Consumers' Confidence Sinking

 Popular Economics Weekly

“Consumer confidence edged downward in May as the inflationary impacts of the war in the Middle East intensified,” said Dana M Peterson, Chief Economist, The Conference Board. “Consumer appraisals of current business conditions and the current labor market were moderately less positive compared to last month.” Conference Board

Conference-Board

American consumers are more worried than ever. The Conference Board and University of Michigan’s surveys are at historic lows; back to levels not seen since the COVID-19 pandemic.

Confidence then peaked in 2021 during the pandemic recovery and has been declining ever since. This is while financial market indexes are reaching unsustainable levels on the hope that the next big thing (A.I.) may bring in another Age of Enlightenment.

But beware, we have had such periods before. It looks like another period of mass hysteria over the possibilities of A.I. as companies invest $trillions, mostly in borrowed money, that is creating another asset bubble like the Dot-com and housing bubbles.

We called it Irrational Exuberance in the 1990s. It’s over enthusiastic investors over-investing in artificial intelligence.

The U. of Michigan reported,“Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month.”

And consumers know why finances are eroding. Inflation can only go higher with the Iran war shortages, and tariff levels settling at 1930 pre-Great Depression levels with no formal treaties (which choked supply chains at the onset of the Great Depression).

There is no relief for either consumers or producers in sight amid the chaos that is being generated. The biggest worry is the rank naivete of a Republican Party that won’t hold its leader’s craziness to account. Americans are beginning to realize that the Trump administration has lost the Iran war, and the tariff hikes were illegal. It’s also showing up in the record lows in the polls.

In wanting to play the autocrat, Trump has booted the intelligent advisors who gave him intelligent advice. Iran can now keep the Hormuz Strait closed, while intelligence agencies are reporting Iran has enough missiles and drones to decimate the infrastructure of the other border countries, if the U.S. should try a land invasion to open the Strait.

A.I. is beginning to alarm economists, such UC Berkeley Professor Brad Delong in his Grasping Reality blog:

“The current $1.5T AI arms race: are hyperscalers building utopia, building dystopia, building digital god, or simply lighting trillions of dollars on fire in a dollar auction?”

Said $Trillions are chasing the next big thing, in other words, which happens when our government holds too much debt instead of paying it down. This results in an excess money supply sloshing around the economy looking for the next big deal, instead of investing in what Americans most need that Republicans have been intent on abolishing: (e.g, , programs to improve healthcare, environmental protection, education, climate prediction, alternative energy).

So consumers are right to be worried. This is the time for such programs that were created in the Biden administration to prepare Americans for the future, rather than a return to the past.

Can we do it without bursting another (A.I.) bubble that turns into another recession?

Harlan Green © 2026

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

Time To Pay the Piper

 Popular Economics Weekly

 “The time to repair the roof is when the sun is shining. [State of the Union Address January 11 1962]” President John F Kennedy

Wikipedia

Two of our largest domestic economies are heeding President Kennedy’s words, “when the sun is shining”; it’s time to begin paying our national debt during this record-breaking stock market run that is currently benefiting the wealthiest Americans.

We are drowning in a federal debt that is endangering our good faith and credit while crowding out domestic spending on the public services that make life more bearable for ordinary Americans. We have a federal debt that is now 120% of the annual output of the U.S. economy (Gross Domestic Product).

New York City’s Mayor Zohran Mamdani, and California Governor Gavin Newsom have announced that it’s possible to balance a budget. Maybe that’s something Republicans should also heed if they want to remain relevant to America’s future by offering more than tax cuts and bloated military budgets.

New York City is the largest U.S. city with an 8.5 million population, and the State of California has the fourth largest economy in the world behind the U.S., China and Japan.

Mayor Mamdani announced the $124.7 billion Fiscal Year (FY) 2027 Executive Budget, putting New York City on firm financial footing while protecting the services working people rely on. “Through strong fiscal management, Mayor Mamdani balanced the budget through a combination of aggressive savings, new tax revenue, partnership with Albany and critical new investments.”

California’s 2026-27 budget, as revised by Governor Gavin Newsom on May 14, 2026, “projects no deficit for that year and the next budget year (2027-28), with a structural deficit eliminated through July 2028.”

It’s a sign that Americans in Democratic states at least want to move on from the trickle-down economic policies that Republicans have practiced since 1980, resulting in five recessions including the Great Recession on their watch.

It has perpetrated the greatest income and wealth inequality of all—red states depriving their own citizens of a livable minimum wage and social services that make their lives bearable, with no minimum wage higher than the national minimum wage of $7.25 per hour (portrayed in the Wikipedia map), or state taxes to pay their bills and provide adequate health care.

That’s a reason most Republican-led, so-called red states, have fallen far behind in growth compared to Democrat-led blue states –many with surplus tax revenues that go to many of the red states in the form of benefit payments to balance their budgets.

California, for instance, has the largest tax ‘imbalance’ in the nation. Varying estimates show Californians pay between $83billion and $275billion more to the IRS than the federal government returns to the state in the form of Social Security, healthcare, military contracts, and disaster aid.

Whereas red states like Kentucky require $Billions from the federal coffers to meet their budget needs. For instance, 10 red states have no Medicaid health insurance for their low-income residents.

The results show the glaring damage the minimal, ‘bare bones’ red state budgets wreak on the health and safety of their citizens. Red states exhibit higher premature mortality rates and higher incidences of death from major internal causes, such as heart disease, cancer, and stroke. Blue state citizens on average live longer.

NIH research shows a clear partisan health divide in the United States, with "blue" (Democratic-leaning) states consistently outperforming "red" (Republican-leaning) states across major public health metrics, including life expectancy, infant mortality, and preventable chronic illnesses.

The New York City and California examples show that state and federal governments know how to balance a budget that benefits all Americans, not just the wealthiest. The Clinton Administration even created four consecutive years of budget surpluses in the 1990s that paid down the federal debt.

A consensus is building that our national debt must be dealt with. Balancing budgets are the responsible way to deal with it, not the trickle-down economic policies that have created the monstrous debt from the many Republican tax cuts that have deprived red states’ citizens of a decent standard of living.

