Will It Be a 'Hard Landing'?

Popular Economics

“The US LEI receded slightly in August, the first monthly decline since March of this year,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Four out of ten components fell compared to the previous month, with consumer expectations remaining a significant strain on the Index.”

 

LEI

Does the new Fed chairman want to be another Paul Volcker, whose Board of Governors raised the Fed Funds rate to 20 percent to cure the stagflation surge of the 1970s? We don’t need another ‘hard landing’, the economic term for an engineered recession.

New Fed Chair Kevin Warsh said at the most recent FOMC meeting that the Fed would do what it takes to restore confidence in the Federal Reserve to fulfill its mandate of low inflation with maximum employment.

And to make its point the 12 Fed Governors voted unanimously to raise their Fed Funds rate +0.25 percent, thus raising the Prime Rate from 6.75 to 7.00 percent that governs most installment loan and credit card rates.

So the surge in August retail sales might not be a good thing, as much as consumers would like to celebrate another good holiday, since how is the Fed to bring down inflation otherwise when consumers are a major cause of it?

The core personal consumption expenditure index—the version of the Fed’s preferred inflation measure for consumers that excludes food and energy prices—has exceeded the Fed’s 2% target for over 60 months.

The Conference Board’s Index of Economic Indicators (LEI) that attempts to predict future growth has been flashing signals of a slowdown for months per its graph above (downward slope of blue line).

But even the tariffs and Mideast wars haven’t slowed down consumer spending enough. The Fed is saying that it has waited too long to act to bring down inflation, which is endangering economic growth and the U.S. currency.

Chairman Warsh also said five years was too long to wait for the inflation rate to return its 2 percent target rate because of the tariffs and Middle East unrest. It was last this low during the COVID-19 pandemic.

Of course, “The odds of a serious Fed policy mistake are uncomfortably high and rising,” warned Mark Zandi, chief economist at Moody’s Analytics, in a post on X, I quoted last week.

Barron’s Randall Forsythe cites David Rosenberg of Rosenberg Research on what can be the most dangerous mistake, “Unless oil prices come down quickly. The only way by which interest rates bring inflation back to the 2% target is “by destroying enough demand to offset the supply loss. That is a recession by design,” he concludes.

Economists call it a ‘hard landing’. And that has always been the dilemma; how can the Fed boost interest rates just enough to engineer a ‘soft landing’, which means bring inflation back down to its long-term average without causing a recession?

This is the rock and a hard place I’ve been talking about. It can’t be done without real pain.

Harlan Green © 2026

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

What's the Fed To Do?

 Popular Economics

“Real gross domestic product (GDP) increased at an annual rate of 1.5 percent in the second quarter of 2026 (April, May, and June), according to the second estimate released today by the U.S. Bureau of Economic Analysis (BEA). In the first quarter, real GDP increased 2.1 percent.” BEA.gov

FREDgdp

Economic growth has slowed because of too much economic and geopolitical uncertainty that shows no signs of relenting. So, there are growing warnings that the Federal Reserve might be raising interest rates too soon in September.

“The odds of a serious Fed policy mistake are uncomfortably high and rising,” warned Mark Zandi, chief economist at Moody’s Analytics, in a post on X.

What mistakes? Like raising interest rates too soon to anticipate events that might not even happen. Dr. Zandi is commenting about a fear that the Fed will act too soon to curb the growing inflation surge, thus slowing economic growth unnecessarily in the face of more events that may require easier credit conditions.

I’m also on the side of caution. The record highs in financial markets fit all the signs of past investment bubbles. Therefore, raising interest rates prematurely may burst the investment bubble as it did the housing bubble that created the Great Recession.

The argument to hold rates or even lower them is because Trump’s tariffs have already reduced consumers’ pocketbooks. The $billions in refunds ordered by the courts from the illegal tariffs have mostly benefited major retailers such as Target.

Or, the Fed may be right to raise their rates now because inflation won’t slow down and the financial markets are at record levels, which will goose economic growth for probably the rest of this year.

