What Scares So Many Americans?

Popular Economics Weekly

"The only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." FDR

President Roosevelt understood in his 1933 inaugural speech, “The only thing we have to fears fear itself…” the horrific fears of Americans at the beginning of the Great Depression; the paralyzing feelings that things could only get worse.

I believe many Americans are just as scared today. It’s not only because of the worldwide COVID-19 pandemic that affected the world in many similar ways to the Great Depression. And it explains why American voters could twice elect Donald Trump, a convicted felon and known sexual predator, as president.

Our government is based on a capitalist system that generated a 25 percent unemployment rate and long bread lines. It failed to care for the many Americans who couldn’t adopt to a new industrial world of mass production and mass markets that caused the Great Depression

Such overwhelming fear pervades much of American life today—that has generated our record number of gun holders and incarcerated citizens, as well as record income inequality with the top 1% income earners owning as much as 90% of the population. The gap between haves and have nots is the worst in the developed world.

Roosevelt’s New Deal was the answer in the 1930s by literally putting Americans back to work on the government’s tab who couldn’t find work on their own in programs that would benefit all Americans, such as the WPA that built many of our dams and bridges, and CCC that preserved our national parks.

It protected those who worked with workman’s compensation when they lost their job, the 8-hour day, and gave labor unions the right to negotiate with their employers.

But Donald Trump, because of his innate cruelty and utter disregard for the laws and constitution, was able to convince many Americans that immigrants, gays, a weak military, inferior races were to blame for their poverty.

Perhaps Democrats today would have better understood how much such events as the COVID-19 pandemic had paralyzed Americans and the world in a similar way—if there had been another Roosevelt instead of Donald Trump.

FREDUMichsurvey

The FRED graph of the University of Michigan sentiment survey shows when Americans became most fearful; in the sharp decline in positive feelings that began in January 2024 at the beginning of Trump’s second term; when he began to almost completely ignore the laws of the land and the constitution.

How do ordinary wage earners that comprise most Americans conquer their fears,“convert retreat into advance” without another Roosevelt?

Reverse the economic policies that took away so much of their wealth and driven so many into poverty, for starters. Raise the national minimum wage $7.25 per hour that hasn’t changed since the 1990s.

Then reverse the massive tax cuts enacted that began in the 1980s for both the highest earners and corporations that have saddled American taxpayers with $40trillion in national debt. It’s been done before.

It can be done by understanding Americans’ dreams, instead of exploiting their fears.

Harlan Green © 2026

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

Why the Employment Mystery?

 Popular Economics Weekly

“Both nonfarm payroll employment (+29,000) and the unemployment rate (4.2 percent) changed little in September, the U.S. Bureau of Labor Statistics reported today. Employment in all major industries changed little over the month.” BLS.gov

FREDpayrolls

September’s U.S. official unemployment report was a disappointment—just 29,000 jobs were added vs. +133,000 jobs in August. But that may not be a sign of a weakening labor market.

It should be obvious that the labor market is at the beginning of another recovery with the massive acceleration in government and A.I. spending that eclipses any prior era by $Billions.

The new chip factories and data centers are being built over time. It may be another decade before we will see definitive results in job formation and GDP growth, as happened in prior technological revolutions, such as for computer and the Internet use to spread.

So it’s difficult to see the changes, contrary to the Bureau of Labor Statistics report, or even the final employment numbers. For instance, after losing -10,000 jobs in July, mainly because of supply disruptions from Trump’s Iran blockade, payroll formation was originally reported to be 162,000 jobs in August then reduced to 133,000 hires in its latest revision.

And I’m guessing that September new jobs will probably be revised upward from 29,000 jobs, given that it’s hard to estimate September because totals include seasonal back to school and government hires that aren’t known immediately.

So, all that investment must eventually grow the job market as well. Steve Ratner, Morning Joe’s resident economist, said in a NYTimes opinion piece that we could already be seeing its impact; the labor markets are beginning to hire more technical professionals because of it.

“To date, A.I. has killed a number of jobs but boosted employment for plumbers, electricians, data scientists and market research analysts”.

Manufacturing may be the biggest story. Manufacturing employment was little changed in September (+9,000) but is up by 72,000 since a recent low in December 2025.

And the Institute of Supply Management’s manufacturing index of new orders climbed 1.6 points last month to a robust 55.3%. It means a majority (55.3%) of supply managers report more new orders. Some manufacturers are even hiring for the first time in a few years. Job creation was positive for the third straight month, following a 33-month streak of declines.

So the low September payroll total may be a temporary glitch.

