Retail Sales Recovering?

 Popular Economics Weekly

“Advance estimates of U.S. retail and food services sales for May 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $763.7 billion, up 0.9 percent (±0.4 percent) from the previous month, and up 6.9 percent (±0.5 percent) from May 2025.” Census Bureau

 

FREDretailsales

Retail sales are recovering in 2026 because consumers are still shopping, even though paying more for automobiles and gas because of the higher inflation. But it’s emptying their pocketbooks, to no one’s surprise.

So why do they keep shopping? There’s more than a little irrational exuberance prevailing at the moment in financial markets because of optimism over the SpaceX IPO that is breaking sales records. It’s called herd behavior in economic parlance, because its investors seem to believe SpaceX is the next big thing without too much forethought.

Nobel Laureate Robert Shiller calls it lazy thinking, listening to little more than word of mouth or hearsay, or scanning the headlines but not what is between the lines, instead of researching it.

SpaceX is making a tiny profit, yet Elon Musk’s hyper sales pitch has investors believe the sky’s the limit with future earnings from…what, a trip to the moon or Mars? Its IPO has capitalized it as high as established corporations such as Microsoft that have a track record of real profits.

The stock market indexes are still breaking records in part because the major corporations have record profits. And the job market is finally recovering, after almost no job growth last year. The sudden hiring surge is because manufacturing has rebounded; both from the Biden administration’s $5 trillion raised in legislation to modernize U.S. infrastructure and the $1.5-2 trillion suddenly pouring into the A.I. construction of data centers.

In fact, there’s so much irrational exuberance that this so-called A.I. revolution is now being compared to the Dotcom (in 2000) and housing bubbles (2008).

Too much fiber optic cable was laid in the years leading up to 2000 that is only now turning a profit, and too many homes were built during the bubble that weren’t being absorbed by the housing market, resulting in basically flat home sales and too little construction of new homes for a decade.

This is even though the U.S. population has increased by 60 million since 2000, according to the Census Bureau. The result is the lack of affordable housing and record homelessness, a cure of which would be more profitably invested in, rather than A.I.

But despite the market optimism, most consumers have become more cautious. Irrational exuberance hasn’t convinced ordinary consumers who can barely afford to keep up with rising prices. The Conference Board’s Index of Leading Economic Indicators that attempts to predict business cycles, shows too many headwinds for much improvement.

“Consumers are feeling squeezed because everyday costs—especially gas and energy—are rising faster than their incomes, leaving many households with less money available for things like travel, restaurants, entertainment, and shopping. The good news is that businesses are spending heavily on AI, data centers, and new technology, helping to keep the economy growing, while consumers pull back spending,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators for the Conference Board.

Growing retail sales are a positive sign that the economy is improving for consumers as well as market investors but it can’t last unless inflation declines. Will artificial intelligence be the ticket to greater prosperity for all?

Let’s hope so, otherwise the A.I. bubble will also burst.

Harlan Green © 2026

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

"I Love the Inflation."

 Financial FAQs

Huffington Post

Why would our President say, “I love the inflation.” in the Oval Office in front of the world’s press? Huffington Post reported it was after being asked if Trump was concerned about new consumer price index data that showed the annual inflation rate at a 4.2%, three-year high.

Energy prices are skyrocketing with no prospects for a resolution to the Strait of Hormuz closure. And the latest inflation news is that the Producer Price Index for final demand just rose a whopping 1.1% in May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported, also the largest rise in more than three years

And the PPI contains the prices of the raw materials (such as oil products) that go into the Consumer Price Index. So no relief in sight for the pocketbooks of most Americans, the 80 percent of wage-earners that statistics show are now living from paycheck-to-paycheck.

Huffington Post reports the anti-Trump group Home of the Brave said that was why it was already putting the president's remarkable quote on political billboards in 16 states, part of a $15 million advertising buy highlighting the rising cost of living.

