Economic Growth Continues

Posted on October 24, 2026 by Popular Economics Weekly

Financial FAQs

“The Conference Board Leading Economic Index® (LEI) for the US was unchanged in September 2026 at 99.6 (2016=100), after a decline of 0.1% in August. The LEI grew by 0.6% between March and September 2026, a reversal from its decline of 1.1% over the previous six months (September 2025 to March 2026).”

LEI

The Conference Board’s Index of Leading Economic Indicators (LEI) does a decent job of predicting future economic growth and recessions.

It predicts positive growth may continue but given the recent economic events such as President Trump’s illegal tariffs and gulf wars, we are lucky if it continues for more than six months in President Trump’s second term.

The above LEI graph is an overlay of its growth rate predictions (blue line) 6-months ahead overlaying the length of actual recessions (gray bars). That means its various dips portrayed in the graph seem to have predicted a downturn looming in the upcoming 12 months.

The red line below which a recession was called had one exception—there was no recession in the 2022 to 2024 dip before the latest positive upturn.

Why then is the positive upturn predicting higher growth ahead? The A.I. data center construction is generating so much investment (approx. $800B) by the ‘Big 7’ tech companies and banks—such as Apple, Meta, Alpha (Google)—that it has boosted the stock market to record levels.

It’s also boosted interest rates and shaken the bond markets, who are worried that it is crowding out other more mundane investment that keep our government running. And several IPOs are in line, such as Anthropic which believes it can raise up to $1Trillion in its upcoming IPO.

So, economic growth has been a mixed bag until now. The growth slump in 2024 happened when Trump enacted his first tariffs and another One Big Beautiful Bill tax cut bill that added more $Trillions to the national debt.

“Five out of ten components made positive contributions to the LEI in September, led by the interest rate spread and average weekly hours in manufacturing. Nevertheless, these gains were offset by a large decline in consumer expectations and much smaller negative contributions from stock prices, new orders for capital goods and building permits.”

The huge surge in A.I. investment is giving a boost to economic growth this year. But what happens when all the data centers have been built out sometime next year? When will use of the new ChatGPTs, Claude software generate enough profits to pay for the record debt that underpins its construction and the huge amount of power required to run it?

The good news is that it’s a huge plus for upgrading our energy infrastructure that requires new electrical networks to run it as well.

But we do have examples of past over-investment bubbles that burst and caused recessions, such as the dot-com bubble of 2000 when there was a huge buildout in fiber optic cables that opened the Internet to everyone.

Then GDP growth stalled in 2001, a recession followed and growth didn’t turn positive until 2003, which lasted until the 2008-09 Great Recession.

So the LEI red line may not reflect recessions as accurately as we would like. But we are dealing with an administration that glories in its ignorance of the most basic economic verities in its quest to prolong the latest Gilded Age of robber barons as long as possible.

A recession might not occur in the next 12 months, of course. What if the Strait of Hormuz is opened and Trump makes a deal with Iran? Or he settles the tariff trade war? Or, the Federal Reserve succeeds in taming inflation?

Harlan Green © 2026

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

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A Brutal Inflation Report

Posted on October 15, 2026 by Popular Economics Weekly

Financial FAQs

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent on a seasonally adjusted basis in September after rising 0.4 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.7 percent before seasonal.” BLS.gov

FREDcpi

The misjudgments and ignorance of our wanne-be dictator who likes wars is coming home to roost. Consumers are being hit with the second-largest monthly inflation spike since Trump began to bomb Iran (see graph), which makes it inevitable that there will be more interest rate hikes by the Federal Reserve.

This is largely because of the shortage of oil and energy supplies as Iran has been knocking out Middle East oil wells and refineries while closing the Strait.

The Bureau of Labor Statistics reported the gasoline index rose 9.1 percent in September, accounting for over half of the monthly all items increase. The energy index increased 5.2 percent over the month following a 2.1-percent increase in August.

But it hasn’t yet stopped consumers from shopping. Advance estimates of U.S. retail and food services sales for September 2026 not for inflation were up 0.8 percent (±0.4 percent) from the previous month, and up 6.3 percent (±0.5 percent) from September 2025.