And GDP growth has already been revised upward in the past two quarters. Q1 2026 GDP was bumped up from 2.0 to 2.2 percent and Q2 from 1.5 to 2.5 percent. And there are +3 percent predictions for Q3 growth.

But all that activity is blowing up inflation. The price index for gross domestic purchases increased 5.6 percent in the second quarter GDP number, revised down 0.2 percentage point from the previous estimate.

This means there will be another Fed rate hike, but maybe after the November election, which is the tradition so as not to be seen as influencing voters.

“Total nonfarm payroll employment changed little in September (+29,000), following an average monthly gain of 45,000 over the prior 12 months.

Health care employment continued its upward trend in September (+17,000), but at a slower pace than the average monthly gain over the prior 12 months (+33,000).

Will the employment picture improve with literally $Trillions going into the economy? More importantly, will it improve consumers’ confidence in their own future, which has been in the dumps? They have to believe it will for that to happen. A.I. robots won’t do it.

That is the conundrum, as former Fed Chair Greenspan would say.

Harlan Green © 2026

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

Consumers Breakout For Holidays

 Financial FAQs

“Personal income increased $66.6 billion (0.2 percent at a monthly rate) in August, according to estimates released today by the U.S. Bureau of Economic Analysis (BEA). Disposable personal income (DPI)—personal income less personal current taxes—increased $68.6 billion (0.3 percent), and personal consumption expenditures (PCE) increased $190.8 billion (0.9 percent).” BEA.gov

I said last week better economic growth depends on the consumer to keep shopping despite the higher inflation and Federal Reserve actions that raise consumers’ cost of living. And there may be at least one more +0.25 percent hike this year.

And rising prices haven’t stopped consumer spending yet. The Federal Reserve’s main consumer measure, the Personal Consumption Expenditure Index (PCE), shows consumers shopping more; maybe because they haven’t run out of savings and want to enjoy the holidays and Christmas?

The jury is out on why they continue shopping. Tariffs and the Iran blockade haven’t stopped them yet, just made it more expensive. But they are depleting their savings because personal incomes, mainly wages, aren’t keeping up with the rising prices.

So what are consumers buying says the PCE? Just about everything they need; motor vehicles, energy (gas, diesel fuel) in the face of higher prices, to no one’s surprise.

A big jump in employment (+162,000) last month may also have encouraged consumers to be braver. This month’s unemployment report could be a repeat.

Continued economic growth will also depend on the rest of the economy, of course. Most business investment is with the military and A.I. construction but that won’t help consumers, whose spending makes up two-thirds Gross Domestic Product growth.

Construction also surging because of the A.I. build out, for instance. That shows in the S&P Manufacturing Index growth.

“This week’s flash PMI surveys pointed to a sharp acceleration in US activity. The S&P Global US Composite PMI rose from 56.0 in August to 58.4 in September, its strongest reading since July 2021. Both manufacturing and services strengthened, while employment growth accelerated and business costs picked up. S&P Global described the combination as a distinctly hawkish signal for interest rates.”

This is also could better the mood of consumers. But that’s not enough to sustain their spending for long. The Trump administration has cut back other programs, defying congressional mandates, that would benefit consumers and thus boost longer term growth.

That won’t happen as long as Trump viciously cuts more of the healthcare, education, and environmental protection programs. And the immigration crackdown is depleting many of the service sector jobs that immigrants populate.

We can also say the 7 percent plus fixed mortgage rates have stopped the housing sector in its tracks, further shrinking growth potential.

But consumers might as well make the most of these holidays as long as the good times last!

Harlan Green © 2026

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

A 'Hard Landing'?--Part II

 Popular Economics

“The number of job openings was little changed at 7.1 million in August, the U.S. Bureau of Labor Statistics reported today. Hires changed little at 5.2 million, while total separations were unchanged at 5.1 million. Within separations, quits (3.1 million) were unchanged, while layoffs and discharges (1.6 million) were essentially unchanged.” BLS.gov

FREDjolts

Will the federal Reserve engineer a hard or soft landing in this new rate hike cycle just beginning? A soft-landing is possible, but something has to be done about the rapid rise in interest rates.

The last time the Fed acted to tame inflation was during the post-COVID-19 pandemic recovery when CPI inflation had reached 9 percent.

But it worked. There wasn’t another recession and the economy has had five years of continuous growth since then, in large part because of the bipartisan recovery aid, including personal checks paid to almost all Americans.

More than $5Billion was invested in the recovery from the worst recession since the Great Depression.

Can the Fed do a repeat performance under new Fed Chair Kevin Warsh, an actual economist?

