Does Inflation Ever Come Down?

Popular Economics Weekly

“From the preceding month, the PCE price index for March increased 0.7 percent. From the same month one year ago, the PCE price index for March increased 3.5 percent.” BEA.gov

FREDpce

Inflation is rising again, to no one’s surprise, from its low of 2.3 percent in April 2025 when Trump first announced his worldwide tariff hikes, to 3.5 percent in March this year. The reasons are clear, inflation is rising on Trump’s watch, not Biden’s.

And inflation almost never comes down without another recession. This is verified in the above graph of Federal Reserve’s preferred Personal Consumption Expenditure price index from 1980. The gray bars are the five recessions since 1980, and each clearly shows the beginning of the sharp downward move of prices in the PCE index

The only time prices have come down without a recession since then was during President Biden’s term—from its high in June 2022 to slightly above 3 percent at the end of his term.

Biden could do this because the Fed used its best tool to combat inflation; raising interest rates at the same time as Biden succeeded in lowering the federal debt by raising corporate taxes to counter the huge influx of government money injected into the economy ($5 trillion) from Biden’s bipartisan Infrastructure, Inflation Reduction and CHIPS Acts.

The bills were passed to inaugurate the biggest modernization of the U.S. economy since the Great Depression that employed a record number of workers.

So it is possible to bring down inflation without a recession. And there is substantial harm, especially to working Americans who face higher prices for basic necessities, such as gas and healthcare, for prolonging this inflation surge.

What had caused the five recessions since 1980? Republican administrations cut taxes without paying for them, ballooning the federal debt instead of reducing it. Recessions (gray bars) occurred in 1980, 1981, 1990, 2008-09, all during Republican administrations. The short 2000 recession happened because of the COVID-19 pandemic.

This is an unnecessary inflation surge, in other words. It’s because of multiple wars being fought and a Republican congress that will not curb a president who doesn’t care about the costs and harm he is doing to Americans and the American economy.

Harlan Green © 2026

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

What, Another Great Recession?

 Financial FAQs

 “The conflict with Iran has already put fresh stress on the U.S. economy, as businesses are reporting rising prices, fewer orders and a decline in employment. A survey of service-oriented companies — the sector that employs most Americans — fell to an 11-month low of 51.1 in March from 51.7 in the prior month, S&P Global said Tuesday.” MarketWatch

FREDpayrolls

Maybe we shouldn’t be looking at the 1970’s era of stagflation for the kind of economic damage from the Iran War and closing of the Strait of Hormuz to oil shipments. There is a short-term spike in oil prices, though oil from other sources than the Gulf can eventually make up the difference in supplies.

The war’s damage may take longer to materialize but look more like the Great Recession, which we shouldn’t forget was a worldwide recession that occurred in 2008-09, the worst since the Great Depression of the 1930s.

We shouldn’t forget that the Great Recession Bush/Cheney and their oil barons ultimately spawned with the ill-planned invasions of Iraq and Afghanistan was based on lies about the weapons of mass destruction that Saddam Hussein didn’t have.

And now Trump and his Robber Barons are taking the Gilded Age dreams of William Mckinley one step further with lies that Iran is preparing nuclear weapons to justify the ill-prepared war with Iran while aliening the allies that would help them succeed.

This is even though Trump’s just-resigned Counterterrorism czar Joe Kent said Iran posed no imminent threat with nuclear weapons.

The Great Recession was caused by more than the Bush wars on terror, of course. It was caused by putting too many regulation-cutting foxes in the Bush/Cheney hen house that literally resulted in the failure of nonbank banks like Bear Stearns and Lehman Brothers to fail.

Trump is following the same playbook by gutting the government’s regulatory agencies that could prevent the blatant fraud occurring with the Trump administration’s Bitcoin investments that have no regulations or backing with assets.

This time negative GDP growth could come from the faltering labor market, which is frozen in place with almost no net new job creation at all in 2015 as highlighted in the above FRED graph. Fed Chair Powell remarked at his latest press conference that they were torn over whether to cut interest rates or raise them because Trump’s immigrant deportations were causing a labor shortage.

Economic growth ground to a halt as well in 2008, even when Fed Chair Greenspan anxiously began to cut interest rates to prevent the near failure of our banking system.