Yet there is a booming stock market (Thank you, Elon Musk’s SpaceX IPO). This is while wages rose 3.4 percent in the latest May unemployment report, which means it can’t keep up with 4.2% Inflation.

Most Americans are depleting their savings just to survive. The latest Personal Consumption Expenditure survey shows the sharp drop in personal savings—from 6.4 percent of their disposable income in January 2024 to 2.6 percent today that consumers are drawing from to keep up their spending.

It’s because most of the job growth has been in the lower-wage service sector—such as healthcare, education, and social services. Wages began to drop below 4 percent in May 2024, at the same time as inflation began to rise when Trump announced higher tariffs on all 180 countries in the world, which his advisors had to know meant another tax on consumers.

So the real reason Trump made such a flippant remark must be because he doesn’t give a damn about inflation, is blatantly ignoring the promise he made to voters that he would bring it down from “day one” of his presidency.

Why? He needs taxpayers to help pay down the ballooning debt incurred from his Big Better Tax Bill giving his fellow oligarchs such large tax breaks that it is endangering the full faith and credit of our government.

There’s another ‘balloon’ we should also start worrying about, the $ billions being invested in upcoming IPO's such as Elon Musk’s Space X that has sucked up some $75 billion in investments with little profits to show from it, and two more high-profile IPOs to follow: Anthropic and Open AI.

It’s part of the A.I. boom that’s being touted as another Industrial Revolution. But we mustn’t forget the pain such revolutions cost. The Industrial Revolution dating from 1890 caused 15 deep recessions or depressions, such is the price of such progress.

Or, we can demand that the record number of billionaires being created, and now even Elon Musk, the first Trillionaire created from the SpaceX IPO, pay their fair share.

Harlan Green © 2026

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

Job Market Recovering

 Popular Economics Weekly

“Total nonfarm payroll employment increased by 172,000 in May, and the unemployment rate was unchanged at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality, local government, and health care. Employment in financial activities declined.” BLS

FREDpayrolls

The job market is finally recovering, after almost no job growth last year. The recovery is brutal, per the head spinning FRED payroll graph above; -149,000 jobs were lost in October 2025 and -156,000 jobs were lost as recently as February 2026 before recovering in March (+214,000 jobs), April (+179,000 jobs), and now May (+172,000 jobs).

The sudden hiring surge is because manufacturing has rebounded; both from the Biden administration’s $5 trillion raised in legislation to modernize U.S. infrastructure and the $1.5-2 trillion suddenly pouring into the A.I. construction of data centers.

Corporations are investing as much as possible of their record profits in A.I. that is being touted as the next industrial revolution able to produce more of everything, thus freeing us from the jobs that produce everything.

Fed Governors are already talking about raising interest rates later this year, instead of lowering them to combat the inflation surge. Bond yields have been rising as markets are now expecting higher inflation ahead.

Consumers will be hit the hardest, as surveys now show that just 20 percent can continue to shop as they have been with the rest now living from paycheck-to-paycheck.

This is happening at the same time as retail (CPI) inflation has topped 4 percent, the first time in three years. Its energy index has now risen 23.5 percent in a year, thanks to the Strait of Hormuz closure.

So, 20 percent of consumers can travel, boosting the leisure and hospitality sector, which added 70,000 jobs in May, well above the average monthly gain of 14,000 over the prior 12 months. But food and gas are another matter for the 80 percdent.

Manufacturing payrolls added 7,000 jobs, and construction added 17,000 jobs in May but most of the job growth was in the lower-wage service sector. Employment in local government rose by 55,000, largely reflecting a gain in local government, education (+44,000). Healthcare added 35,000 jobs, in line with the average monthly gain of 38,000 over the prior 12 months.

Former Labor Secretary Robert Reich has predicted what will happen with wealth now concentrated in the hands of so few:

“When so much of our economy is in relatively few hands, we will inevitably get to the point where consumers cannot buy all the goods and services the economy is capable of producing (with A.I.). This puts the entire economy at risk.”