The just released JOLTS report shows that better economic growth is ahead, even with the Fed’s first rate hike since 2024. The actual unemployment report is due and will give more clues—such as whether hiring picks up.

So the hard landing scenario—which is an engineered recession when the Fed holds interest rates too high for too long--I believe is less likely, even though bond interest rates are the highest in 20 years; a danger single that credit conditions are tight for both businesses and consumers.

The Jobs Openings and Labor Turnover survey shows the number of job openings has been gradually increasing from its low of 6.55 million openings last December and is now 7.1 million.

There were 5.2 million hires and 5.1 million separations (i.e., quits), thus approximately 100,000 net new jobs were possibly created in August. This should be positive news for the upcoming August unemployment report.

If higher job formation continues, consumers will spend more despite the Fed’s actions to raise their higher borrowing costs. Consumers aren’t feeling good about the cost of anything since the Iran war.

They will need a confidence boost. They aren’t very happy per the latest Conference Board survey.

“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M Peterson, Chief Economist, The Conference Board. “The Present Situation Index fell sharply, while the Expectations Index slipped further into negative territory.”

But higher job creation numbers might do the trick and allow a soft landing, especially if the A.I. build out will create the good jobs that are needed to run the new economy.

Harlan Green © 2026

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

More Economic Growth?--Part II

Financial FAQs

“Real gross domestic product (GDP) increased at an annual rate of 1.5 percent in the second quarter of 2026 (April, May, and June), according to the second estimate released today by the U.S. Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 2.1 percent.” BEA.gov

FREDgdp.

I don’t believe a recession is near, I said last week. The five-year cycle of economic growth begun with the recovery from the Covid-19 pandemic could continue.

For how long? The longest growth cycle to date was during the Obama and Trump I administrations—2009 to 2020 (see above graph). And that was because of the massive government spending to bring U.S. out of the 2008-09 Great Recession.

This is despite Trump’s economic wrecking ball that has reduced nonfarm payroll formation to just 31,000 per month over the past year and canceled or reduced many of President Biden’s bipartisan bills that boosted investment in infrastructure, healthcare, environmental protection, and healthcare services.

And what about the Fed’s rate hike(s)? Barron’s Randall Forsyth reports that interest rate markets believe the Federal Reserve risks causing a recession, or stagflation at least, by raising its Fed Funds rate +0.25 percent one to two more times to fight very stubborn inflation.

That is why economic growth slowed to 2.1 percent and 1.5 percent in Q1 and Q2 this year that the Fed could further damage because of its hawkish rhetoric on inflation.

But something remarkable is happening that could pull Americans away from the precipice. The Atlanta Fed’s GDPNow estimate of third quarter GDP growth is 5.1 percent for the second consecutive month, above most economists’ predictions.

Why? Consumers and governments are on a spending spree, and some $800B is being invested in the construction of A.I. data centers blanketing the country where many Americans don’t want them.

This is while corporations have record profits, which will extend the record stock market run whose prices are already in nosebleed country. The Price-to-Earnings ratio of the S&P 500 is 28 to 1, already far above its long term 15 to 1 historical ratio, according to economist Robert Shiller of irrational exuberance fame.

Trump and Republicans can’t do much more damage to growth. Their policies are failing at almost everything they attempt. Trump’s signature tariffs are illegal and require refunding, which will aid the bottom line of corporations and lower the prices of such as Target and Walmart.

He has failed to win the Iran war, and the world is finding ways to work around the consequent energy shortages. And renewable energy sources are making a comeback.

The Japanese have even agreed to build small nuclear reactors and two huge natural gas energy projects in the Midwest and South.

Consumers haven’t stopped spending, either. Surprisingly, American retail shoppers are out in force again with the 1.2 percent August sales increase. Many consumers seem to be recovering from the shock to energy prices since the beginning of the Iran War.

And maybe payroll hiring will continue to improve with the 166,000 additional hires in August. But the bottom line is the Iran war must end as well, and everyone knows it.

Harlan Green © 2026

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

 

More Economic Growth Ahead

Financial FAQs

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2026 is 5.1 percent on September 17, unchanged from September 16 after rounding. After this morning’s housing starts release from the US Census Bureau, the nowcast of third-quarter real residential investment growth decreased from -4.3 percent to -4.7 percent.”

GDPNow

This five-year plus cycle of business growth that began after the COVID-19 recession could continue for years. I have become much more upbeat about our economic future.

All signs are pointing to perhaps a large jump in economic growth for several years, despite the geopolitical chaos. Why? Trump and Republican actions may not be as damaging to the world economies from his tariffs and desire to have a second Gilded Age that has created so many robber barons and the massive concentration of wealth.