Yet much of it was spent on soaring gas prices, or diesel prices which are approximately one dollar higher per gallon than gasoline.

That’s because we are in the middle of the A.I. investment boom that will keep the financial markets at record levels and the economy growing into next year. But everything will be more expensive.

Trump claims his war is to prevent Iran from ever having nuclear weapons. But President Obama had already accomplished it with his Joint Comprehensive Plan of Action (JCPOA) in 2015 in which Iran signed a treaty with the major world powers to never develop a nuclear weapon,

Trump cancelled the treaty that would have kept the Middle East at peace because of his hate for a Black President, so now the Strait of Hormuz is closed and petroleum supplies will be more expensive and more difficult to obtain when it ultimately reopens because Iran controls the access.

There was never a mention of the Strait of Hormuz in Obama’s Treaty because it was an international waterway.

So what happens next? If the A.I. construction continues and consumers keep shopping, we will have decent economic growth. The Atlanta Fed’s GDPNow third quarter GDP estimate is holding at 3.6 percent, up from 2.2 percent in Q2.

And inflation will continue to rise. Wholesale prices that go into consumers prices also took a huge jump of 1.3 percent in September. And that is for the raw materials like steel, lumber, etc., that go into retail products. So, prices will keep rising.

Our Federal Reserve must therefore continue to raise their interest rates to maintain credibility. Their Fed Funds rate controls short term interest rates for credit cards and installment loans, which controls the Wall Street Prime Rate, which is already 7 percent.

It hasn’t slowed down consumers yet because of the chain of events I just mentioned. The stock market is profiting from the A.I. construction and record profits of corporations. But they must slow their shopping eventually, maybe after the holidays when they run out of savings.

The A.I. centers will be taking much of the energy supplies when they open. The Atomic Energy Agency (AEI) estimates that a “typical AI-focused data centre consumes as much electricity as 100,000 households, but the largest one is under construction today will consume 20 times as much.”

I have an interesting thought. Trump could bring inflation back down to earth if he wasn’t so in love with Putin by taking The Ukraine’s side in that war. If Ukraine was given the full support with weapons and intelligence of our “great military”, Russia would have to sue for peace, as the saying goes.

And what then? It could no longer support Iran, who might then also sue for peace. Imagine what could happen next. Sanctions could be lowered or even eliminated, and world trade could begin to return to normal times.

But is Trump too crazy in love with himself for that to happen? Then remove him and save the world from another brutal recession.

Harlan Green © 2026

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

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Endless Wars = Endless Inflation

Posted on October 13, 2026 by Popular Economics Weekly

Popular Economics Weekly

“Many participants emphasized that a higher path for the target range would be prudent on risk-management grounds, providing insurance against inflation remaining persistently above target due to stronger-than-expected demand or further adverse supply shocks,” FOMC

FREDdebt%gdp

Must Americans endure more endless wars, as we did with Vietnam, Iraq, and Afghanistan? And was the cost worth it with the mountain of debt left behind?

The FOMC minutes quoted above say, if we cannot bring down inflation from “stronger than expected demand for funds” (debt), or “adverse supply shocks” (tariffs and ongoing wars), a “higher path” (more rate hikes) would be prudent.

And we now have two more wars—Ukraine, Iran—and the Gaza war, or genocide; whatever we want to call it costing even more, which will push inflation rates even higher, thus the Fed’s response.

The climb in debt portrayed in the above FRED (Federal Reserve Bank of St. Louis) graph to today’s unmanageable height began after 9/11 and the GW Bush wars on terror against Iraq and Afghanistan. But we lost the Vietnam and Afghanistan wars; and Iraq is a loss in the $dollars spent, with the last U.S. troops having finally left after 23 years.

A Brown University study estimates the U.S. financial cost of the Iraq War alone is estimated at $1.79 trillion to $2.2 trillion in direct budgetary spending, with long-term projections (including veteran care, disability, and interest on borrowing through 2050) pushing the total past $2.89 trillion to over $6 trillion. [1, 2, 3]

How will the mountain of debt left behind ever be paid as portrayed in the above FRED graph of public debt as a percentage of GDP in such an environment?