That’s why inflation indexes like the wholesale PPI inflation gauge are trending above 5 percent while countries are already experiencing energy shortages amid two ongoing wars.

Economic growth is picking up from the A.I. buildout as well, which means inflation won’t come down of its own accord. There are predictions that third quarter GDP growth may be as high as 4 percent due to record corporate profits and the A.I. buildout frenzy.

The often cited Atlanta Fed’s GDPNow third quarter growth prediction has been above 4 percent since it was initiated in mid-summer, mostly due to predictions that robust consumer spending and domestic investments will continue.

“Real final sales to private domestic purchasers, the sum of consumer spending and gross private fixed investment, increased 4.2 percent in the second quarter, revised up 0.3 percentage point from the previous estimate,” said the Atlanta Fed.

Another inflation gauge, the price index for gross domestic purchases per the BEA announcement increased 5.8 percent in the second quarter, revised up 0.1 percentage point from the previous estimate. The personal consumption expenditures (PCE) price index increased 5.3 percent, revised up 0.2 percentage point, and the PCE price index excluding food and energy increased 3.6 percent, also revised up 0.2 percentage point.

These are more inflation measures that say inflation will require years to come back down to the Fed’s 2 percent inflation target. There aren’t yet ceasefires being negotiated in both wars, much less endings, and Trump keeps attempting to raise his illegal tariffs!

So the Fed is between the classic rock and a hard place. Raising rates will slow growth from the A.I. data center buildout while maintaining or lowering rates will keep consumers spending and the job market from collapsing.

But the Fed’s inflation mandate is in direct conflict with Trump administration policies that want to keep interest rates as low as possible to pay for its tax cuts and policy mistakes.

So why not be extremely cautious and protect yourself from all the possible disasters looming on the horizon? Or leave it to the Federal Reserve Governors to be the canaries in the coal mine.

Harlan Green © 2026

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

Inflation Out of Control?

 

Jobs Picture Improving?

 Financial FAQs 

“Total nonfarm payroll employment increased by 162,000 in August, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places and in local government education. The information industry lost jobs.” BLS.gov

FREDpayrolls

Total nonfarm payroll employment rose by 162,000 in August, higher than the average monthly gain of 31,000 over the prior 12 months, said the Bureau of Labor Services.The new payroll jobs tallied in August look to be a temporary blip after miniscule job gains the prior three months.

Why the sudden rise? These are largely service sector jobs, which means summertime travel and leisure activities pick up, and schools will soon begin.

Employment in food services and drinking places increased by 59,000 in August, well above the average monthly gain of 12,000 over the prior 12 months. Local government education added 42,000 jobs in August, offsetting a decrease in the prior month.

Will this reverse the severe job decline since early 2024, the start of the second Trump administration, that is portrayed in the Federal Reserve Bank of St. Louis (FRED) graph above?

Only if Trump will cease finding ways to illegally raise tariffs, begin to honor existing tariff agreements, and settle the Iran war that he is mired in. Oh yes, also stop the immigration policies that have depleted the number of working adults.

Otherwise, the one million fewer working adults who have stopped looking for work, thus shrinking the labor force, will also shrink economic growth.

The FRED graph is an accurate depiction of what a gutted labor market looks like since 2024. There is no consistency, because it reflects the moment-to-moment thoughts, or lack of thoughts, of a President who rules by distraction to shield the damage to economic growth he and Republicans are causing.

It’s a huge damage list—+300,000 federal jobs cuts by DOGE, downsizing or eliminating whole departments in Health and Human Services, the EPA, Medicare and Medicaid that hurts worker productivity by creating a sicker working population.

The bond rout (NYTimes) that is raising longer term interest rates has scared our allies. Both the Dutch and French governments have elected to remove their $billions in gold assets out of U.S. territory, where they have been traditionally held because they no longer trust the U.S. to keep international agreements.

Will other countries begin to sell off their U.S. holding of Treasury bonds as well? That would be a major red flag, as it means other countries are turning away from using the U.S. Dollar that supports most world trade.