Harlan Green © 2026

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

Stagflation Isn't Going Away

Financial FAQs

“The number of job openings was unchanged at 6.9 million in March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires increased to 5.6 million while total separations changed little at 5.4 million. Within separations, both quits (3.2 million) and layoffs and discharges (1.9 million) were little changed.’ BLS.gov

FREDjolts

The FRED graph of the JOLTS report (U.S. Job Openings and Labor Turnover Survey) shows the sharp decline in the number of job openings from its high of 12 million openings in 2022 at the end of the COVID-19 pandemic. This is another sign of stagnating growth. And though stocks continue to rally to new highs, interest rates are also rising, a sign of higher inflation.

Now combine no new job growth with rising inflation and we have further signs of stagflation, the combination that stopped economic growth for most of the 1970s. It has hovered around 7 million job openings during Trump’s second term because of Donald Trump’s almost single-minded job-killing policies.

It’s not just the illegal on-again, off-again tariffs that disrupt supply chains, but the immigration sweeps taking tens of thousands of workers out of their jobs and off the streets. And most of them pay taxes that would help in reducing our record federal debt.

Cap that with all the DOGE job cuts that have eviscerated the Labor Department responsible for enforcing OSHA worker safety laws and union wage negotiations. Millions have also lost their insurance coverage because Republicans blocked renewal of subsidies that made it affordable to ordinary non-seniors.

Job formation is now at a standstill because of Trump’s anti-labor antics. It’s mostly pure greed that motivates Republicans these days who have cut social services to the bone to pay for their tax cuts.

And there is plenty of time for stagflation to worsen as a semi-permanent feature of Trumponomics, his version of Reagonomics trickle-down economic policies, since Trump has three more years.

Inflation doesn’t disappear when economic growth picks up that is inflating stock prices. All the AI investing will ultimately increase productivity in factories that make cheaper products and need fewer workers. But who will buy its products with fewer employed workers, hence consumers, to buy its products?

Nobel Laureate economist Paul Krugman has pointed out the damage Republican economic policies have done to the health and welfare of Americans and American workers, as well that lessens their productivity because more sick days means time lost from the workplace.

“There is a strong correlation between right-wing politics and increased mortality — stronger than many of the statistical associations that guide public health policy. Deep red states like Alabama and West Virginia have life expectancy comparable to, say, Kazakhstan.”

I’ve written in the past about the dumbing down of the Republican electorate that is causing this; its refusal to rely on scientific knowledge, or support vaccines and publicly funded healthcare.

“We’re seeing the forces that keep U.S. life expectancy far below that in other rich countries, that cause Texans (for instance) to die younger than residents of Massachusetts, go into overdrive at a national level.”

This will cause the death of more Americans, further shrinking our available supply of workers. It’s already happened—just 15,000 new jobs per month were created in 2025. Professor Krugman warns the carnage will continue while inflation is soaring because of his many missteps.

“The consequences will be grim,” he warns.

Harlan Green © 2026

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

Great Employment Report!

Popular Economics Weekly

“Total nonfarm payroll employment increased by 178,000 in March, and the unemployment rate changed little at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in construction, and in transportation and warehousing. Federal government employment continued to decline,.” BLS

MarketWatch

This was a very good March unemployment report, per the U.S. Bureau of Labor Statistics, a complete reversal of February’s -133,000 (revised) payroll job losses. It was mainly because 31,000 Kaiser healthcare nurses settled their strike, and improved weather brought construction workers out that were building the record number of AI data centers that must generate so much electricity for Artificial Intelligence that could put as much as 30 percent of white-collar workers out of jobs.

It didn’t bring much enthusiasm back to Wall Street because Trump threatened in his national address to continue the Iran War while he ended it and let everyone else deal with the Strait of Hormuz.

It was his usual gobbledygook, in other words, that didn’t make anyone happy and shifted the blame for the closing of the Strait to others, when there had always been free passage until Trump/Hegseth revealed how much they enjoyed killing people.

It was a reprise of the Bush/Cheney Iraq war, in other words, that took eight years to resolve and ultimately led to the Great Recession.

The March unemployment rate fell slightly to 4.3 percent while 400,000 more adults left the workforce. This means our working age population continues to shrink while fewer workers are needed thanks to more use of Claude, CHATgbt, bots, etc., etc., until who knows when??

We should know be looking at consumer behavior if we want to know what happens next. Retail sales picked up in March, so consumers are shopping again and consumer confidence edged up as well. Retail sales comprise some 50 percent of consumer spending and is the main driver of growth for the U.S. economy.

In the 12 months ending in February, retail sales increased a solid but below-trend 3.7% in unadjusted terms, but that was before $4 per gallon gas and the supply disruptions from the Iran war.

And “Consumer confidence ticked up again in March, as a modest improvement in consumers’ views of current conditions outweighed a slight downshift in expectations for the future,” said Dana M Peterson, Chief Economist, The Conference Board.

We will certainly see higher prices and possibly higher interest rates ahead as the Iran war continues, as we did with the Iraq war. Alan Greenspan’s Federal Reserve raised its Fed Funds rate from 1% in 2003 to 5.25% in 2006 to combat soaring inflation from the $2 trillion plus cost of the ill-fated invasions of Iraq and Afghanistan that created America’s first $trillion budget deficit.

The badly-planned Iran war will cost as much or more while American taxpayers continue to struggle to pay for more federal debt as this war drags on.

I get the feeling we are staring at another economic precipice. It can for several reasons—another costly war, an energy shortage, President Trump asking allies to bail him out after dissing them, the illegal tariffs, cutting off immigration when there’s a looming shortage of workers, etc., etc…

The list is almost endless.

Harlan Green © 2026

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

Why the Decline in Job Vacancies?

 Financial FAQs

“The number of job openings was little changed at 6.9 million in February, the U.S. Bureau of Labor Statistics reported today. Over the month, hires decreased to 4.8 million, and total separations changed little at 5.0 million.” BLS.gov

FREDjobopenings

The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) was bad news for workers, as per the slide in available jobs portrayed in the above graph of monthly job openings.

It has now fallen to just 6.9 million in February 2026, the total of available nonfarm payroll jobs tallied by the Labor Department. Actual job hires fell to 4.8 million while 5.0 million left the workforce, a net loss of 200,000 jobs.

The Iran War will add to the damage that has already been done to the U.S.—and maybe worldwide—economy from the single-minded focus on what is most important to President Trump and his Robber Barons; bringing back another Gilded Age with its ultra-consolidation of wealth that has caused record public debt that is being paid for by American taxpayers. 