The Federal Reserve’s FOMC minutes quote hinted at the cost of so much debt; multiple interest rates hikes are needed to tame inflation back down to its 2 percent target rate to maintain its credibility to control inflation.

And that means prolonged high interest rates that will damage economic growth. Or, it might take another major recession like the Great Recession (thick vertical gray bar in graph) to happen.

Our public debt must eventually be paid down. It should be with higher taxes on corporations and the wealthiest. But Republicans have chosen to cut taxes while spending more on the military (i.e., our wars), while reducing spending on most social program sand even threatening social security and Medicare.

Too much is at stake if we ever defaulted on our public debt. now $41Trillion still and growing with our credit rating downgraded to AA from two of the credit agencies.

The good news is that we have the power to settle ongoing wars. The bad news is that President Trump and his Republicans have taken the wrong side on the Ukraine and Iran wars (Russia’s) and maybe Israel’s as well by supporting Netanyahu and his hard liners that don’t want a two-state solution.

But the EU won’t allow the Ukrainians to lose, and Trump doesn’t have a way out of a war that has cost US $44B to date, per Wikipedia.

The Fed has gone into such rate hike cycles times before. The last concerted effort happened because Alan Greenspan’s Fed held interest rates too low for too long to aid in paying for the wars on terror (sound familiar?).

And it busted the housing bubble, resulting in the 2008-09 Great Recession.

There are much more dire outcomes if we can’t find a way to end these ongoing wars. It will take greater fiscal discipline to bring down $41Trillion in debt; now 122 percent of our Gross Domestic Product.

It’s been done before; the Clinton Administration’s four years of budget surpluses. Then what happened? The 9/11 Al-Qaeda attack and more wars.

There are cheaper ways to settle conflicts. President Obama’s nuclear arms treaty with Iran, for instance, in which Iran agreed to use nuclear energy only for peaceful purposes.

Harlan Green © 2026

Follow Harlan Green on Twitter: https://x.com/HGreen97180/

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What Scares Americans–Part II?

Posted on October 9, 2026 by Popular Economics Weekly

Popular Economics Weekly

“Overall, sentiment for lower-income consumers and those with smaller stock portfolios dropped steeply this month, groups that have fewer resources to weather increases in prices. Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year.”

FREDUMichsurvey

President Trump’s attempts to bully Americans into accepting his policies aren’t working as we approach the midterms. It’s not surprising because of whom he has chosen to fill his administration, bullies, usually with little knowledge of the law and IQs lower than his own (100?).

It amounts to planned terror, against not just the undocumented but whole communities who fear that even legal immigrants might be rounded up, legal citizens shot, and American citizens losing their vote.

How else do we explain actions that don’t match Trump’s words: policies that raise inflation and shrink energy supplies, shrink world trade and raise our prices, cut healthcare and grow disease outbreaks, and start wars instead of preventing them?

Those who’ve been hurt most are also own supporters. The University of Michigan is the latest to report Americans’ unhappiness with Trump’s economy.

The sentiment survey headline index fell to 46.3 in its preliminary October reading from 48.1 in September, according to its latest data. This is when it averaged close to 100 during President Biden’s and Trump’s first term.

The survey highlights that the most unhappy in the above U Mich graph were Independents(black bar) and the bottom Tercile one-third with no stocks(green bars).

No wonder. The September unemployment report showed just 29,000 payroll workers hired, averaging just 45,000 jobs per month in the last year.

Why does he enable the failures? Perhaps the best example is his double-speak. Rather than admit he can’t answer a question, he lies, or he finds someone else to blame.

He is living in an economy he doesn’t understand, a holdover from the first Gilded Age of corruption with its robber barons and scandals.

He can’t grow an economy with illegal tariffs, unpopular wars, and broken treaties. His policies are finally coming home to roost as the saying goes, with record unpopularity so close to the midterms.