Nobel Laureate Paul Krugman doesn’t think it’s a danger just yet.

“I’m not saying that Democrats should be like Trump, and blithely ignore debt and deficits. They should by all means push for tax hikes on high incomes, close loopholes exploited by multinational corporations, strengthen IRS enforcement, and more.”

The economic uncertainty could also be a result of Trump’s own deteriorating mental state and three more years of endless military wars. We will need our allies.

Harlan Green © 2026

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

Not Another Greenspan?

 Popular Economics

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent on a seasonally adjusted basis in July after falling 0.4 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.” BLS.gov

FREDcpi

Kevin Warsh, the new Federal Reserve Chairman sounded hawkish in his first speech at the Fed’s annual Jackson Hole conference, as if an interest rate hike was needed soon to fight rising inflation.

"While the PCE and CPI (inflation) readings were better than expected, they do not tell me that underlying trends have meaningfully improved, and we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do."

But Warsh is a true-red Republican appointed by President Trump and we know that Trump wants to keep interest rates as low as possible to pay for the tariffs and war he has started and will go at any lengths to make it happen, including attempting to fire Fed Governors (Lisa Cook).

Good luck is all I can say. Warsh confronts a scenario that is frighteningly similar to that of Alan Greenspan’s tenure as Fed Chairman in early 2000. President GW Bush needed ultra-low interest rates to pay for his wars on terror after 9/11. But he also passed huge tax cuts that Republicans didn’t want to pay for.

And Greenspan worked to assist him in financing the invasions of Iraq and Afghanistan by convincing his Fed Governors to hold down interest rates for as long as possible—too long it turned out. The Fed Funds rate was held at 1 percent while CPI inflation was ultimately rising to 5.3 percent by 2008, igniting the housing bubble that ultimately burst, thus creating the Great Recession.

Maybe Greenspan was at heart an inflation dove, because the Fed got behind the inflation curve and didn’t raise its Fed Funds rate to 5.25 percent until 2006, which was too late to stop the housing bubble and soaring inflation.

So does Chairman Warsh’s pronouncement that inflation will be tackled, no matter the consequences, to be believed? The Fed Governors have been sounding equally hawkish on the need to fight inflation. And "short-term interest rates are predominant tool to achieve the dual mandate," said Warsh (i.e., stable prices and maximum employment).

Yet U.S. debt is growing faster than the economy, and the job market is barely growing. A.I. won’t be the savior if consumers run out of money because they no longer have a job. The BLS’s latest benchmark revision of payroll jobs estimate implied that non-seasonally adjusted nonfarm payroll gains averaged about 11,000 per month through March over the preceding 12 months instead of 18,000, reports Reuters.

So will Warsh and the Fed be able to withstand the merciless vituperation sure to come from the child-like brain of Donald Trump and maintain the inflation fight when the going gets tough?

We don’t want another bubble to burst with A.I.’s investment bubble growing every larger on top of the tariffs and endless wars.

Harlan Green © 2026

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

Inflation is Here to Stay

Financial FAQs

“The Producer Price Index for final demand was unchanged in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. On an unadjusted basis, the index for final demand increased 4.7 percent for the 12 months ended in July”. BLS

FREDppi

The wholesale PPI is a sign that inflation is too high to raise hopes for any decrease in interest rates anytime soon. And because the PPI measures the cost of raw materials that go into retail products, it foretells how consumer prices will behave in the coming months.

In fact, August PPI also tells us why interest rates are soaring in the bond markets as well that set mortgage rates. It’s why 30-year fixed mortgage rates have risen to 6.67 percent at this writing.

So why are interest rates so high at this time? It’s not only the ongoing wars creating shortages in everything (mainly Iran and Ukraine) but the huge demand for money to build out the AI data centers. Elom Musk’s SpaceX IPO got ahead of the crowd by netting $75 billion, which delayed IPOs for Open A and Anthropic among others.

The IEEE Technology Society predicts that the AI build out will cost $363 to $400 billion. And the investments are mostly borrowed money which is driving up bond yields even higher, crowding out funding for much-needed government programs.

