Consumers Aren't Buying It

 Popular Economics Weekly

Photo: Emma Da Silva/Getty Images

MarketWatch

“Total U.S. consumer credit growth slowed to a $5.1 billion gain in May, down from a $16.9 billion rise in the prior month, the Federal Reserve said Tuesday.

That translates to a 1.2% annual rate in May, down from a 4% rise in the prior month.” Greg Robb, MarketWatch

President Trump waited for stocks to rally before announcing his latest tariff broadsides on world markets, such as the 50 percent tariff on Brazilian imports. But the result is consumers are shopping less and less. So Trump shouldn’t be paying attention just to the financial markets if he wants to know what might happen over the rest of his term.

Retail sales fell 0.9% in May, the biggest drop in two years. Car sales spiked earlier this year as consumers sought to avoid higher prices from planned tariffs. But sales have slowed sharply since April, said MarketWatch.

The labor market is also slowing. Initial unemployment claims, an early indicator of its direction, have been increasing. The number of people receiving unemployment benefits increased 10,000 to a seasonally adjusted 1.965 million during the week ending June 28, the highest level since November 2021.

Consumer spending drives most economic growth (70%), so if they falter economic growth will slow. And stagnant growth is the component of a possible stag-flation that will result, just as it did in the 1970s with the oil shortages.

We now must wait for the other shoe to drop, which is the effect of the tariff taxes on inflation, which will surely increase later this year, given the supply shortages to follow.

Everyone now knows that TACO Trump is using the shock and awe tactics of so-called reciprocal tariffs, which are blatantly illegal per the Foreign Trade Court ruling now on appeal, to get more concessions from trading partners.

Trump’s problem is that neither consumers nor businesses like uncertainty, yet this is the only way Trump has ever known how to negotiate. His long history of lawsuits and bankruptcies have been the result. And once again he leaves it to the courts to sort out the messes he is now creating for all Americans.

Will it be worth it to those that elected Trump, and will be the most affected by their incompetence?

Harlan Green © 2025

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

Where Was FEMA?

 Financial FAQs

“On July 4, the day Trump signed the bill, flash floods devastated central Texas, leaving more than 100 people dead and about 160 still missing. Local officials immediately blamed cuts to the National Weather Service (NWS) for the disaster, but reviews showed that NWS meteorologists had predicted the storm accurately and had sent out three increasingly urgent warnings at 1:14 a.m., 4:03 a.m., and 6:06 a.m.” Heather Cox Richardson, Letters from an American

CNN

The Texas flash flood caught authorities flat-footed, but not the National Weather Service. It is GW Bush’s Katrina Hurricane response fiasco all over again.

I am re-posting excerpts from Historian Heather Cox Richardson’s Substack blog of what really happened in the Guadalupe River, Texas flash flood disaster. It is the most recent example of the cost in lives of the DOGE cost cutting frenzy and Trump administration’s mismanagement, that is also costing lives. This is apparently what we can expect from Trump and the incompetents he has picked to run our government over the next 3.5 years.

“But four hours passed before the police department in the City of Kerrville issued a warning. It wasn’t until 7:32 that the city urged people along the Guadalupe River to move to higher ground immediately. The missing link between the NWS and public safety personnel appears to have been the weather service employee in charge of coordinating between them. He took an unplanned early retirement under pressure from the “Department of Government Efficiency” and has not been replaced.

Then, as Gabe Cohen and Michael Williams of CNN reported, search and rescue teams from the Federal Emergency Management Agency (FEMA) could not respond to the disaster because Homeland Security Secretary Kristi Noem, whose department is in charge of FEMA, had recently tried to cut spending by requiring her personal sign-off on any expenditure over $100,000. That order meant FEMA couldn’t put crews in place ahead of the storm, or respond immediately. Noem didn’t sign off on the deployment of FEMA teams until Monday, more than 72 hours after the flooding started.

Tricia McLaughlin, a spokesperson for the Department of Homeland Security, told Cohen and Williams that Noem did not authorize FEMA deployment because DHS used other search and rescue teams. “FEMA is shifting from bloated, DC-centric dead weight to a lean, deployable disaster force that empowers state actors to provide relief for their citizens,” McLaughlin told CNN in a statement. “The old processes are being replaced because they failed Americans in real emergencies for decades.”

“DHS is rooting out waste, fraud, abuse, and is reprioritizing appropriated dollars. Secretary Noem is delivering accountability to the U.S. taxpayer, which Washington bureaucrats have ignored for decades at the expense of American citizens,” McLaughlin said. Noem has called for the elimination of FEMA.

Meanwhile, FEMA’s acting director, David Richardson, has been nowhere to be found, making no public appearances, statements, or postings on social media since the disaster, and not visiting the site. Former FEMA officials told Thomas Frank of Politico that Richardson’s absence suggests Noem is controlling the FEMA response. Trump appointed Richardson after his team fired his first appointee, Cameron Hamilton, for telling Congress he did not think FEMA should be scrapped.

The day after he took office in May, Richardson, who has no experience with emergency management, told staff: “Don’t get in my way…because I will run right over you. I will achieve the president’s intent…. I, and I alone in FEMA, speak for FEMA,” he said.

Even as rescuers were still at work today in Texas, DHS cancelled a $3 million grant that had been awarded in New York to make sure the NWS can communicate effectively with local officials.”

I maintain it’s what we can look forward to when our government is run by a convicted felon who only trusts those most loyal to him rather than our constitution.

Harlan Green © 2025

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