The massive A.I. investments and stock market highs say that it could continue despite the reordering of world markets amid so much geopolitical uncertainty. This could outweigh the effects from tariffs and the unending Iran war that continue to elevate inflation. Growth isn’t being boosted by just the A.I. build out that is projected to cost some $800B, more than all residential real estate investment.

The manufacturing and service sector activity as measured by the latest Institute of Supply Management indexes are still expanding, causing long-term interest rates to rise as well.

“In August, the Services PMI^® registered 55.4 percent, an increase of 1.3 percentage points compared to July’s figure of 54.1 percent. The Business Activity Index remained in expansion territory in August, increasing 2.6 percentage points to 61.7 percent from July’s reading of 59.1 percent.”

“The Manufacturing PMI^® registered 54.6 percent in August, 1 percentage point below the July figure of 55.6 percent. The overall economy continued in expansion for the 22nd month in a row. (A Manufacturing PMI^® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.)”

The Atlanta Fed’s GDPNow estimate of third quarter GDP growth is 5.1 percent for the second consecutive month, above most economists’ predictions. Consumers and governments are on a spending spree, as well as the construction of A.I. data centers that are blanketing the country.

The longest positive growth cycle to date was during the Obama and Trump I administrations—2009 to 2020, slightly eclipsing the 1990’s Clinton era that ended with four years of budget surpluses.

S&P also chimed in with its composite output index growing the fastest in five years. But will it withstand the Federal Reserve rate hike cycle just begun, with maybe a second rate boost this year?

The key to prolonging this business cycle is also the labor market, which has been subpar until now. The August 162,000 total nonfarm payroll employment was a total surprise, given the average monthly gain of just 31,000 over the prior 12 months.

Surprisingly, American shoppers are out in force for the first time this fall after several pauses as they rushed to get ahead of rising prices for the holidays, I said last week.

So corporations must keep hiring, in spite of the looming fear of A.I. robots supplanting many jobs.

Harlan Green © 2026

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

Will It Be a 'Hard Landing'?

Popular Economics

“The US LEI receded slightly in August, the first monthly decline since March of this year,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Four out of ten components fell compared to the previous month, with consumer expectations remaining a significant strain on the Index.”

 

LEI

Does the new Fed chairman want to be another Paul Volcker, whose Board of Governors raised the Fed Funds rate to 20 percent to cure the stagflation surge of the 1970s? We don’t need another ‘hard landing’, the economic term for an engineered recession.

New Fed Chair Kevin Warsh said at the most recent FOMC meeting that the Fed would do what it takes to restore confidence in the Federal Reserve to fulfill its mandate of low inflation with maximum employment.

And to make its point the 12 Fed Governors voted unanimously to raise their Fed Funds rate +0.25 percent, thus raising the Prime Rate from 6.75 to 7.00 percent that governs most installment loan and credit card rates.

So the surge in August retail sales might not be a good thing, as much as consumers would like to celebrate another good holiday, since how is the Fed to bring down inflation otherwise when consumers are a major cause of it?

The core personal consumption expenditure index—the version of the Fed’s preferred inflation measure for consumers that excludes food and energy prices—has exceeded the Fed’s 2% target for over 60 months.

The Conference Board’s Index of Economic Indicators (LEI) that attempts to predict future growth has been flashing signals of a slowdown for months per its graph above (downward slope of blue line).

But even the tariffs and Mideast wars haven’t slowed down consumer spending enough. The Fed is saying that it has waited too long to act to bring down inflation, which is endangering economic growth and the U.S. currency.

Chairman Warsh also said five years was too long to wait for the inflation rate to return its 2 percent target rate because of the tariffs and Middle East unrest. It was last this low during the COVID-19 pandemic.

Of course, “The odds of a serious Fed policy mistake are uncomfortably high and rising,” warned Mark Zandi, chief economist at Moody’s Analytics, in a post on X, I quoted last week.

Barron’s Randall Forsythe cites David Rosenberg of Rosenberg Research on what can be the most dangerous mistake, “Unless oil prices come down quickly. The only way by which interest rates bring inflation back to the 2% target is “by destroying enough demand to offset the supply loss. That is a recession by design,” he concludes.

Economists call it a ‘hard landing’. And that has always been the dilemma; how can the Fed boost interest rates just enough to engineer a ‘soft landing’, which means bring inflation back down to its long-term average without causing a recession?

This is the rock and a hard place I’ve been talking about. It can’t be done without real pain.

Harlan Green © 2026

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