Why Did I Not Notice This?

9/4/26 Bureau of Labor Statistics reports 4.1% unemployment rate in August. The only lower rate in recent years was when Trump was inaugurated.

More Bad Economic News

9/16/26 St. Louis Federal Reserve Bank reports inflation-adjusted median household income as of March again at record level. Now median and average are not same thing even though careless and ignorant people (usually politicians and journalists) often misuse them that way. Still unless there are an enormously large number of households will negligible incomes, this is still good news.

Entertaining Explanation for Why Coal is Not Going Away

 And particularly why China, India, and Indonesia are not giving It up. Listen carefully while Mother Earth and Greta Thunberg cry. Hint: where we buy our products just exports coal burning.

Trump’s Upset About the Fed

2/3/26 TheFP:

Joseph Wang left his job at the Federal Reserve Bank of New York, he came across an odd new research paper from his former employer. Wang had been a senior trader on the Open Market Trading Desk, carrying out the Fed’s monetary policy. In his five years there, the usual Fed research covered topics like inflation, labor markets, and bank capital. This paper, though, was titled “800,000 Years of Climate Risk.”

“I thought that was very strange,” Wang recalled. “The Fed writing about CO2 concentrations."

The article lists other areas where the Fed seems to have branched from economics to leftist activism. Perhaps a bit more adult supervision is in order. 

All Orange Man Bad's Fault

8/28/25 CNN:

"Washington

 — 

The US economy’s rebound in the second quarter was stronger than previously reported, thanks to consumers who stepped up their spending despite jitters over President Donald Trump’s trade war.

"Gross domestic product, which measures all the goods and services produced in the economy, registered an annualized rate of 3.3% from April through June, the Commerce Department said in its second estimate released Thursday. That’s up from the 3% rate in the first estimate."

Rising GDP does not necessarily mean increased federal revenues, but it seems a good bet.  Budgeting based on presumed Laffer Curve results is not wise, but Trump’s audacious gamble may work.

The bad news keeps coming.  8/28/25 AP:

" WASHINGTON (AP) — Fewer Americans sought unemployment benefits last week as employers appear to be holding onto their workers even as the economy has slowed.

"Applications for unemployment benefits for the week ending Aug. 23 dropped 5,000 to 229,000, the Labor Department reported Thursday."

June Inflation Numbers

All the panic over tariffs causing inflation are having some data problems.   7/15/25 Bureau of Labor Statistics shows a .3% increase in prices for June for annualized rate of 2.7%.

Another Great Day for Up

Victory for Trump leadership; defeat for mortal enemy of America and Israel; great advertising for American defense contractors; likely increased demand for American petroleum if Iran closes Straits of Hormuz; latter damages America's enemy, China; Democrats make themselves look silly whining about victory.  What's not to love?  Stock markets up.

Orange Man Bad Inflation

6/30/25 Investopedia:

"Consumer prices rose 2.1% over the year in April as measured by Personal Consumption Expenditures, the Bureau of Economic Analysis said Friday.

1 That was the lowest annual inflation since September. The inflation rate was lower than the expectations of forecasters, who had called for a 2.2% increase according to a survey of economists by Dow Jones Newswires and The Wall Street Journal.2"



 

CNN Business With a Remarkably Fair Article

5/14/25 CNN Business:

The lowest inflation rate in four-years was made possible by a trend that will surely bring smiles to the faces of Americans: Falling prices.

Egg prices plunged between March and April by the most since 1984, according to the Bureau of Labor Statistics. Used cars and trucks unexpectedly got cheaper despite auto tariffs. So did clothes.

Those price drops are encouraging and should help families who are hurting from the high cost of living.

But not all price drops are created equal. Some of the good inflation news might be happening for a bad reason: a weakening economy.

But after discussing dropping prices caused by reduced consumer demand:

Others argue it’s far too early to conclude that consumer demand really is faltering.

The timing of Easter may have “mucked” with prices for air travel, hotels and elsewhere, noted Ryan Sweet, chief US economist at Oxford Economics. He said the drop in prices for sports “could be more noise than signal.”

I don’t think consumers are running for the bunker,” Sweet told CNN in an email. “If consumers were hunkering down, they would cut back on dining out and going to the movies.”

Although AMC Theatres is offering 50% off tickets on Wednesdays this summer, restaurants are hardly empty.

In fact, the number of seated diners in the United States from online reservations was 10% higher in April year-over-year, according to OpenTable data. Seated diners so far in May are up 8%.

I Guess Inflation Can Be Tamed by Orange Man Bad

5/13/25 CNBC:

The consumer price index rose a seasonally adjusted 0.2% for the month, putting the 12-month inflation rate at 2.3%, its lowest since February 2021.