Add to this his stated attempt to ‘purify’ the American electorate to be as white as possible, allowing the killing of undocumented workers in doing so.

It amounts to terror, using armed and masked ICE officers to terrorize legal and illegal immigrants is perhaps the most obvious attempt to mimic Hitler Brownshirt’s roundup of Jews in the leadup to WWII.

These are very much acts of domestic terrorism. And most of Trump’s Billionaires want unregulated A.I. to grow as well. Who will make the decisions then?

Harlan Green © 2026

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What Scared So Many Americans?

Posted on October 8, 2026 by Popular Economics Weekly

Popular Economics Weekly

“The only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” FDR

President Roosevelt understood in his 1933 inaugural speech, “The only thing we have to fears fear itself…” the horrific fears of Americans at the beginning of the Great Depression; the paralyzing feelings that things could only get worse.

I believe many Americans are just as scared today. It’s not only because of the worldwide COVID-19 pandemic that affected the world in many similar ways to the Great Depression. And it explains why American voters could twice elect Donald Trump, a convicted felon and known sexual predator, as president.

Our government is based on a capitalist system that generated a 25 percent unemployment rate and long bread lines. It failed to care for the many Americans who couldn’t adopt to a new industrial world of mass production and mass markets that caused the Great Depression

Such overwhelming fear pervades much of American life today—that has generated our record number of gun holders and incarcerated citizens, as well as record income inequality with the top 1% income earners owning as much as 90% of the population. The gap between haves and have nots is the worst in the developed world.

Roosevelt’s New Deal was the answer in the 1930s by literally putting Americans back to work on the government’s tab who couldn’t find work on their own in programs that would benefit all Americans, such as the WPA that built many of our dams and bridges, and CCC that preserved our national parks.

It protected those who worked with workman’s compensation when they lost their job, the 8-hour day, and gave labor unions the right to negotiate with their employers.

But Donald Trump, because of his innate cruelty and utter disregard for the laws and constitution, was able to convince many Americans that immigrants, gays, a weak military, inferior races were to blame for their poverty.

Perhaps Democrats today would have better understood how much such events as the COVID-19 pandemic had paralyzed Americans and the world in a similar way—if there had been another Roosevelt instead of Donald Trump.

FREDUMichsurvey

The FRED graph of the University of Michigan sentiment survey shows when Americans became most fearful; in the sharp decline in positive feelings that began in January 2024 at the beginning of Trump’s second term; when he began to almost completely ignore the laws of the land and the constitution.

How do ordinary wage earners that comprise most Americans conquer their fears,“convert retreat into advance” without another Roosevelt?

Reverse the economic policies that took away so much of their wealth and driven so many into poverty, for starters. Raise the national minimum wage $7.25 per hour that hasn’t changed since the 1990s.

Then reverse the massive tax cuts enacted that began in the 1980s for both the highest earners and corporations that have saddled American taxpayers with $40trillion in national debt. It’s been done before.

It can be done by understanding Americans’ dreams, instead of exploiting their fears.

Harlan Green © 2026

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

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Where Are the Jobs?

Posted on October 3, 2026 by Popular Economics Weekly

Popular Economics Weekly

“Both nonfarm payroll employment (+29,000) and the unemployment rate (4.2 percent) changed little in September, the U.S. Bureau of Labor Statistics reported today. Employment in all major industries changed little over the month.” BLS.gov

FREDpayrolls

September’s U.S. official unemployment report was a disappointment—just 29,000 jobs were added vs. +133,000 jobs in August (see graph). But that may not be a sign of a weakening labor market.

It should be obvious that the labor market is at the beginning os another recovery with the massive acceleration in government and A.I. spending that eclipses any prior era by $Billions.

The new chip factories and data centers are being built over time. It may be another decade before we will see definitive results in job formation and GDP growth, as happened in prior technological revolutions, such as for computer and the Internet use to spread.

