Fitrst Quarter Economic Growth Improves

 Financial FAQs

Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2026 (January, February, and March), according to the advance estimate released today by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2025, real GDP increased 0.5 percent.

BEA.gov

“The U.S. economy has just powered through shock after shock,” was Fed Chair Powell’s summation of the state of the U.S. economy at his last press conference as Federal Reserve Chairmen.

First quarter 2026 real (inflation adjusted) GDP growth picked up +2.0% in the government’s first estimate, following +0.5% growth in Q4 2025, thanks to the $billions being spent in AI energy center build outs.

Kevin Warsh will take over as the new Fed Chairman in May, so there is speculation that he will push for easier monetary policy as President Trump’s pick for the new Fed Chairman by lowering the Fed’s interest rates and a more hands off management style.

Trump badly needs easy credit to maintain growth because of his economic mismanagement. A barely functioning government is either tied up in congress with the various shutdowns (last fall and current DHS funding), while illegal tariffs have choked supply chains.

Meanwhile, to Powell’s consternation, economic growth is picking up “through shock after shock”, from the Great Recession, COVID-19 pandemic, the 37-day fall government shutdown, tariffs, and the various wars that have caused energy prices to skyrocket.

The AI build out was predicted to boost growth, consumers continued to hold up their end, and government spent more on the Ukraine and Iran wars. The Defense Department reported the Iran war has already cost $25 billion in just the first two months.

And the financial markets continue to rally to new highs, so we are seeing some irrational exuberance, despite the game of chicken by Iran and Trump over the Hormuz Strait blockade. It’s obvious market investors continue to believe that Trump with his TACO policies will find a way to extricate American out of his latest war sooner rather than later.

But it also means $4 plus gas prices and soaring inflation for months to come. Even if the Iran war is settled sooner, predictions are that Middle East energy production won’t be restored to previous levels for at least one year.

The real problem is the Trump administration’s economic mistakes have taken us back to a Cold War economy—more military spending, fewer government social services, while endangering the good faith and credit of the U.S. federal government as the debt continues to balloon.

Something has to give, in other words. The financial markets won’t rally forever on the AI investment bubble, and consumers won’t keep shopping until they drop without an ensuing downturn.

The question is when on so many fronts. When will the wars end? When will enough consumers realize prices won’t come down and elect a congress that will control Trump’s extravagance and greed before he bankrupts the American economy?

When will it be one shock too many that drives us into another recession?

Harlan Green © 2026

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

How Do We Repair Our Economy?

Financial FAQs

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

 

President Kennedy’s maxim at his 1962 State of the Union address—the almost universal truth that the time to ‘repair’ our economy is when times are good—may seem dated today. At one time it was possible, but not for everyone today.

We have record federal debt fueled by a succession of economic blows—sequential tax cuts that didn’t pay for themselves, recessions, the COVID-19 pandemic, high tariffs, and several wars over the past decades.

And foreign investors are fleeing U.S. government bond markets that literally finance one-quarter of our federal debt because of it, driving up interest rates. Our ballooning federal debt is fast crowding out other government spending; maybe even reducing social security benefits in about 10 years.

Now is the time to repair our economic ‘roof’ while times are good. We have soaring financial markets and 3% annual GDP growth rates that have powered economic growth of late to pay down the soaring federal debt that is already at World War II levels as a percentage of our Gross Domestic Product.

Alas, there is no agreement on how to repair our debt problem. This is while another war is creating a 1970’s-style stagflation that will add $trillions more to the deficit.

International Energy Agency (IEA) officials, such as Fatih Birol, say the current Iran crisis is more severe than the oil shocks of 1973 and 1979, and the 2022 Ukraine-war shock, combined.

And businesses are not hiring new workers because of the economic uncertainty. It is fostering what has been called “The Great Hesitation” by the Wall Street Journal.

The WSJ cited the Baker, Bloom and Davis Economic Policy Uncertainty Index, a widely watched measure of policy-related uncertainty, that has surged to levels “typically seen during situations like the 2008 financial crisis (i.e., Great Recession) and the early months of the Covid-19 pandemic.”

Republicans aren’t showing much concern about the expanded deficit on their watch. Firstly, the highest tariff taxes since 1930 at the onset of the Great Depression has sharply raised every day prices. And the Trump administration’s immigrant shutdown is depriving the U.S. economy of enough new workers to replenish our labor force.

This is in part because Trump and the Republican Party have been unable to rein in the blatant racism of its Christian Nationalists’ policy that has branded almost all immigrant as undesirables. It has brought immigration to a trickle that once averaged one million entrants per year.

Yet immigrants have literally been the life blood of our economy and seed of economic growth. Stanford Business School studies have shown that immigrants represent nearly a quarter of the U.S. workforce in science, technology, engineering, and mathematics and more than a quarter of the nation’s Nobel Prize winners.

President Clinton was able to create actual budget surpluses in his last four years—from 1996-2000—by negotiating with congress to limit government spending on the military as well, until GW Bush busted the federal budget once again with Republican tax cuts while borrowing $trillions more to fight his wars on terror after the 9/11 attack.

How naïve President Kennedy sounds today when he said in 1962, “Members of the Congress, the Constitution makes us not rivals for power but partners for progress. We are all trustees for the American people, custodians of the American heritage.”

We need to repair more than the roof to survive as a democracy. But we must first realize we live under the same roof.

Harlan Green © 2026

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

The Coup Attempt by Trump-Musk

 A couple dozen young men go from government office to government office, dressed in civilian clothes and armed only with zip drives. Using technical jargon and vague references to orders from on high, they gain access to the basic computer systems of the federal government. Having done so, they proceed to grant their Supreme Leader access to information and the power to start and stop all government payments.

That coup is, in fact, happening. And if we do not recognize it for what it is, it could succeed.

In the third decade of the twenty first century, power is more digital than physical. The buildings and the human beings are there to protect the workings of the computers, and thus the workings of the government as a whole, in our case an (in principle) democratic government which is organized and bounded by a notion of individual rights.

The ongoing actions by Musk and his followers are a coup because the individuals seizing power have no right to it. Elon Musk was elected to no office and there is no office that would give him the authority to do what he is doing. It is all illegal. It is also a coup in its intended effects: to undo democratic practice and violate human rights.

Timothy Snyder, Author of On Tyranny