Former Clinton Labor Secretary Robert Reich listed the economic damage from Trump’s first term alone. He (Trump) pledged to be “the greatest jobs president that God has ever created.”

He’s been the worst jobs president in American history. In his first term, Trump presided over a historic net loss of nearly 3 million jobs, the worst jobs numbers ever recorded under an American president, as tabulated by FactCheck.org.

FactCheck.org showed more the decline in Trump’s first term:

· The international trade deficit Trump promised to reduce went up. The U.S. trade deficit in goods and services in 2020 was the highest since 2008 and increased 36.3% from 2016.

· The number of people lacking health insurance rose by 3 million.

· The federal debt held by the public went up, from $14.4 trillion to $21.6 trillion.

And President Trump month-long war with Iran is adding to the damage with the blocked petroleum supply chain that provides so many necessary byproducts—such as fertilizer, natural gas and helium, for starters.

“After a month, your war has already cost 13 American lives, cost American taxpayers at least $30 billion, cost American consumers at least a dollar more per gallon of gas than they paid a month ago, pushed up food prices and mortgage rates, and pushed down the value of 401(k) retirement plans. It’s mangled supply chains for industries that rely on items such as fertilizer to grow food or helium to make computer chips,” said Professor Reich

So we shouldn’t be looking at the 1970’s era of stagflation for a result from the Iran War because of the damage already done in President Trump’s second term, whether the Strait is closed, or not. It may take longer to materialize but look more like another Great Recession, I said recently, that was caused by the economic mismanagement of another Republican administration involved in a Middle East war.

A key will be watching the employment picture this week, especially the Labor Department’s Friday unemployment report.

Harlan Green © 2026

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

FREDgdp

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

Where is the Inflation?

 

Financial FAQs

“When I took office, inflation was the worst in 48 years, and some would say in the history of our country. President Donald Trump

FREDcpi

No, just a cursory look at the St. Louis Fed’s above graph of the Consumer Price Index dating from 1970 shows that 48 years ago the Arab oil embargo of the 1970s spawned the mother of all stagflations sending consumer inflation to 14 percent in 1980.

The Trump administration is crowing about the weaker November inflation numbers cited in the BLS graph, but who will believe the data when he fired the head of the Bureau of Labor Statistics (BLS) that produces the report because he didn’t like the unemployment revisions in September?

Certainly not consumers, as their sentiment index via the University of Washington sentiment survey has fallen steadily from its high of 74.0 last December to 52.9 this December.

The belief problem was most evident in Trump’s recent prime time, 20-minute Oval Office address quoted above, that showed the leader of our government no longer has any grasp on reality, only his lies and fantasies.

Whereas the Biden administration had brought it down to 3.0% last December. It only began to rise again since Trump’s April 2 retaliatory tariff announcements.

Perhaps Trump’s biggest lie was that “Much of this success has been accomplished by tariffs. My favorite word tariffs, which for many decades have been used successfully by other countries against us, but not anymore.” and that the tariffs are bringing “billions” back to the American economy.

No, tariffs are an import duty taking money out of the pockets of Americans from the higher prices that have resulted. Though, they could be refunded to the importers that paid the duties if most of the tariffs are repealed by the Supreme Court, as expected. But don’t count on prices coming down anytime soon that have become imbedded since then.

The inflation report was deceptive in that though the overall inflation rate fell to 2.7 percent from 3.0 percent most components rose over the year.

“In November, the Consumer Price Index for All Urban Consumers rose 2.7 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 2.6 percent over the year (NSA).” BLS

The index for all items less food and energy rose 2.6 percent over the past 12 months. The shelter index increased 3.0 percent over the last year. Other indexes with notable increases over the last year include medical care (+2.9 percent), household furnishings and operations (+4.6 percent), recreation (+1.8 percent), and used cars and trucks (+3.6 percent).

The most harm to American pocketbooks will be skyrocketing energy prices as the massive build out of AI centers will need tremendous amounts of power. That’s why the energy index for electricity increased 6.9 percent over the last 12 months and the index for natural gas rose 9.1 percent.

Maybe the saddest part of Trump’s address was his nonsensical, desperate hyperbole: “We're doing what nobody thought was even possible, not even remotely possible. There has never, frankly, been anything like it. One year ago, our country was dead. We were absolutely dead.

Yet the U.S. had the fastest economic recovery in the developed world from the COVID-19 pandemic under Joe Biden with full employment and GDP growth in the 2-3 percent range.

No, we are not dead. And recent political surveys are showing that American voters in recent elections are waking up to the damage being done by Trump and his oligarchs to the many Americans in just one year who have lost jobs, and healthcare coverage, and protection from the worsening floods, wildfires, and hurricanes that Trump calls “a hoax”, all in the name of enriching themselves.

Harlan Green © 2025

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

What is Worrying Consumers?

 Financial FAQs

 “Consumer confidence tumbled in November to its second lowest level since April after moving sideways for several months,” said Dana M Peterson, Chief Economist, The Conference Board. “All five components of the overall index flagged or remained weak.”

Conference Board

Why are consumers worrying so much? Maybe they don’t like government shutdowns? Or, maybe it’s because higher prices and the tariffs are hurting small businesses that depend on imported goods? Or, there are fewer available jobs. Actually, it’s all of the above per the Conference Board’s Consumer Confidence Survey.

“Consumers’ write-in responses pertaining to factors affecting the economy continued to be led by references to prices and inflation, tariffs and trade, and politics, with increased mentions of the federal government shutdown.”

It’s also becoming obvious that consumers don’t like bully behavior, such as Republicans ramming through the continuing budget resolution without Democrats’ input.

Republicans 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, I said last week.

Retail sales data finally released for September showed consumers were still shopping and dining out, but not as much.

So what will happen now? This was all before the shutdown. My guesstimate with anecdotal evidence from the likes of Walmart, Target, et. al., is that the more affluent consumers that own homes and stocks will come storming out of the gates after the shutdown and maybe party through the holidays. Government workers will be receiving extra paydays, for instance—i.e., weeks of backpay.

Doug McMillon, Walmart’s outgoing chief executive, cited by MarketWatch, said on the chain’s earnings call that middle-and-upper-income households drove growth in the U.S. during the third quarter. He also said that “lower-income families have been under additional pressure of late.”

And the financial markets have been rallying as it looks like the Fed will cut rates once again in December. Consumers will rally as well as they race to borrow and purchase during the holidays. That’s because polls say they expect inflation to surge over the next year when things will become more expensive.