So it’s difficult to see the changes, contrary to the Bureau of Labor Statistics report, or even the final employment numbers. For instance, after losing -10,000 jobs in July, mainly because of supply disruptions from Trump’s Iran blockade, payroll formation was originally reported to be 162,000 jobs in August then reduced to 133,000 hires in its latest revision.

And I’m guessing that September new jobs will probably be revised upward from 29,000 jobs, given that it’s hard to estimate September because totals include seasonal back to school and government hires that aren’t known immediately.

So, all that investment must eventually grow the job market as well. Steve Ratner, Morning Joe’s resident economist, said in a NYTimes opinion piece that we could already be seeing its impact; the labor markets are beginning to hire more technical professionals because of it.

“To date, A.I. has killed a number of jobs but boosted employment for plumbers, electricians, data scientists and market research analysts”.

Manufacturing may be the biggest story. Manufacturing employment was little changed in September (+9,000) but is up by 72,000 since a recent low in December 2025.

And the Institute of Supply Management’s manufacturing index of new orders climbed 1.6 points last month to a robust 55.3%. It means a majority (55.3%) of supply managers report more new orders. Some manufacturers are even hiring for the first time in a few years. Job creation was positive for the third straight month, following a 33-month streak of declines.

So the low September payroll total may be a temporary glitch.

And GDP growth has already been revised upward in the past two quarters. Q1 2026 GDP was bumped up from 2.0 to 2.2 percent and Q2 from 1.5 to 2.5 percent. And there are +3 percent predictions for Q3 growth.

But all that activity is blowing up inflation. The price index for gross domestic purchases increased 5.6 percent in the second quarter GDP number, revised down 0.2 percentage point from the previous estimate.

This means there will be another Fed rate hike, but maybe after the November election, which is the tradition so as not to be seen as influencing voters.

“Total nonfarm payroll employment changed little in September (+29,000), following an average monthly gain of 45,000 over the prior 12 months.

Health care employment continued its upward trend in September (+17,000), but at a slower pace than the average monthly gain over the prior 12 months (+33,000).

Will the employment picture improve with literally $Trillions going into the economy? More importantly, will it improve consumers’ confidence in their own future, which has been in the dumps? They must believe so for it to happen. A.I. robots won’t do it.

That is the conundrum, as former Fed Chair Greenspan would say.

Harlan Green © 2026

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

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Consumers Holiday Breakout

Posted on October 1, 2026 by Popular Economics Weekly

Financial FAQs

“Personal income increased $66.6 billion (0.2 percent at a monthly rate) in August, according to estimates released today by the U.S. Bureau of Economic Analysis (BEA). Disposable personal income (DPI)—personal income less personal current taxes—increased $68.6 billion (0.3 percent), and personal consumption expenditures (PCE) increased $190.8 billion (0.9 percent).” BEA.gov

I said last week better economic growth depends on the consumer to keep shopping despite the higher inflation and Federal Reserve actions that raise consumers’ cost of living. And there may be at least one more +0.25 percent hike this year.

The rising prices haven’t stopped consumer spending yet. The Federal Reserve’s main consumer measure, the Personal Consumption Expenditure Index (PCE), shows consumers shopping more; maybe because they haven’t run out of savings and want to enjoy the holidays and Christmas?

The jury is out on why they continue shopping. Tariffs and the Iran blockade haven’t stopped them yet, just made it more expensive. But they are depleting their savings because personal incomes, mainly wages, aren’t keeping up with the rising prices.

So what are consumers buying ? Just about everything they need; motor vehicles, energy (gas, diesel fuel) in the face of higher prices, to no one’s surprise.

A big jump in employment (+162,000) last month may also have encouraged consumers to be braver. This month’s unemployment report could be a repeat.

Continued economic growth will also depend on the rest of the economy, of course. Most business investment is with the military and A.I. construction but that won’t help consumers, whose spending makes up two-thirds Gross Domestic Product growth.

Construction is also surging because of the A.I. build out, for instance. That shows up in the S&P Manufacturing Index growth.