The 10-year Treasury yield is 4.70 percent today, up from its low of 4.1 percent April 3, 2025 (tariff liberation again).

And that’s not all. Once up and running, the amount of water and electrical power needed to operate the data centers drives up electricity prices as well. And global warming will be exacerbated from the excess amounts of heat generated.

Lawrence Berkeley National Laboratory projects U.S. data center electricity demand will grow from 176 TWh in 2023 (about 4.4% of total U.S. electricity) to 325–580 TWh by 2028 (6.7–12% of total U.S. electricity)

Tech financial analysts worry that enthusiasm for AI has turned into a bubble that is reminiscent of the mania around the  Internet’s infrastructure build-out boom from 1998-2000, I have also been saying.  During that time period, telecom network providers spent over $100 billion blanketing the country with fiber optic cables based on the belief that the Internet’s growth would be so explosive that such massive investments were justified.  The “talk of the town” during those years was the “All Optical Network,” with ultra-long haul optical transceiver, photonic switches and optical add/drop multiplexers.  27 years later, it still has not been realized anywhere in the world.

The annual PPI held at 4.7 percent for the past two months, down from 5.5 percent, which is the stratosphere as far as inflation is concerned. The last time it even approached the Fed’s 2 percent target was April 2025, the month Trump began his illegal liberation day tariffs that is now refunding, per the courts.

That’s probably why Q1 2026 GDP growth was just 2.1 percent, and the advance Q2 estimate was 1.5 percent, as I’ve said.

The real lesson(s) from the self-induced geopolitical uncertainty by the Trump administration is that many safeguards are being reduced or eliminated that protect the American economy and American citizens.   

These safeguards include paying down the national debt instead of tax cuts that increase it, funding scientific research instead of reducing it, and expanding public health care. 

Without those safeguards it's just a matter of time before another recession.

Harlan Green © 2026

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

"The only thing we have to fear is fear itself." Roosevelt

 Popular Economics

FREDpayrolljobs

The job market is shrinking, to no one’s surprise. But July’s catastrophic unemployment report tells us the loss of -23,000 payroll was particularly horrific. Yet +214,000 jobs were created in March, and the economy was perhaps on its way to decent growth this year.

It’s been downhill ever since. More workers are leaving the workforce than are being hired—and 234,000 left the workforce in July—because companies are leery of Trump’s anti-growth policies.

In fact, the sharp drop in payroll hiring began with Trump’s start of the Iran War, as can be seen in the FRED chart. There may have been other factors, such as higher tariffs and threats to invade other countries as well.

But economies don’t like wars begun with no advance notice or preparation, nor does congress, or employers, or most Americans. Tolerating such an ongoing war tells us that many Americans are now living in a country ruled by almost constant fear, under a president who is a convicted felon acting like a mob boss who is ignoring laws and the congress while making decisions through threats and intimidation.

Why did this happen? President Roosevelt faced much larger fears that he addressed in his famous 1933 inauguration speech when 25 percent of Americans were unemployed. And because of such conditions, created the modern social safety net—including social security, union protections, and unemployment insurance—to recover from the Great Depression.

But many of those guarantees have been watered down or eliminated for many Americans since then. We are the only developed country without universal health care, tuition free public college, mandated paid vacations and paid child leave, among other benefits, all major indicators of social well-being.

And Americans suffer from the greatest income inequality in the developed world, engineered by successive conservative governments who have made a concerted effort to roll back President Roosevelt’s New Deal.

They have been so effective, particularly since 1980 and Ronald Reagan’s trickle-down economic policies, that many Americans no longer feel safe, have lost faith in democratic government, and have elected to live in an autocracy—particularly in red states ruled by Republicans—in desperate fear of not only losing their vocations, but their health care and retirement pensions, including social security.

Fear is contagious, but as President Roosevelt knew, was faced down when our government reclaimed its role as a public service that protected all Americans, not just the privileged few.