And Trump has grown wilier with his tariff pronouncements, not touting their benefits so loudly, for instance, which was alarming consumers, while finally admitting that tariffs have been raising prices. His MAGA followers are suffering the most. He must have finally looked at his poor poll numbers that are even lower than during his first term.

The other unspoken shoe to drop that affects consumers is the shrinking job market. ADP payrolls reports that just +42,000 private payrolls were added in October. Trade, Transportation, Education and Healthcare added the most jobs. But -51,000 jobs were lost in other sectors such as Information and Information and business services.

“Private employers added jobs in October for the first time since July, but hiring was modest relative to what we reported earlier this year. Meanwhile, pay growth has been largely flat for more than a year, indicating that shifts in supply and demand are balanced,” said Dr. Nela Richardson, Chief Economist

It’s pretty obvious that we are living in uncertain times, and the old Republican playbook of tax cuts combined with DOGE and Project 25 slashing of government benefits isn’t yet hurting the 10 percent of consumers that have assets, but that leaves 90 percent of Americans still living paycheck to paycheck.

What will happen to them?

Harlan Green © 2025

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

First Quarter Growth Revised Lower

 Financial FAQs

“Real gross domestic product (GDP) decreased at an annual rate of -0.5 percent in the first quarter of 2025 (January, February, and March), according to the third estimate released by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2024, real GDP increased 2.4 percent.” BEA.GOV

We won’t know yet if we can stay out of a recession because first quarter GDP was revised downward in its final (third) estimate, but Americans have been stocking up on cheaper imports before the tariffs kick in, just in case.

Real GDP was revised down 0.3 percentage point from the second estimate (-0.2%), primarily because of downward revisions to consumer spending and exports. This was before the April 2 tariffs and retaliatory tariffs hit consumers.

But the final (third) revision of Q1 GDP showed inflation already rising because of the rush to buy before April 2. The price index for gross domestic purchases increased 3.4 percent in the first quarter, a revised +0.1 percentage point from the previous estimate. The personal consumption expenditures (PCE) price index increased 3.7 percent, and the PCE price index excluding food and energy increased 3.5 percent, both +0.1 percentage point higher than previously estimated.

So, what are consumers and businesses to do while waiting for the final outcome of the tariff wars? (If there will be a grand finale, that is.) Trump is using the tariffs to not only pay for the huge deficit that his Big Beautiful Tax bill will create, but as a way to bully other countries to do all manner of things, like get NATO to up its military spending, and China to import more U.S. exports.

The general consensus is that tariffs will ultimately end up being about 10 percent for most countries (30 percent for Chinese imports), up from 4 percent in recent history. The financial markets are rallying again because of Trump’s TACO (Trump Always Chickens Out) negotiating techniques—suddenly raising retaliatory tariffs, then cancelling them. It can’t prevent higher prices, since so much of what we consume is imported.

Things might look brighter for a while, like in the second quarter just coming to a close in June. The Atlanta Fed’s GDPNow estimate of second quarter growth is still holding at 3.4 percent because of continued investment in AI and other high-tech innovations in its most recent Nowcast. But we won’t see the first estimate of second quarter GDP growth until July 30.

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.4 percent on June 18, down from 3.5 percent on June 17. After this morning’s housing starts report from the US Census Bureau, the nowcast of second-quarter real residential fixed investment growth decreased from -2.8 percent to -4.4 percent.

Higher fixed investment is good for growth, of course, yet we are also seeing increases in weekly initial jobless claims that come close to Great Recession and COVID-19 pandemic numbers. The number of jobless workers collecting longer term unemployment benefits rose by 37,000 to 1.97 million, marking the highest level since November 2021.

That’s because much of the high-tech and AI investment will be replacing White-collar workers. We now must wait until July 30 before Q2 growth numbers come out from the Bureau of Economic Analysis. That’s a long time to wait these days, since so much can happen.

Stocks and bonds are rallying because corporate profits are higher, as well as the hope that TACO Trump won’t level any more retaliatory tariffs. The Foreign Trade Court has said the retaliatory tariffs aren’t legal. So maybe that’s what the markets are betting on—no more tariff increases. Most analysts are predicting the new 10 percent tariff level will shave approximately 1.5 percent from GDP growth this year, however.

Harlan Green © 2025

Follow Harlan on Twitter: https://twittter.com/HarlanGreen

Republicans Have Never Paid Their Bills

 Financial FAQs

“The new law will reduce federal revenues by significant amounts, even after allowing for the impact on economic growth. It will make the distribution of after-tax income more unequal. If it is not financed with concurrent spending cuts or other tax increases, TCJA (Tax Cuts and Jobs Act) will raise federal debt and impose burdens on future generations. If it is financed with spending cuts or other tax increases, TCJA will, under the most plausible scenarios, end up making most households worse off than if it had not been enacted.” Brookings

President Trump is justifying his trade war that could wreck the U.S. and maybe world economies because he wants to renew his 2018 Tax Cuts and Jobs Act (TCJA) that could raise the federal debt $2.8 trillion over the next 10 years.

If Republicans would ever pay their bills, rather than continue to lobby for tax cuts, we wouldn’t be in this situation. But they haven’t since Ronald Reagan and now are led by a complete phony who sues those that expose his lies making complete fools of those who support him.

Why are we in a huge financial mess today with a record federal budget deficit and falling value of the dollar President Trump is using to justify an illegal tariff war that is tearing apart the world’s financial order and alienating our closest allies?

Trump’s Republicans are twisting themselves into pretzels to justify the tariff wars Trump is waging on the whole world—all 180 countries—that could lead to product shortages last experienced during the COVID-19 pandemic.

Yet rather than destroy the U.S. and other world economies with unjustified DOGE job cuts and tariffs, if Trump Republicans were serious about reducing the federal debt, they should raise taxes on those that have benefited most from decades of tax cuts enacted by Republican administrations

It doesn’t have to be this way. The Clinton/Gore government downsizing of the 1990s created four years of budget surpluses, because they negotiated with congress to make the cuts that were in congressionally mandated programs.

“Unlike the current effort, the cutting didn’t start until they had gone through a six-month study process and developed a blueprint of how to best reinvent the federal government,” said a recent Newsweek article on the subject. “Government agencies were brought into the process to determine the best ways that efficiencies could be realized. In fact, the effort was led by some 250 federal employees that remained on their agency payrolls.”