“This week’s flash PMI surveys pointed to a sharp acceleration in US activity. The S&P Global US Composite PMI rose from 56.0 in August to 58.4 in September, its strongest reading since July 2021. Both manufacturing and services strengthened, while employment growth accelerated and business costs picked up. S&P Global described the combination as a distinctly hawkish signal for interest rates.”

It could better the mood of consumers. But that’s not enough to sustain their spending for long. The Trump administration has cut back other programs, defying congressional mandates, that would benefit consumers and thus boost longer term growth.

That won’t happen as long as Trump viciously cuts more of the healthcare, education, and environmental protection programs. And the immigration crackdown is depleting many of the service sector jobs that immigrants populate.

We can also say the 7 percent plus fixed mortgage rates have stopped the housing sector in its tracks, further shrinking growth potential.

But consumers might as well make the most of these holidays as long as the good times last!

Harlan Green © 2026

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

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A ‘Hard Landing’?–Part II

Posted on September 29, 2026 by Popular Economics Weekly

Popular Economics

“The number of job openings was little changed at 7.1 million in August, the U.S. Bureau of Labor Statistics reported today. Hires changed little at 5.2 million, while total separations were unchanged at 5.1 million. Within separations, quits (3.1 million) were unchanged, while layoffs and discharges (1.6 million) were essentially unchanged.” BLS.gov

FREDjolts

Will the federal Reserve engineer a hard or soft landing in this new rate hike cycle just beginning? A soft-landing is possible, but something has to be done about the rapid rise in interest rates.

The last time the Fed acted to tame inflation was during the post-COVID-19 pandemic recovery when CPI inflation had reached 9 percent.

But it worked. There wasn’t another recession and the economy has had five years of continuous growth since then, in large part because of the bipartisan recovery aid, including personal checks paid to almost all Americans.

More than $5Billion was invested in the recovery from the worst recession since the Great Depression.

Can the Fed do a repeat performance under new Fed Chair Kevin Warsh, an actual economist?

The just released JOLTS report shows that better economic growth is ahead, even with the Fed’s first rate hike since 2024. The actual unemployment report is due and will give more clues—such as whether hires pick up.

So the hard landing scenario—which is an engineered recession, when the Fed holds interest rates too high for too long, I believe is less likely even though bond interest rates are the highest in 20 years; a danger single that credit conditions are tight for both businesses and consumers.

The Jobs Openings and Labor Turnover survey shows the number of job openings has been gradually increasing from its low of 6.55 million openings last December and is now 7.1 million.

There were 5.2 million hires and 5.1 million separations (i.e., quits), thus approximately 100,000 net new jobs were possibly created in August. This should be positive news for the upcoming August unemployment report.

If higher job formation continues, consumers will spend more despite the Fed’s actions to raise their higher borrowing costs. Consumers aren’t feeling good about the cost of anything since the Iran war.

They will need a confidence boost. They aren’t very happy per the latest Conference Board survey.

“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M Peterson, Chief Economist, The Conference Board. “The Present Situation Index fell sharply, while the Expectations Index slipped further into negative territory.”

But higher job creation numbers might do the trick and allow a soft landing, especially if the A.I. build- out will create the good jobs that are needed to run the new economy.

Harlan Green © 2026

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

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Higher Economic Growth?–Part II

Posted on September 26, 2026 by Popular Economics Weekly

Financial FAQs

“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.

I don’t believe a recession is about to happen, I said last week. The five-year cycle of economic growth begun with the recovery from the Covid-19 pandemic could continue.

For how long? The longest growth cycle to date was during the Obama and Trump I administrations—2009 to 2020 (see above graph). And that was because of the massive government spending to bring U.S. out of the 2008-09 Great Recession.

This is despite Trump’s economic wrecking ball that has reduced nonfarm payroll formation to just 31,000 per month over the past year and canceled or reduced many of President Biden’s bipartisan bills that boosted investment in infrastructure, healthcare, environmental protection, and healthcare services.

And what about the Fed’s rate hike(s)? Barron’s Randall Forsyth reports that interest rate markets believe the Federal Reserve risks causing a recession, or stagflation at least, by raising its Fed Funds rate +0.25 percent one to two more times to fight very stubborn inflation.