Harlan Green © 2026

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

Where are the Jobs?

 Financial FAQs

“The number of job openings was little changed at 7.4 million in June, the U.S. Bureau of Labor Statistics reported today. Hires were unchanged at 5.3 million, while total separations changed little at 5.4 million.” BLS

FREDjolts

The job market is shrinking, contributing to the slower economic growth we are seeing this year. For instance, fewer job vacancies are being reported by the Job Openings and Labor Turnover (JOLTS) report, a survey that measures the monthly number of available jobs.

And fewer workers means less will be produced. The JOLTS report also tells us there are more separations–workers leaving the workforce for a variety of reasons than hires.

That’s probably why Q1 2026 GDP growth was just 2.1 percent, and the advance Q2 estimate was 1.5 percent. But there are indications that the AI construction may cause third quarter GDP growth to be higher, as much as 3 per cent with the huge surge in AI spending.

The number of job openings increased in transportation, warehousing, and utilities (+97,000) and in federal government (+39,000). Job openings decreased in wholesale trade (-74,000), nondurable goods manufacturing (-55,000), and mining and logging (-9,000), per the JOLTS report.

The question will be why the reluctance to hire more workers in other sectors? Is it AI? We know that as much as $800 billion is being invested in AI infrastructure and might replace a lot of jobs. So companies may have frozen the number of new hires until they know more about AI’s potential.

What are employers still looking for? The upcoming ‘official’ U.S. unemployment report out in days will also show a shrinking labor force. It’s a huge debate. Firstly, companies have no way yet of measuring what AI may earn on their investments.

“It’s a currency where you have no instinct to know what you are using, and the accounting practices aren’t even there,” said an economist cited by the NYTimes. “The AI stuff is being treated as an investment right now, but it’s a risky investment in case it has no returns.”

It’s not all bad news. The larger, lower paying, service sector economy is still growing. Service companies such as banks, retailers and restaurants expanded last month at an accelerated rate for the sixth month in a row. An index produced by the Institute for Supply Management inched up to 54.1% from 54.0% in the prior month, said MarketWatch’s Jeffry Bartash.

The manufacturing sector is also growing because of the AI buildout. “In July, U.S. manufacturing activity remained in expansion territory, growing at its fastest rate in more than four years,” reports Susan Spence, MBA, Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee.

But AI is still muddying the job creation picture. It is the sixth year of this expansion, so AI will determine if this is an ongoing boom, or a bust economy. The record DOW and S&P indexes are predicting boom times ahead, but that’s in part because Wall Street and financial markets are counting on the Mideast wars to be settled, Trump to stop levying illegal tariffs, and there are no prolonged energy shortages.

Will that happen? Or do we need a few more election cycles to determine what laws and regulations will govern this emerging economy?

Harlan Green © 2026

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

Another Housing Bubble?

 The Mortgage Corner

“WASHINGTON (July 9, 2026) – Existing-home sales decreased by 2.4% month-over-month and increased 2.8% year-over-year, according to the National Association of REALTORS® Existing-Home Sales report. NAR

FRED30yrmortgage

It’s been months since I last wrote about the housing market, and why it’s had such a slow recovery. FRED’s 30-year fixed mortgage graph tells us why, and why we have a housing shortage.

And the 30-year fixed rate mortgage has hovered above 5 percent since 2023, its longest stretch above 5 percent since 2007 and the start of the Great Recession. Lower interest rates would certainly stimulate more housing construction, especially on the affordable end.

But new Fed Chair Kevin Warsh has been repeating that inflation is too high at his congressional hearings and the Fed may have to make some hard choices and become an inflation hawk to bring inflation back to its 2 percent target rate.

If only we still had Ayn Rand disciple and free market lover Alan Greenspan as the Fed Chair! In a similar situation during the GW Bush 2000 decade, Fed Governors resisted raising the Fed rates to help fund the Bush administration’s wars on terror, despite enacting the large Republican tax cuts that caused the first $trillion in federal debt.

