opportunity that is taught in schools and heard by immigrants.

Why? Because it’s a larger economic truth that not all Americans have accepted. Equality is good for everyone. It should be self-evident, a statement of common sense. The more equality of opportunity among us, the more we can better ourselves, become more productive citizens, which in turn increases our national wealth (and lowers budget deficits).

It was certainly the dream of immigrants, such as my mother, a British citizen born in Jamaica.

But there are times such as today when many Americans don’t believe it is possible, which is why we are living in another Gilded Age with the worst income inequality of the developed world. It is on a par with developing countries in Africa and has been the major cause of recessions and the Great Depression.

Many have bought the counter narrative by those that don’t like equality, such as Donald Trump and his MAGA supporters, part of the privileged few at the top of the income ladder who want us to believe they are the most qualified to create greater wealth for the rest of us.

This Gilded Age was formed like the last Gilded Age of President William McKinley, from a concentration of power among the wealthiest oligarchs. Then it was monopolies in such as the newly created railroad and oil industries.

Today, it is small government policies of Donald Trump that mirror the trickle-down economic policies of President Reagan because enough Americans believed it, believed government was the problem and cutting taxes the solution, believed that equality is not good for everyone because we live in a zero-sum world with limited resources. What is given to one must be taken from another.

The conservative position espoused by 1970s Economist Arthur Okun, for instance, was that greater equality meant less market efficiencies to produce and so fewer incentives for greater wealth, since leveling the playing field meant leveling out the opportunity for large profits.

But that has never been the case. There has always been copious evidence that the opposite is true; that overly large profits have led to diminished household wealth and breakup of communities.

One can measure inequality with such as the CIA’s World Factbook that ranks inequality among nations. Those with the greatest equality also have less violence, greater freedoms, greater health, and guaranteed vacations!

Richard Wilkinson’s TEDx lecture and book with Kate Pickett, “The Spirit Level” is one of the best studies of the dire effects of income inequality on the quality of life. The most important factor, and a sign of dire consequences when inequality has approached the level of the Great Depression, are the US violent crime and incarceration rates, which Wilkinson discusses at length.

The U.S. is by far the most violent country in the world—worse than any other developed country with the highest incarceration rates. Efforts to reverse such inequality have begun on the local levels, even if congressional conservatives have blocked raising the miniscule national minimum wage of $7.25 per hour that was last set in 2009.

It is worth just $5 per hour today whereas blue states like California and Connecticut have raised their minimum wage to $16.90 per hour in line with rising livings costs.

And there is an increasing awareness of the income disparities, such as the fact that corporate CEOs now earn more than 300 times the income of their employees, and certain hedge fund managers have reported an annual income of $1 billion.

The Center for American Progress launched the Washington Center For Equitable Growth, which aims to deepen the economic critique of inequality. It was set up by Berkeley economist Emmanuel Saez, among others, who is known with his partner Thomas Piketty as the first economists to historically research the history of income distribution over the past 100 years.

The mission statement of the Center explains why it is needed:

“New research suggests that growing inequality in the United States may have broad social and economic effects — by reducing stable demand for goods and services, dampening entrepreneurialism, undermining the inclusiveness and responsiveness of political and economic institutions, limiting access to education, and stunting individual development. Yet our understanding of how these mechanisms interact with the broader economy is limited.”

Mitt Romney’s Op-ed has voiced one of the major issues confronting Americans today—how to fix the overwhelming federal debt load that threatens the ‘full faith and credit’ of the U.S. government.

“The largest source of additional tax revenues is also probably the most compelling for the fairness and social stability. Some call it closing a tax code loophole but the term “loopholes” grossly understates their scale. “Caverns” or “caves” would be more fitting,” said Romney

Donald Trump’s flailing attempts to use higher tariffs to pay down federal debt, when it is in fact another tax on all Americans, is maybe the most important reason to follow Mitt Romney’s advice.

Taxing the wealthiest that haven’t been “paying their fair share”—including Donald Trump’s billionaire supporters, would close one of the largest loopholes that is endangering the U.S. economy, as Senator Bernie Sanders continually reminds us.

Harlan Green © 2025

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