In a sign of the times, sales of existing homes accelerated to their fastest pace of the year in May, led by sales of homes priced at over $1 million, according to research released by the National Association of Realtors. The only categories where home sales declined last month were those homes that are most affordable priced below $250,000.

This second industrial revolution will create fewer high-wage jobs, in other words, because A.I. can already do much of the thinking, problem-solving work as well. Who will take care of the fallout? It will be jobs that improve the human element, particularly in healthcare, which A.I can certainly be helpful in modernizing.

But what about protecting the environment? A.I.’s huge computers use lots of electricity, and water to cool the super computers. But so do ordinary Americans.

Harlan Green © 2026

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

Is Employment Recovering?

Financial FAQs

 “The number of job openings increased to 7.6 million in April, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and total separations decreased to 5.1 million and 5.0 million, respectively. Within separations, both quits (3.0 million) and layoffs and discharges (1.7 million) were little changed.” BLS.gov

FRED/jolts

The employment picture is improving, and there are prospects for more hiring ahead. The question is how long can it last with so much economic and geopolitical uncertainty?

The manufacturing boom is one reason for the employment surge because it’s building out our aging infrastructure, thanks to the Biden administration’s $1.2 trillion Infrastructure Investment and Jobs Act (IIJA). But manufacturing is growing also due to the binge in private investment for the AI build out of data centers I’ve been writing about—maybe as much as $2 trillion in mainly borrowed money.

Biden’s IIJA provides $550 billion in new funding to rebuild roads, bridges, public transit, water systems, and broadband access across the United States on top of $650 billion authorized by Congress for work on existing infrastructure, says Wikipedia.

The latest Institute For Supply Management survey reported:

“The Manufacturing PMI^® registered 54 percent in May, 1.3 percentage points higher than in April and its highest reading since May 2022 (55.9 percent). The overall economy continued in expansion for the 19th month in a row. (A Manufacturing PMI^® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) per Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

The good news is also showing up in vastly improved jobs data. The April JOLTS report on job openings being advertised by employers jumped to 7.6 million from its low of 6.55 million last December.

There was just a 100,000 increase in hires (5.1 million) over separations (5 million), in the report, because employers remain cautious over the tariffs and Iran war. But it’s also a sign they are holding onto their existing employees.

Add to this payroll provider ADP reported that U.S. businesses created 122,000 new jobs in May to mark the biggest increase in 16 months. It’s another sign of a rebound in hiring in what’s been a tough labor market for job seekers.

“Hiring was more broad-based in May than we’ve seen in the last few years,” said Nela Richardson, chief economist at ADP, the U.S.’s largest processor of company payrolls. “The labor market continues to show sustained momentum going into the summer hiring season.”

So economic growth is holding up for now. Q1 was revised downward from an initial 2.0% to 1.6 %, due to slowing consumer spending. Second quarter growth estimates are in the 3% range, with the Atlanta Fed’s GDPNow estimate of second quarter growth at 3.0%.

But an unusually pessimistic result from the University of Michigan sentiment survey reports that inflation expectations are sky high, which will further slowdown spending as consumers become more careful with their money.

“Year-ahead inflation expectations inched up from 4.7% last month to 4.8% this month. The current reading substantially exceeds the 3.4% reading seen in February 2026 prior to the start of the Iran conflict, along with all 2024 readings. Long-run inflation expectations climbed from 3.5% in April to 3.9% in May, notably higher than the 2.8% to 3.2% range seen in 2024.”

So there are many caveats to future projections of the job market and a recovering manufacturing sector. The 2026 International Monetary Fund World Economic Outlook highlights how precarious this recovery is. Our economic wellbeing may depend on the duration of the Iran war, to no one’s surprise. If it lasts more than a few months, the likelihood of recession has increased

Harlan Green © 2026

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