A caveat is to be careful what you wish for, since the last such building surge inflated the housing bubble for mostly the wrong reasons.

And the busted housing bubble that led to the Great Recession of 2008-09 also led to the current housing shortage. Can we ever return to the ‘good old days’ when there was enough housing for those that want to own?

It fueled an earlier housing bubble It was the combination of interest rates being held below rising inflation that caused housing prices to increase by double digits for a couple of years and we were left when a massive oversupply of unsold homes.

Right now we have both a demand and supply problem—how to bring down mortgage rates to lure more home buyers, and kick start more housing construction.

The Trump administration is also attempting to talk down interest rates in the face of its massive tax cuts as it has been waging war on several fronts—from attacking Venezuela to Iran, while again ballooning the federal debt.

The 30-year average fixed mortgage was last at a much more affordable 3 percent rate during the COVID-19 pandemic. It is 6.58 percent at this writing and has remained above 6 percent since 2022 when the Fed last raised interest rates to combat inflation as world economies began to recover from COVID.

And we know both home buyers and mortgage lenders are incredibly sensitive to mortgage rates, in part because mortgage lenders have kept credit standards much higher than they were in the lead up to the housing bubble that caused so many defaults. Anyone remember the no-income verification, liar loans of that time?

The National Association of Realtors remain hopeful that the home buyer market will approve.

"The back-and-forth in monthly home sales activity, driven by mild fluctuations in mortgage rates, shows how sensitive home buyers are to affordability conditions,” said NAR Chief Economist Lawrence Yun. “However, job gains—more than half a million since the beginning of the year—will continue to provide support for the housing market.”

But so much is similar to the housing bubble and bust. Trump’s Big Beautiful Tax Bill and Iran war is raising the costs of everything as did Bush’s tax cuts and war on terror.

Are we seeing a housing revival with the slight uptick in existing home sales? Hope springs eternal, as the saying goes. Sales have hovered around 4 million residential units since the busted housing bubble and 2008-09 Great Recession. There has never been enough supply to satisfy the demand of an increasing population since then because the busted housing bubble restricted new home building for almost 10 years, and 30-year fixed rate mortgages have hovered above 6 percent ever since, per the FRED graph.

Higher interest rates are raising construction costs. Trump’s tariffs on steel, copper, lumber and other materials are lifting construction prices and interrupting some jobs. This is while immigration enforcement is worsening worker shortages and delaying projects.

I said last week,

“We get so many things thrown at us in the construction industry,” said Tony Rader, the chief relationship officer at National Roofing Partners, a commercial roofing company in Coppell, Texas. “It just seems like every time we turn around, we’ve got something else to fight.”

The bottom line is too many resources have been diverted to funding wars, not peaceful enterprises since then, leaving little room for more housing construction, or curing our homeless problem.

When will that change?

Harlan Green © 2026

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

Defeating The Bully Mentality

 Popular Economics Weekly

"But nobody expects to see a lot of prominent Republicans declaring that rejecting Medicaid expansion is wrong, that caring for Americans in need is more important than scoring political points against the Obama administration. As I said, there's an extraordinary ugliness of spirit abroad in today's America, which health reform has brought out into the open." P Krugman

sfgate.com

We are now seeing what happens when the Republican Party has adopted what I have called a bully mentality, a state of mind so fixed on domination rather than negotiation that it has inflicted massive damage to the U.S. economy and the American people with its hatred of a government that serves all Americans.

Donald Trump is the latest result of Republicans’ attempts to capture as much wealth as possible. They have dumbed down their party to such an extent that they now have a government dominated by the least educated and less talented that threatens to cause another recession.

And what can we do about it?

I quoted Nobel Laureate Paul Krugman on Republicans’ “ugly” behavior as long

ago as 2014 when Republicans opposed Obamacare. Such an ugly state of mind has never prevailed in this democracy that was founded by vanquishing the biggest bully at the time, King George III.

"...while supposed Obamacare horror stories keep on turning out to be false, it's already quite easy to find examples of people who died because their states refused to expand Medicaid. According to one recent study, the death toll from Medicaid rejection is likely to run between 7,000 and 17,000 Americans each year.”