• Core CPI also increased 0.2% for the month, while the year-over-year level was 2.8%.
• Egg prices tumbled, falling 12.7%, though they were still up 49.3% from a year ago.
• While the April CPI figures were relatively tame, the Trump tariffs remain a wild card in the inflation picture, depending on where negotiations go between now and the summer.

Who would have guessed corporations would get less greedy with a rich man in the White House? :-)

The last little dig makes it sound as though the higher tariffs will make a big difference.   That depends.  If you studied economics you doubtless remember elasticity of demand.  If a good is not essential or not terribly important to buyers an increase in price will reduce demand for it.  Think of badly made, badly sized Chinese clothing,  toys for kids who already have rooms full of unused toys, electronic toys for adults.  I am sure there many other examples.  

If the price of these increases 40%, demand will fall.  The amount demand falls depends on the elasticity of demand.   A 40% reduction in demand (extreme but not impossible) might have no inflationary results.  Those same products offered by a lower tariff country might cause no price change at all.  If made in USA (like those carbide endmills mentioned yesterday which are already competitively priced) might also cause no real change.

If you rely on antisocial media and your friends are repeating DNC talking points, your reality may differ, at least in that bubble.

This is An Opportunity Wrapped in a Hazard

5/10/25 Indian Defence Review (there is one to which I have never linked before):

"In the volcanic heart of Oregon, a lithium deposit worth a staggering $1.5 trillion has been discovered. Located in the McDermitt Caldera, this deposit could reshape the future of the U.S. battery industry, particularly as electric vehicle production accelerates. While the potential benefits are undeniable, the discovery is also stirring controversy, as local communities raise concerns about its environmental and cultural impacts."

The short version is that extraction has substantial environmental hazards and the area is culturally significant to the local Indian tribe.

I pass through there every time I drive to Nevada.  If you say it has an ecology worth preserving,  I will have to trust you.  It barely seems to have life.

This is in the middle of an Indian reservation,  so their property rights must be respected. I would love to see Christian culture and religion receive the same concern as we give the Indians.   I am not rejecting the validity of that respect; just asking for similar kid gloves for us.

How Did I Miss This?

3/12/25 New York Times:

"Inflation eased more than expected in February, a welcome sign for the Federal Reserve as it grapples with the prospect of higher prices and slower growth as a result of President Trump’s trade war.

"The Consumer Price Index was up 2.8 percent from a year earlier, after rising another 0.2 percent on a monthly basis. That was a step down from January’s surprisingly large 0.5 percent increase and came in below economists’ expectation."

I Am Generally Skeptical of Tariffs

As a punitive tool for nstions not doing our bidding, when those requests are reasonable, it is hard to argue against them.   When used against nations with whom we are likely to go to war, such as the PRC, they are essential. 

Generally,  the arguments against raising tariffs are:

1. They discourage the most efficient producers from international trade.  Canada is never going to be real good at pineapple growing.  They are very good at growing wheat.

2. Tariffs hurt consumers by raising prices for imports which also reduces price competition by domestic producers.

3. Foreign competition forces better products from domestic makers.  Look at how low quality American cars were until primarily Japanese competition almost drove U.S. car producers into bankruptcy. 

The case for higher tariffs:

1. It can encourage self-sufficiency.   The collapse in 1177 BC is a reminder that globalization can make you too dependent on other nations.

2. It can be a source of revenue.  Until 1913, tariffs were a major source of federal government income.  Creation of the federal income tax made tariffs relatively minor.

3. It can create jobs domestically.  2/24/25 CNN Business:

"New YorkCNN — Apple said Monday it will invest $500 billion on expanding US facilities over the next four years, a move that could help it avoid new tariffs on goods imported from China.

"Apple said the investment will create 20,000 jobs.

"Earlier this month, President Donald Trump announced tariffs of 10% on all imports from China, from which Apple imports many products, including most of its iPhones. Trump signaled Friday that Apple was planning to make this investment following a meeting with Apple CEO Tim Cook on Thursday. Trump attributed the investment to his tariffs."

Having a manufacturing base in America creates jobs and jobs that are generally better paid than, "Would you like fries with that, sir?" 

This process is not without its risks, of course.  Tariffs need to be carefully considered.  I have read that New Zealand has very high tariffs on cars,  even though it has no makers of cars.  Tariffs can create industries, as Hamilton's tariffs did to make America a great manufacturing nation.   But if no industry develops,  those tariffs will just be destructive to consumers. 