Powell’s Fed Governors also predicted overall GDP growth of 2.4 percent in 2026, even though Q4 2025 Real GDP growth slowed from 1.4 to just 0.7 percent. So I don’t understand the Fed’s optimism over economic growth.

And history has shown that no job growth will ultimately lead to no economic growth,

The frightening truth is that both Republican administrations have made bad decisions for the same wrong reasons.

Harlan Green © 2026

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

Why Kill Social Security?

 Answering Kennedy’s Call

“Let's say social security didn't send out their checks this month. My mother who’s 94, she wouldn’t call and complain. She'd think something got messed up, and she'll get it next month. A fraudster always makes the loudest noise, screaming, yelling and complaining.” Trump Commerce Secretary Howard Lutnick

It’s a sign of Republican Party and the Trump/Musk administration’s extreme incompetence (and naviete) if they believe Americans will buy Howard Lutnick’s story that only fraudsters would care if our seniors miss a social security payment when a major share of seniors list their monthly social security payment as their major (and only) source of income!

Commerce Secretary Howard Lutnick’s comments thereby reveal why Republicans and Trump want to  at least damage it enough that Republicans can privatize it for their Wall Street cronies.

It is an insane attempt to destroy social security in its current form, of course, and a reflection of Republicans’ efforts to dumb down its mostly red state electorate.

Even GW Bush attempted it, to no avail when the profit windfall that brokers would reap for managing it as a private pension fund was revealed ($5Billion at the time), which would come out of taxpayers’ pockets, of course.

Nobel Laureate Paul Krugman in a recent Substack column said why they are so blatant about it: the differences in education and the information media their red stater supporters have access to. Sixty three percent of Republican/Trump voters in 2024 were less than college educated.

Paul Krugman

Krugman also pictured who will be most harmed by his attempt to destroy social security. It will be our elderly and retired with a high school education or less, with 60 percent of their income comes from social security. And these are Republicans’ main red state supporters.

They tried something similar in Trump’s first term with more than 30 attempts to repeal Obamacare. It was a major reason Trump lost to Biden in 2020. It should be the main reason Republicans lose at least the House of Representatives in the upcoming 2026 midterm election.

The only real way to combat this wall of ignorance is with a better information infrastructure, or more effective propaganda machine, if we want to call it that. It will be necessary to expose the blatant ignorance Republicans have historically relied on to maintain their power in the red states and with swing voters that pay less attention to political news, polls have shown.

AOC and Bernie Sanders are having rallies in red and purple states like Arizona and Colorado talking what makes “common sense” to most American voters, and that have been effective in drawing up to 50,000 member crowds, for starters.

Trump/Musk are blindly rushing ahead with Musk’s so-called DOGE efficiency drive and Trump’s tariff wars that could cause horrendous damage to our economy, when there are much better ways to accomplish their stated goals of lowering regulations and decreasing the budget deficit and national debt.

Such haste is causing irreparable damage to lives and livelihoods; just as Musk’s failure to correct Tesla’s design flaws have killed people. There are better ways, and maybe the SCOTUS 5-4 ruling that Trump can’t indiscriminately fire federal workers without cause can begin to slow down the wholesale destruction enough to prevent a very large economic ‘fire’ and even a major recession, I said last week.

There is a lesson to be learned. The Tesla automobile’s sometimes fatal design flaws seem to be because of his lack of attention to details in his single-minded drive to invent new and better technologies, just as Trump’s pre-occupation with revenge and retribution clouds his thinking, and that of those that are tasked with carrying out his executive orders.

It's an opening that will combat the Republican Party’s nihilism, not to denigrate the less educated, but is common sense to most Americans—not tariffs that boost inflation and make enemies of our allies, or allow measles and bird flu epidemics to run their course rather than vaccinate, and bipartisan legislation that protects our borders rather than illegal deportations. The list goes on and on.

Common sense policies are something understood by all income groups and social classes that oligarchs and their enablers, the real fraudsters, don’t want Americans to know.

Harlan Green © 2025

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

Even More Debt

 ANSWERING KENNEDY’S CALL

 “In the recent (2020) GOP primary presidential debate, former United Nations Ambassador Nikki Haley claimed that President Trump added $8 trillion to the national debt while Florida Governor Ron DeSantis said that President Trump added $7.8 trillion to the debt. These statements are true, depending on how you measure additions to the debt. We estimate the ten-year cost of the legislation and executive actions President Trump signed into law was about $8.4 trillion, with interest.” January 2024, Committee for a Responsible Federal Debt.