The Republican Party since President Nixon’s resignation has been a record of economic failures. The 27 Republican-dominated red states are the poorest states, with the greatest income inequality, lowest life spans and highest birthrate mortalities. They require the most assistance from wealthy blue states to balance their budget deficits. And they have the highest death rates, including suicides, from drug and gun use.

It is the reason we are experiencing a second Gilded Age, almost a repeat of the turn of the 20th century that created the robber barons. The enormous wealth generated by the digital age has created an economy dominated by the ultra-wealthy with a massive tax burden born by all Americans.

$trillions have been siphoned away from wage earners to the owners of capital since 1980, which most economists consider the start of the second Gilded Age. The result was a series of recessions leading to the housing bubble and Great Recession during GW Bush’s reign.

And did they learn from it?

No, Republicans then elected another bully to two terms who continues to wreak havoc on the American economy with illegal tariffs and an another unending war. Donald Trump is a convicted felon who has always been a bully preying on the weakest. His many bankruptcies (5) and lawsuits (+3500) attest to his methods of defrauding investors and stiffing his workers that he could not dominate.

But perhaps the saddest example of Republicans’ transformation to a party  is that they no longer protect the environment as they did when President Nixon created the Environmental Protection Agency in 1972 by signing the Clear Air and Water Acts.

When will Americans finally wake up to the suffering inflicted from such ugly behavior in a party that only caters to the richest and persecutes the poorest in upcoming elections, before inflation becomes uncontrollable, the air unbreathable, and the Iran becomes another unending war like Iraq?

Will it take another Great Recession and loss of millions of jobs before Americans stand up to such a bully mentality once again to end this Gilded Age?

Harlan Green © 2026

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

“The economy hasn’t lost its mojo.” MarketWatch

 Financial FAQs

“Advance estimates of U.S. retail and food services sales for June 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $768.6 billion, up 0.2 percent (±0.4 percent)* from the previous month, and up 6.7 percent (±0.5 percent) from June 2025.” Census.gov

FREDretailsales

Headlines, such as that consumers “haven’t lost their mojo” have popped up when retail sales rose 0.2 percent in June. It’s a sign of consumers are willing to ‘shop until they drop’, which may keep the U.S. economy growing for some time.

It also means that same level of irrational exuberance of the 1990s is back once again, with the major market indexes at record levels, and consumers seemingly oblivious to the conditions that prevailed during the late 1990s.

 Nobel Laureate Robert Shiller first presented the term irrational exuberance to Alan Greenspan’s Federal Reserve Governors in 1996 to evidence how overvalued stock market levels had become at the time. But it wasn’t until 2000 that the dot-com asset bubble burst that many market commentators and some economists are comparing to the current record market rally.

The MarketWatch headline portrays most of the media’s reaction to the latest Advance Retail and Food sales report by the U.S. Census Bureau. The slightly hysterical headline is really a sign of relief because of the slight drop in monthly gas prices that prevailed during the 60-day cease fire agreement.

But the cease fire has ended. And it reveals how badly the Trump tariffs and Iran war have hurt consumer spending, still the backbone of U.S. economic growth. We have been a consumer-driven economy since the 1950s and end of World War II.

And since retail sales are not inflation adjusted, when adjusted for inflation, gas and food in particular have become less affordable. Retail inflation is still above 3 percent. Retail sales have fluctuated wildly, as per the above graph, rising 6.7 percent in 12 months because consumer bought more in earlier months to get ahead of the rising inflation—i.e., before the Iran War began to jack up everyday prices.

Though sales at car dealers and online merchants both jumped about 2 percent in June, sales fell at grocery, clothing and healthcare stores, says MarketWatch.

So, consumers are still shopping because they must, putting them further in debt. The Consumer Price Index for basic necessities like gas and food is still above 3 percent, as I said, and the wholesale (PPI) price index for raw materials that go into retail goods is 5.5 percent annually, the U.S. Bureau of Labor Statistics reported. It’s still the largest rise in more than three years.