The federal workforce was reduced by 440,000 employees between 1993 and 2000, or about 17 percent of the total. The cuts made the government the smallest it had been since the Eisenhower administration, according to the Newsweek report.

FREDdebtpercentageGDP

The St, Louis Fed (FRED) graph of federal debt as a percentage of GDP shows precisely when Republicans began to drastically cut taxes in 1980 under President Reagan—from a 75 percent maximum personal tax rate to below 40 percent, whereas the 90 percent corporate tax rate and 92 percent maximum personal tax rate of the Eisenhower era paid for the “new hires, new equipment, and product research which are deductible from taxable earnings.”

In other words, the higher tax rates made corporations use their profits to finance U.S. growth. Whereas today the tax cuts have mostly financed corporate stock buybacks.

How times have changed! President Eisenhower asked wouldn’t it be better to spend a majority of earnings on expanding the U.S. economy rather than to horde it?

Not any more, because Republicans don’t want to pay their bills rather than provide social services and environmental protection that would benefit all Americans. That’s their history since President Reagan declared that “government was the problem” and immediately fired the federal air traffic controllers who were striking for higher pay and better working conditions.

Will Americans realize and restore Republicans’ theft from American taxpayers via the tax cuts since 1980? It’s estimated some $1 trillion in wealth has been transferred from American workers to the owners of wealth since then that is causing the record income inequality we have today.

Make no mistake, if enough Americans don’t realize what fools they’ve been to support a President who says we’ve just won World War I, and appointed a Navy Secretary who held a ceremony honoring the 1941 Japanese attack on Pearl Harbor on June 6 instead of December 6, it will result in the wholesale destruction of our democracy and loss of the “good faith and credit” of the U.S. Government.

Harlan Green © 2025

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

Wh Needs a Tax Cut?

 Popular Economics Weekly

“A bill that cuts federal income taxes for middle-class families makes absolutely no sense, except as a sad way of camouflaging the real intent of the bill: Giving millions of dollars to the very wealthy, who happen to be the only people who are really benefiting from our uneven economic growth,” Rex Nutting

Huffington Post

I wrote this Huffington Post piece in 2017 during President Trump’s first term when he passed the Tax Cuts and Jobs Act (TCJA) that is set to expire but is being renewed if Republicans succeed in passing their new fiscal budget.

But in seeking to repeat Trump’s first term, Trump and his Republicans are regressing to an economic model that existed more than 100 years ago, and that is completely out of touch with the modern world.

His tax cut helped very few income earners, i.e., ordinary working folk. MarketWatch economist Rex Nutting calculated that those in the 60 percent middle-income brackets—from $32,000 to $140,000 per year—pay just an average 2.5 percent in income taxes. It’s only the richest 0.1 to 1 percent income earners that pay more and therefore want the huge tax cuts Congress and the Trump administration are proposing.

The TCJA renewal in 2025 will add at least $3 trillion to our federal debt in the next 10 years, according to the Congressional Budget Office, and raise our federal debt from 120 percent to as much as 130 to 150 percent of GDP because Republicans have no mechanism to pay for it, except higher import taxes from the tariffs and cuts to health care services such as Medicaid.

Hence the just announced sovereign debt downgrade of Moody’s AAA to Aaa, the last debt rating agency that held a AAA rating on U.S. Treasury debt, which will raise the cost of U.S, Treasury securities.

The tariff war that Trump illegally initiated with the dubious rationale that it will bring back a bygone era of manufacturing (Congress has the power to regulate tariffs during wartime emergencies but they have since allowed presidents to enact them during peacetime), will cause another period of stagflation as happened in the 1970s that took 10 years and double-digit interest rates to cure.

How soon voters and investors have forgotten what stagflation was like! The Federal Reserve under Chairman Paul Volcker raised its Fed Funds rate to 20 percent in the 1980s because inflation had risen to 14 percent rate and resulted in two back-to-back recessions under President Reagan.

“Top this off with another record for corporate profits, up 7.4 percent in a year, and there is no reason to be cutting their taxes,” I said in 2017. “They haven’t been using their profits for productive purposes, so what’s needed is for them to pay higher taxes so government can use that money to invest productively in the $2 trillion plus in outmoded infrastructure that badly needs replacement,”

And that’s precisely what the Biden administration did, pass bipartisan legislation that invested $2 trillion in the Infrastructure, CHIPs and Science, and Inflation Acts to modernize the U.S. economy.

Yet voters re-elected a man in Trump 2.0 that is returning the budget and tax cut debate to an earlier historical period. President Trump is now touting the need for another Gilded Age that prevailed in 1900 when tariffs protected fledgling industries.

Tariffs became less important with the introduction of income taxes in 1913 to support government services, and the trend since then has been downward to the very low rates that prevailed until now.

Then why have so many Americans re-elected someone who is only interested in reducing taxes to enrich himself and his Oligarchs; who has shown an almost total ignorance of basic economics (in maintaining a tariff isn’t an import tax) with a history of countless business failures, and that is causing investors to flee the US economy and impoverish the rest of us?

Will it take another recession to convince voters once again that One-man rule doesn’t work if Americans still want to live and prosper in a democracy?

Harlan Green © 2025

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

Stopping the Steal

 Popular Economics Weekly

“We were losing hundreds of billions of dollars with China. Now we’re essentially not doing business with China. Therefore, we’re saving hundreds of billions of dollars. Very simple.” Donald Trump

NYTimes

Why would Trump mouth such an obviously stupid statement, other than to maintain the lie to his MAGA base that tariffs are not import taxes?

The above Donald Trump quote during his Sunday “Meet the Press” interview with NBC’s Kristin Welker is alarming for too many reasons. It indicates Trump is living in a surreal world, ignoring the warnings from small businesses, and even the U.S. Chamber of Commerce, that are literally terrified over the damage that his tariff war is already causing.

“Stopping the Steal” was an HBO documentary that described the January 6 uprising and Donald Trump’s attempt to overturn Joe Biden’s election. But the title is also a good description of Donald Trump’s attempt to justify his poorly though out tariff war on all 180 countries in the world that he maintains have been stealing from Americans and deserve the chaos it is causing.

It must be exhausting, having to maintain such falsehoods every time he makes public statements, especially economic untruths that are threatening to wreck the U.S. economy.