Devastating Analysis of Elite Data

An economist compares the economic data used by Democrats to pat themselves on the back in 2024 and reassure themselves that the people would elect Harris with more realistic measures that explain why Trump won:

"But the CPI also perceives reality through a very rosy looking glass. Those with modest incomes purchase only a fraction of the 80,000 goods the CPI tracks, spending a much greater share of their earnings on basics like groceries, health care and rent. And that, of course, affects the overall figure: If prices for eggs, insurance premiums and studio apartment leases rise at a faster clip than those of luxury goods and second homes, the CPI underestimates the impact of inflation on the bulk of Americans. That, of course, is exactly what has happened.

"My colleagues and I have modeled an alternative indicator, one that excludes many of the items that only the well-off tend to purchase — and tend to have more stable prices over time — and focuses on the measurements of prices charged for basic necessities, the goods and services that lower- and middle-income families typically can’t avoid. Here again, the results reveal how the challenges facing those with more modest incomes are obscured by the numbers. Our alternative indicator reveals that, since 2001, the cost of living for Americans with modest incomes has risen 35 percent faster than the CPI. Put another way: The resources required simply to maintain the same working-class lifestyle over the last two decades have risen much more dramatically than we’ve been led to believe."

And this appeared in the Democrat house organ,  Politico.

FOMC Cuts Rstes

9/18/24 Board of Governors of Federal Reserve System.  After a pile of explanation of their duty to keep unemployment and inflation both low, and sewing signs of a soft landing they will "lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent..." from looking at market indices, it appears that big money also priced in this reduction. 

No matter.  They seem to be doing their job, managing the disaster caused by a lack of adults running the government overall.

The markets are responding with vigor today 

Article About Argentina

12/23/23 New York Times article about the economic dislocations since President Milei took over--dislocations that he warned would take place 

After many paragraphs explaining that Argentina's economy has been seriously screwed up for years and the obligatory injured party interviews the absolute last paragraphs:

Despite the challenges, Ms. Cardozo said she remained a Milei supporter and was hoping his policies work.

“We were living under a fantasy,” she said, referring to gas prices before the recent hike. “If these adjustments are necessary to thrive in the end, they’re worth it.”

I am reminded of the pain after Reagan took office.  Crushing stagflation of the 1970s was hard on everyone but the rest of the 1980s was a good time for America.

Peter Zeihan

I have no idea who he is, but this presentation to some business leaders group gives the impression of a polymath who makes very plausible and somewhat worrisome predictions and warnings.

1. China is near collapse and we will likely get no warning of governmental collapse until stuff just stops arriving in container ships.

2. Russian raw materials come from areas largely Turkic, not ethnic Russian which are growing in population rapidly while the skilled workers largely ethnic Russian is dying much faster than ther are being born.

3. Mexico and Southeast Asia will be replacing (other videos indicate Mexico already is) China as the manufacturing center for North America and likely the rest of the world.

4. The raw materials required for a green revolution are simply not available at scale to do this.  He argues that if the U.S. military were deployed to invade and occupy the nations that are the needed sources of these raw materials (and we was not recommending it), we might have enough to green America, but the rest of the world no way.

5. His discussion of what Trump did in creating the MAGA realignment of the Republican Party has been profound. He makes the claim that both the Obama and Trump Administrations were run by people with no idea of the math required to run a national economy.  This does explain a lot, sadly.

Are You Wondering Why Stock Markets Are Rising?

It is generally accepted that the Fed has raised interest rates enough to prevent runaway inflation and likely cooling off an economy in deranged boom.  As interest rates fall, stocks become more attractive investments.

The Inflation Number Was Bad, But Better Than The Expected Tragedy

The stock market recovered nicely today, up about $27K for me.  

If you do not understand why a bad but not real bad inflation number makes the market happy: it means it takes a little pressure off the Fed to keep raising interest rates to stifle the stupidity the Democrats keep trying to impose.

A Marvelous Explanation of Defense Procurement Economics

I have mentioned this guy before.  He is a defense procurement specialist from somewhere Down Under (Aussie or Kiwi), and this video explains why comparing dollars spent on defense spending by nation understates how much the U.S. taxpayers get for that pile of money.  There are economic multiplier effects (manufacturing here creates taxable corporate income, personal income, capital gains, and lots of high-paying jobs.  

Then he explains why so many nations buy American weapon systems: why our scale of domestic production and leading-edge technology makes other nations' domestic production too costly.  I notice that when he discusses scale of production advantages he often includes World War II and modern production lines as a subtle reminder that we are really good at some things, still.  Like building the best fighter aircraft in the world.  Not cheap but as the Ukraine War is showing, cheap is not enough.