We don’t have to look at just the dot-com bubble to compare, either. I see an unsettling resemblance to the ‘roaring twenties’ of an earlier era from the recovery of another pandemic, the Spanish Flu pandemic of 1919 to 1920 that killed what would be millions of Americans if at our current population level.

It was a long recovery—until 1929 and the Black Friday stock market crash that led to the Great Depression, caused in part by another era of high tariffs that led to product shortages.

How long may this era of irrational exuberance last that has driven the financial markets to record levels with so much wealth pouring into a new space age that will take us years to return to the moon, much less turn a profit?

We are at another turning point in what currently looks like an A.I. revolution, much like the Internet’s introduction that took decades to adopt, and recovered from a Great Recession, let’s not forget.

So the best way to survive another bout of irrational exuberance is to be patient, in my opinion, rather than listen to the crowd that promises the next big thing.

Harlan Green © 2026

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

No Relief From Inflation

 Popular Economics Weekly

 “From the same month one year ago, the PCE price index for May increased 4.1 percent. Excluding food and energy, the PCE price index increased 3.4 percent from one year ago.”

 

BEA.gov

The Personal Consumption Expenditure Index (PCE), the Federal Reserve’s preferred inflation gauge that covers the widest spectrum of price changes, showed no relief in May. In fact, the PCE graph above showed inflation’s steady climb since Trump’s April 2025 Liberation Day (illegal) tariff hikes levied on the rest of the world that must now be repaid.

Refunding the tariffs to importers won’t reduce inflation because the higher import costs were passed on to consumers and producers. It becomes a chain reaction as those costs work through the economy. There are also the distributors, for instance, as well as the retailers and manufacturers’ profits that go into the chain.

The 4.1% annual inflation rate means inflation is now out of control for wholesale prices that go into the finished products as well. This is while Kevin Warsh, the new Fed Chairman, has said he is committed to bringing inflation back down to 2%.

When and how can it be done? We will be living with the likelihood the Fed may have to raise interest rates sometime this year. The Ukraine and Iran wars are creating more product shortages on top of the supply chain shortages caused by the tariffs.

The Ukraine war could be over if Trump had taken Ukraine’s side in the conflict instead of Putin’s. And how will he handle the Iranians who have the U.S. over a barrel (of more than oil) because he must bring down the price of oil-based products as well?

The U.S. economy is growing at 2% in the latest first quarter revision because consumers have kept shopping, but with a terrific toll on their personal savings rate (down to just 3%).

The financial markets have added to the frenzy because of the A.I. spending to expand data centers. There’s more than a little irrational exuberance prevailing, I said last week.

Their actions have raised consumer prices to such a level that they may not come down for years. We know this because the wholesale Producer Price Index (PPI), that measures the price of raw materials going into the finished products rose a whopping 1.1% in May, seasonally adjusted, also the largest rise in more than three years that must work its way through the product chain.

No, inflation is here to stay for a while, producing an immense asset bubble as the U.S. economy advances into the next stage of our industrial revolution. Economists have another term to describe it—creative destruction—that economist John Kenneth Galbraith said was,

“the cyclical process by which the system eliminates the people and institutions which are mentally too vulnerable for useful economic service. Unfortunately the process has larger and less benign effects, including the possibility of painful recession or depression.”

We are in this inflationary mess because of executive actions made on impulse rather than research by a President and advisors who are completely ignorant of  basic economic theory, who has said he likes the inflation and no longer cares about the economy.

Who will be the winners and losers in the A.I. economy to come at a speed that will upend the lives and jobs of the next generations?

Harlan Green © 2026

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

Retail Sales Recovering?

 Popular Economics Weekly

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

 

FREDretailsales

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

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

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

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

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

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

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

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

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

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

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

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

Harlan Green © 2026

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

"I Love the Inflation."

 Financial FAQs

Huffington Post

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

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

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

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

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

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

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

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

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

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

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

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

Harlan Green © 2026

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