Bloomberg reports that because there are no agreements with anyone in the first 100 days, trade flows are shifting away from America. Canadian exports to the US tumbled while shipments to other countries soared. The Trump administration’s duties on Canadian steel, aluminum, autos and other products, as well as Canada’s retaliatory levies on a range of American goods, led to a large pullback in activity between Canada and its largest trading partner in March.

Canadian exports to the US plunged 6.6%, the biggest drop since the pandemic, while imports fell 2.9%. Canada’s exports to countries other than the US jumped 24.8%, however, almost entirely offsetting the decline in shipments to the U.S.

Most worrisome of all, Trump is becoming more incoherent in his speeches and interviews. He also claimed on Sunday, he did not know that as President he swore to defend the U.S. Constitution “from all enemies, foreign and domestic.”

Some of his pronouncements could be an act but it is an act that will cause sky-high inflation and the empty shelves that we have not seen since the COVID-19 supply shortages.

Why the lies? Mental health experts have said many of Trump’s actions are designed to create the chaos he needs to control his surroundings. He created a cabinet in his second term as dysfunctional and subservient as that of his family and real estate business.

Mary Trump, his niece and a Clinical Psychologist, wrote a book about her uncle. There is no understanding Donald Trump without understanding his “malignantly dysfunctional family”, according to Mary, in a 2020 Guardian interview with David Smith about her best-seller,  Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man.

It was a family patterned after Trump’s father, Fred, Sr., that was “a nightmare of traumas, destructive relationships and a tragic combination of neglect and abuse” that Donald Trump grew up in, said Mary Trump.

She also told The Current guest host Mark Kelley it has resulted along with being "fairly unstable and easily manipulated," the president's ability to "destroy alliances, rip up treaties and be in control of an enormous nuclear arsenal" has made him a "very dangerous" leader.

Paul Krugman, who won his Nobel Prize for original research on foreign trade, has said, “The best bet, then, is that the trade war will proceed, even intensify. There will be some winners, at least in terms of global influence, including China, which gains from America’s loss of credibility, and the European Union, which unlike Trump’s America can be trusted to honor its agreements. The United States will be a big loser, both politically and economically.”

So the question Americans must answer if we are to save our economy, how much longer are we willing to live in such chaos?

Harlan Green © 2025

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

What's Next?

 Financial FAQs

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 1.1 percent on May 1, down from 2.4 percent on April 30.”

AtFedGDPNow

What’s next for economic growth? Predictions for Q2 are all over the map since the first quarter GDP went negative with -0.3% GDP growth because businesses boosted their imports ahead of future price hikes caused by the tariffs, and imports are subtracted from exports in the Gross Domestic Product calculation.

The Atlanta Fed’s GDPNow Q2 growth estimate of +1.1 percent gives us an idea of what’s to come. It has already fallen sharply from +2.4 percent because of the negative Q1 surprise, as well as the drop in consumer spending (PCE) and real private fixed investment (e.g., factories), all signs of further slowing.

I see stagflation on the economic horizon, rather than an actual recession since wherever the import taxes being negotiated end up to be, it will raise prices. And the service sector of our economy is still expanding, that includes the leisure, healthcare and transportation sectors.

The Institute for Supply Management said that its service-sector PMI rose to 51.6% in April from 50.8% in the prior month in the largest sector of our economy. The measure of new orders rose to 52.3% in April from 50.4 in the prior month. And the measure of prices paid for services for inputs jumped to 65.1 from 60.9 in the prior month, which is the inflation component of stagflation.

However, Q2 growth is uncertain because no one knows what the tariffs will be (i.e., import taxes). If Q2 GDP should also contract it could indicate we are in a recession, since two consecutive quarters of negative GDP growth have been one tell of a recession.

Torsten Slok, Apollo Global’s chief economist interviewed on CNBC’s Squawk Box predicts if the high tariffs that were. put in place earlier this month remain in effect, odds of a two-quarter contraction in economic output stand at 90 percent, with gross domestic product dropping by 4 percentage points.

But Trump knows this so he will probably bring the tariffs down to the 10 percent minimum already being levied on all 180 countries in the world (that include penguin only islands).

Trump has probably calculated this will ultimately bring in enough tax revenues to enable the tax cuts he wants enacted for his Oligarchs. The rest of Americans will suffer, however, as the budget negotiations will demand spending cuts to everything else except the military and immigration services

So we shouldn’t ignore a recession possibility, since China is the elephant in the room, and could derail everything, since it accounts for most of the holiday season imports, for starters. And any manufacturing renaissance will be years in the offing.

Declining Gross Domestic Product growth isn’t the only measure of recession. The National Bureau of Economic Research (NBER), the official caller of recessions, adds several other indicators, such as when nonfarm payrolls, personal incomes, and industrial production have peaked in a business cycle.

The NBER, a board of top economists, makes the recession call by looking at peaks and troughs of business activity. The last recession was caused by the COVID-19 pandemic shutdown and came after the longest post WWII expansion in history, said the NBER.

“The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854.”

And small businesses, who thought Trump would bring some relief from regulations as well as lower prices, do not like what they are seeing, I said last week. The National Federation of Independent Business on Tuesday said its Small Business Optimism Index dropped 3.3 points in March to 97.4, falling just below its 51-year average of 98.

Marketplace, a public radio show, said the U.S. Chamber of Commerce sent a letter to the Trump administration this week saying that tariffs pose “significant risks to U.S. employment” and may soon do “irreparable harm” to many small businesses. 

The Chamber, which represents businesses of all sizes, is asking the administration to lift tariffs on any goods that “cannot be made in the U.S.,” establish a tariff exclusion process and automatically exempt small business importers from tariffs.

The problem is that President Trump believes he can use tariffs to wall us off from our allies and trading partners. But wanna be autocrats, such as Trump, are terrible at running economies. The best examples are Turkey’s President Erdogan or Putin, whose economies still suffer from double-digit inflation.

They make decisions for the wrong reasons, because they don’t have to please everyone, just their Oligarchs. But an era of stagflation as happened in the 1970s could cause as much suffering, so stay tuned. Whether recession or prolonged stagflation, it won’t be pretty.

Harlan Green © 2025

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

What Happened to the Budget?

 Popular Economics Weekly

“The House Republican budget passed today calls for massive cuts in health coverage, food assistance, and help paying for college, among some other areas, to pay for huge tax giveaways for wealthy households and businesses.” CBPP.org

CBPP.org

President Trump had to know that devoting a large part of his State of the Union speech insulting Democrats would make it much more difficult to forge a budget for the fiscal year that ends September 30, when they will need Democrats’ support because of their thin majorities.