FactCheck.org

Donald Trump and the Republicans’ most significant legacy will be the huge budget deficits they are projected to leave behind. It will mainly be due to present and upcoming tax cuts they promise to enact without any way to pay for them, except shrinking the social safety net.

And adding higher tariffs to the mix will raise the cost of everything and perhaps cause the Federal Reserve to pause outright in further rate cuts.

Takashito Ito, a former Japanese Deputy Prime Minister of Finance has predicted what will be the result.

“Beyond alienating friends and partners, Trump’s tariffs will probably fail to advance his apparent goal of reducing the U.S. trade deficit. If other countries adopt retaliatory tariffs, total exports from the U.S. — and global trade overall — may well decline. Moreover, high U.S. tariffs would fuel domestic inflation, forcing the U.S. Federal Reserve to raise interest rates, which would probably cause the U.S. dollar to appreciate, causing exports to fall and imports to rise.”

In fact, Nikki Haley was right in their 2020 primary debate: Of the $8.4 trillion President Trump added to the debt, $3.6 trillion came from COVID relief laws and executive orders, $2.5 trillion from tax cut laws, and $2.3 trillion from spending increases, with the remaining executive orders having costs and savings that largely offset each other, said the Committee for a Responsible Federal Debt.

Republicans inflated the budget deficit once before during the GW Bush presidency when they had the chance to almost eliminate it. President Clinton and VP Gore had engineered budget surpluses—yes surpluses—as high as +$236 billion, from 1996-2000 in their last four years that was mainly designed to strengthen social security and Medicare.

Bush’s first Treasury Secretary had also recommended it, but VP Cheney fired him after his first year in office for being such a spending scrooge. Bush had campaigned on returning some of the surplus to taxpayers via tax cuts, because 60 percent of the public in surveys favored tax cuts. But just 12 percent of the tax savings went to the middle class while the wealthiest garnered 79 percent of the tax cut benefits, according to PEW Research.

The Bush administration ended with the first $1 trillion federal budget deficit because of the $trillion spent on the invasion and occupation of Iraq and Afghanistan. Rising budget deficits have been the case ever since with Republican administrations.

It is why we will probably see even more federal debt in Trump’s next four years. It looks like a repeat performance as he is again nominating those most loyal and most incompetent for some of his cabinet picks, such as Pete Hegseth for Defense Secretary, Tulsi Gabbard for the Department of National Intelligence, and Robert Kennedy, Jr. for Health and Human Services.

He has again been using the same bullying tactics to attempt to get his cabinet picks through the Senate without background checks or security clearances. How easily Americans have forgotten that he has used such tactics his whole life to intimidate, once again highlighting his own incompetence to be POTUS.

Harlan Green © 2024

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

Path To Economic Recovery--Part II

 Financial FAQs

 

Calculated Risk

As I said in Part I of this series, there is a path to economic recovery from the worst recession since the Great Recession. Firstly, it means studying what economic policies have worked in past recoveries.

It you use job formation as the most important criteria for success, then the Clinton administration wins with its mix of government and private sector programs that cut military spending with the end of the cold war and increase in public spending at no more than 2 percent per year. The policies resulted in four years of budget surpluses from 1996-2000.

The cold war dividend also resulted in the second longest economic recovery on record—1991-2001—only topped by the Obama-Trump era recoveries cut short in February by the pandemic.

Private sector employment increased by 20,970,000 under President Clinton (light blue) in the excellent Calculated Risk, by 14,714,000 under President Reagan (dark red), 11,849,000 under President Obama (dark blue). 9,039,000 under President Carter (dashed green), and 1,511,000 under President G.H.W. Bush (light purple).

But because of COVID-19 during the 46 months of Mr. Trump's term, the economy has lost 2,128,000 private sector jobs (yellow line) to date.

What happened? Most jobs were created, when government spending kicked in to supplement consumer and business activities. Coincidence doesn’t spell facts, as I’ve said, but we can see what worked and to create jobs.

Public payrolls also grew most also during Democratic administrations with the exception of the Reagan administration that wanted to outspend Russia in their arms race. Payrolls grew during Mr. Carter's term (up 1,304,000), then Mr. Reagan's terms (up 1,414,000), H.G.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs). 