It will make it all but impossible to ratify an annual budget that significantly reduces the budget deficit. It’s not a great way to negotiate, in other words, unless Republicans don’t believe they need Democrats to fund their tax cuts.

House Republicans have passed a purely Republican budget resolution that relies on massive cuts to federal programs that the Center For Budget and Policy Priorities (CBPP), a nonpartisan research and policy organization, recently analyzed.

“The House budget would require the Energy and Commerce Committee to cut at least $880 billion; the Agriculture Committee to cut at least $230 billion; the Education and Workforce Committee to cut at least $330 billion; and other committees to also cut programs to reach a cumulative target of at least $1.5 trillion in cuts through 2034. The magnitude of these reductions would force congressional committees to make enormous cuts in Medicaid, SNAP, student loan assistance and other vital sources of support when they develop the “reconciliation” spending and tax bill that follows the budget resolution.” CBPP

Yet Republicans must compromise with Democrats to pass the annual budget that keeps the federal government open for business because of their paper-thin majorities in both the House and Senate, as I said. And the Democrats’ cooperation will require that some of their own budget priorities be included.

Trump must know by insulting Democrats he won’t get much of what he wants. He must believe there is a better way to narrow the budget deficit. Of course, he and Elon Musk have said so out loud—find some $2 billion in savings in the current budget that totals more than $4.2 trillion at last count.

Instead, Trump/Musk are firing federal employees and closing whole agencies with abandon to make their case that it will eliminate enough fraud and waste to bring down the deficit to justify their tax cuts. But it can’t happen without cuts to the sacred third rails as well—social security, Medicare and Medicaid.

They will be slowed down in their haste to downsize government because most of the DOGE work to date seems to be illegal, according to the many lawsuits that have been filed to stop the DOGE efficiency drive.

It will end up being a failed “Shock and Awe” campaign, according to Thomas Friedman, since their real intent is to cut government “down to the size where one could drag it into the bathroom and drown it in the bathtub,” to quote Grover Norquist, a Republican  strategist.

AtlantaFed

And we might already be seeing evidence of the damage; such as predictions of negative first quarter economic growth for the first time since the COVID-19 pandemic. The Atlanta Fed’s GDPNow model of real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.4 percent on March 6, up from -2.8 percent on March 3.

Tariff fears are part of the problem, as importers are ordering as much as possible before tariffs kick in that will raise prices, and that subtracts from GDP growth. But consumer spending in the new year that powers 60 percent of economic growth has declined because of their exhausted savings.

Consumer spending could shrink even further as the federal job firings and layoffs accelerate. MarketWatch reports some 172,017 job cuts were unveiled in February by U.S.-based employers, according to the monthly report by the outplacement firm Challenger Gray & Christmas. That’s the highest total since July 2020.

“It was chiefly because of a large reduction in government employees from actions by Elon Musk and his so-called Department of Government Efficiency, or ”DOGE,” purportedly to reduce bureaucracy,” said MarketWatch’s Jeffry Bartash.

Challenger put the federal job cuts at 62,242 last month, up from just 151 in January and February combined in 2024. Historically, very few federal employees lose their jobs annually. Retail and tech companies also announced sizable layoffs in February.

Economist Claudia Sahm said in a CNBC interview that such a massive number of workers losing their jobs at once has never happened before and will be flooding the job market.

I can’t imagine what such a large loss of jobs will do to our economy this year, even though federal jobs are a small part of the US workforce.

Harlan Green © 2025

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

Does Trump Want Another War?

 Answering Kennedy’s Call

“I’m not sure most Americans appreciate the monumental damage President Trump is doing to the post-World War II order that is the wellspring of American global leadership and affluence.” NYTimes Nicholas Kristof

USAToday

There is a growing outcry over the “monumental damage” emanating from the bromance of two ‘straight’ (and white) men on a tear of petty vindictiveness settling old scores, which can have far greater consequences.

It is tearing apart our closest alliances that protect Americans and other democratic countries from the depredations of autocrats and dictators, such as Vladimir Putin, who must imagine himself Czar Ivan the Terrible killing hundreds of thousands of his own people in attempting to conquer Ukraine to make it a part of a new Russian Empire (350,000 dead Russians at last count, per NBC’s Morning Joe).

“We have Trump and his oligarchy of ignorant shoe shiners vandalizing the network of organizations, agreements and values—largely put in place by America since the Second World War—which have given most of us, including America, on the whole an extraordinary degree of peace and prosperity.” Chris Patten, former UK Tory Chairman cited by Nicholas Kristof.

The level of ineptitude that Elon Musk’s DOGE team shows is breathtaking, as are the attempts to hide it.

“All in all, what we’ve just witnessed is a stunning display of incompetence, dismissal of critical federal workers by people with no idea of what they do and why it matters. Musk and Trump have, of course, apologized and promised to do better in the future.” Nobel Laureate Paul Krugman

Why the petty vindictiveness of our Bromancers? In a frightening insight by Timothy Snyder, Author of On Freedom, they are really ‘straight’ men trying to appear strong. But that can only be done by weakening the strong that actually stand in their way.

“Trump is a strongman in the sense that he makes others weak. He is strong in a relative sense; as Musk destroys institutions, what remains is Trump’s presence. But other sorts of power meaning vanish, as Musk takes apart the departments of the American government that deal with money, weapons, and intelligence. And then the United States has no actual tools to deal with the rest of the world.”

Dr. Snyder explained what he meant in a recent New Yorker article. Trump and Putin are both fascists, which by definition means masters of propaganda that twist words such as ‘communism’, or ‘deep state’ into meanings that feed their MAGA followers’ paranoid fantasies.

Hitler’s Goebbels, and Russia’s Stalin were masters of such propaganda that led to World War Two. It is detailed in Snyder’s bestselling book, “Bloodlands,” which describes the hideous period in the 1930s and ’40s when as many as 14 million people perished at the hands of Hitler and Stalin, with Ukraine a “particularly awful” mass grave.

And Trump is using the same fascist vocabulary today in branding Ukraine’s Zelensky the dictator, when it is Vladimir Putin.