However the public sector declined significantly while Mr. Obama was in office (down 277,000 jobs), and during the 46 months of Mr. Trump's term, the economy has lost 870,000 public sector jobs.

Calculated Risk

What exactly did Clinton do to create 10 years of prosperity with budget surpluses to boot?? He was not afraid to raise taxes where it was needed to pay for programs that created more jobs, rather than raise the public debt.

He increased taxes with the Omnibus Budget Reconciliation Act of 1993, his first budget. The Deficit Reduction Act raised the top income tax rate from 28 percent to 36 percent for those earning more than $115,000, and 39.6 percent for income above $250,000. It increased the corporate income tax from 34 percent to 36 percent for corporations with incomes over $10 million.

It also ended some corporate subsidies, taxed Social Security benefits for high-income earners, and created the earned income tax credit for incomes under $30,000.

It raised the gas tax by 4.3 cents per gallon. It also limited the ability of corporations to claim entertainment tax deductions.

The +10 years of tepid economic growth since 2010 were caused in part by limiting government programs (e.g., in infrastructure, scientific research) that would have boosted growth, and because President Obama chose to focus on bringing down national debt after the initial $800B ARRA aid package assisting recovery from the Great Recession.

Republicans in particular seem to have been influenced by the rhetoric of anti-tax activist Grover Norquist when he said,  "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub," which did tremendous to economic growth during that time.

The irony in this history is that economists are already predicting a huge economic recovery next year once enough Americans have been vaccinated, as happened with the recovery from the 1918-19 Spanish flu-induced recession, and which became known as the euphoric “roaring twenties”.

Harlan Green © 2020

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

A New Year’s Wish—Greater Prosperity for All!

Popular Economics Weekly

Although this cannot happen until results of the 2020 presidential election overturn a Republican Senate, I wish for something that President Eisenhower has said best. With higher tax rates that prevailed in the 1950-1970s, corporations in the past chose to spend their wealth on investments for future growth that were tax deductible, rather than pay the government.

Corporate tax rates since then have dropped to a low of 21 percent today.  What have corporations done instead with their record profits? Rutgers Economic historian James historian has been sounding the alarm about the results:

” So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.”

The architects of the Reagan revolution tried to reverse these trends as a cure for the stagflation of the 1970s, said Professor Livingston, but couldn’t. “In fact, private or business investment kept declining in the ’80s and after. Peter G. Peterson, a former commerce secretary, complained that real growth after 1982 — after President Ronald Reagan cut corporate tax rates — coincided with “by far the weakest net investment effort in our postwar history.”

There are many ways to look at the huge wealth disparities suffered by Americans whose household incomes have stagnated since the 1970s, when maximum tax rates were still in the 70 percent range. Americans wanted lower taxes so they could become voracious consumers, rather than pay for government services, which caused public investment to decline at the same time that it became the government’s job to create all the necessary public investments to protect consumers, and invest in their future.

It was public spending that in the past had enabled the building of our modern infrastructure of interstate highways and energy grid, as well as scientific research that led to the moon landing and Internet, for starters.

President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment. According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested were 8 percent of G.D.P. in 2000. 

They have reached a record 14 percent of G.D.P. since then, even with a looming $1 trillion annual federal budget deficit.

Populareconomics.com

Sadly, corporations began to spend their growing wealth from lower taxation on themselves and their lobbyists that where able to push through legislation to strengthen their monopolistic consolidation (via deregulation) and labor unfriendly legislation,

It has resulted in the likes of such undemocratic lobbying entities as ALEC, the American Legislative Exchange Council, the advancer of red state policies such as voter ID laws that restrict voting rights, protector of NRA gun rights like Florida’s Stand Your Ground law that protects shooters rather than their victims, and the fossil fuel industry that has no interest in protecting our environment.

The ironic result is that consumers haven’t become wealthier with all the available and cheap consumer goods, haven’t really benefited from higher GDP growth, even with the increased employment we have today in lower-paying service jobs.

The decline in corporate tax rates to the current 21 percent has been disastrous for householders’ wealth and health. It is at the core of America’s record income inequality.

So let us wish for a greater prosperity for all in the New Year!

Harlan Green © 2019

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