That is why Trump and Musk’s actions threaten world peace and our own domestic order. They accomplish it by weakening the military alliances that have protected us such as NATO, while eliminating whole government departments that protect our health and safety and more environmental catastrophes, while weakening the FBI and DOJ that protect Americans from domestic and foreign terrorists.

In fact, settling old scores is an attempt to protect themselves from their own mistakes (i.e., Trump’s convictions, Musk-Tesla’s auto-drive accidents) by putting the blame on others. That is why Trump says he does not know what Musk is doing, when asked. He can therefore blame Musk or his lieutenants when said mistakes are uncovered.

Both Democrats and Republicans must now find a way now to counter Trump and Musk’s biggest mistake of all, their preoccupation with vengeance to and masks their own weaknesses that could lead to another war.

It is weakening our own strength and ability to stand up to Russia and China, where a larger war is most likely to start—because they have become emboldened by our growing weakness.

Harlan Green © 2025

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

No Art of the Deal

 Answering Kennedy’s Call

'Insanity is doing the same thing over and over again and expecting different results,’ Einstein?

Huffington Post

Insane behavior could describe the actions that President-elect Trump is promising to implement after January 20. He has said he wants to deport millions of immigrants, impose higher tariffs on many countries (especially China), cut taxes, expand cryptocurrency, reduce wind powered energy, and “Drill baby Drill” for more fossil fuels.

These policies would damage economic growth at the least, maybe even cause a recession, with no change in the outcome, as happened in his first term. Trump has nominated his cabinet picks on the basis of extreme loyalty to him rather than their abilities, which added to Trump’s own limited intelligence will not be able to implement his goals. 

Wanting to restrict wind and solar power investment will increase global warming, for starters, which has caused the LA fires.

So why do he and his supporters keep expecting different results? Because it would enhance his wealth and that of his main financial supporters led by Elon Musk, the world’s wealthiest Oligarch.

And, even partially implemented would keep red states from receiving the benefits blue states receive, such as higher minimum wages, better healthcare, laws protecting labor unions and collective bargaining by reducing regulations and cutting taxes that benefit their ruling elites.

His supporters still believe in a win-lose world that ceased to exist when the industrial revolution and new technologies began to produce more than could be consumed. It took the progressive movement that culminated in Roosevelt’s New Deal to prove that there were enough resources to benefit working Americans as well as the holders of the wealth created by workers.

His supporters have been willing to give up such benefits in return for cultural values they still believe in such as banning new immigrants and most abortions, as well as censoring libraries in red states so that their followers only have access to propaganda instead of facts.

President-Elect Trump and Republicans’ singular success in his first term has been another tax cut that has continued the transfer of wealth from working Americans to the wealthiest since the Reagan administration.

He may fail in implementing most of his agenda, but we can be sure he will be as vindictive in seeking revenge in Trump 2.0 for his perceived slights as in his first term, now that he is a convicted felon.

“Fortune Magazine reported in 2016 on candidate Trump’s negotiating tactics: “The legal actions provide clues to the leadership style the billionaire businessman would bring to bear as commander in chief. He sometimes responds to even small disputes with overwhelming legal force. He doesn’t hesitate to deploy his wealth and legal firepower against adversaries with limited resources, such as homeowners. He sometimes refuses to pay real estate brokers, lawyers and other vendors.”

And what about reducing the size of government that Republicans promise will reduce graft and waste? Who does it really help?

"Pretty much the whole Republican Party--and, if we're going to be honest, too many Democrats--talked about the evils of 'big government' and called for deregulation," Senator Elizabeth Warren said in 2016 at a AFL-CIO National Summit on Raising Wages. "It sounded good, but it was really about tying the hands of regulators and turning loose big banks and giant international corporations to do whatever they wanted to do."

"These families are working harder than ever, but they can't get ahead. Opportunity is slipping away. Many feel like the game is rigged against them--and they are right," Warren said. "The game is rigged against them.... The world has changed beneath the feet of America's working families."

Many did listen to this warning and elected President Biden because of it. But the message was lost because many Americans thought Democrats were no longer up to the task of protecting them.

Yet we already know who Republicans intend to protect.

Harlan Green © 2025

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

Shutdown vs. “S***hole” Countries

Popular Economics Weekly

The just ended government shutdown has little to do with 9 million children’s health insurance under the CHIP plan, or extending the Dreamers protection under DACA. It really has to do with President Trump’s insistence on shutting down immigration from non-white countries, as was evident from Trump’s “S***hole” comments that he wanted to limit immigration from African and other non-white countries.

What is so shocking about Trump’s comments is they repeat those of one who he claims not to admire. Adolf Hitler in 1928 openly admired America’s racist policies of that time that excluded non-whites and Jews from immigrating to the U.S.:

“The American Union feels itself to be a Nordic-German state and by no means an international porridge of peoples. This is revealed by its immigration quotas ... Scandinavians … then Englishmen and finally Germans have been accorded the largest contingent,” said Hitler even before the Nazi’s took power.

Specifically, Hitler admired the US Immigration Act of 1924 – also known as the Johnson-Reed Act – “which had erected openly racist barriers to immigration on the basis of a “national quota” system,” according to Yale Law Professor James Whitman.

“It was not until the 1965 US Immigration and Nationality Act that the US began to separate itself from the worst aspects of its racist past. And, as Trump’s presidency makes clear, that past has yet to be permanently overcome,” said Professor Whitman in a Project Syndicate article.

There is a reason why US immigration laws became more open. The US has always suffered from a labor shortage, so that it has been newly arrived immigrants that have filled the labor deficiency.

PEW Research states that More than 41 million immigrants lived in the U.S. as of 2013, more than four times as many as was the case in 1960 and 1970. By comparison, the U.S.-born population is only about 1.6 times the size it was in 1960. Immigrant population growth alone has accounted for 29 percent of U.S. population growth since 2000.

That is the most glaring sign that new workers are needed to maintain economic growth. US population growth cannot keep up with our demand for new workers. There is no other way to fill the 6 million job openings reported each month in the Labor Department’s JOLTS report.

Debate on the current House bill that doesn’t include an extension of the Dreamers’ protections was continued for 3 weeks, in the hopes that a bi-partisan bill keeping open the door for immigrants from what President Trump considers to be “S***hole”, non-white countries will be passed.

So this is important for economic reasons; as well as recognizing that America has always been a land of immigrants; that we keep a flow of qualified immigrants and their families coming from countries that can provide the workforce America has always needed to grow and prosper.

Harlan Green © 2018

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