That is why economic growth slowed to 2.1 percent and 1.5 percent in Q1 and Q2 this year that the Fed could further damage because of its hawkish rhetoric on inflation.

But something remarkable is happening that could pull Americans away from the precipice. The Atlanta Fed’s GDPNow estimate of third quarter GDP growth is 5.1 percent for the second consecutive month, above most economists’ predictions.

Why? Consumers and governments are on a spending spree, and some $800B is being invested in the construction of A.I. data centers blanketing the country where many Americans don’t want them.

This is while corporations have record profits, which will extend the record stock market run whose prices are already in nosebleed country. The Price-to-Earnings ratio of the S&P 500 is 28 to 1, already far above its long term 15 to 1 historical ratio, according to Nobel Economist Robert Shiller of irrational exuberance fame.

Trump and Republicans can’t do much more damage to growth. Their policies are failing at almost everything they attempt. Trump’s signature tariffs are illegal and require refunding, which will aid the bottom line of corporations and lower the prices of such as Target and Walmart.

He has failed to win the Iran war, and the world is finding ways to work around the consequent energy shortages. This is in part because renewable energy sources are making a comeback. The Japanese have even agreed to build small nuclear reactors and two huge natural gas energy projects in the Midwest and South.

Consumers haven’t stopped spending, either. Surprisingly, American retail shoppers are out in force again with the 1.2 percent August sales increase. Many consumers seem to be recovering from the shock to energy prices since the beginning of the Iran War.

And maybe payroll hiring will continue to improve with the 166,000 new hires in August. But the bottom line is the Iran war must end as well, and everyone knows it.

Harlan Green © 2026

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

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More Economic Growth Ahead

Posted on September 23, 2026 by Popular Economics Weekly

Financial FAQs

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2026 is 5.1 percent on September 17, unchanged from September 16 after rounding. After this morning’s housing starts release from the US Census Bureau, the nowcast of third-quarter real residential investment growth decreased from -4.3 percent to -4.7 percent.”

GDPNow

The five-year plus cycle of business growth that began after the COVID-19 recession could continue years. I have become much more upbeat about our economic future.

All signs are pointing to a large jump in economic growth for several years, despite the geopolitical chaos. Why? Trump and Republican actions may not be as damaging to the world economies from his tariffs and desire to create a second Gilded Age that has created the many robber barons and massive concentration of wealth.

The massive A.I. investments and stock market highs say that it could continue despite the reordering of world markets amid so much geopolitical uncertainty. This could outweigh the effects from tariffs and the unending Iran war that continue to elevate inflation. Growth isn’t being boosted by just the A.I. build out that is projected to cost some $800B, more than all residential real estate investment.

The Atlanta Fed’s GDPNow estimate of third quarter GDP growth is 5.1 percent for the second consecutive month, above most economists’ predictions. Consumers and governments are on a spending spree, as well as the construction of A.I. data centers that are blanketing the country.

The longest positive growth cycle to date was during the Obama and Trump I administrations—2009 to 2020, slightly eclipsing the 1990’s Clinton era that ended with four years of budget surpluses.

The manufacturing and service sector activity as measured by the latest Institute of Supply Management indexes are still expanding, causing long-term interest rates to rise as well.

“In August, the Services PMI® registered 55.4 percent, an increase of 1.3 percentage points compared to July’s figure of 54.1 percent. The Business Activity Index remained in expansion territory in August, increasing 2.6 percentage points to 61.7 percent from July’s reading of 59.1 percent.”

“The Manufacturing PMI® registered 54.6 percent in August, 1 percentage point below the July figure of 55.6 percent. The overall economy continued in expansion for the 22nd month in a row. (A Manufacturing PMI® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.)” 

S&P also chimed in with its composite output index growing the fastest in five years. But will it withstand the Federal Reserve rate hike cycle just begun, with maybe a second rate boost this year?

The key to prolonging this business cycle is also the labor market, which has been subpar until now. The August 162,000 nonfarm payroll employment was a total surprise, given the average monthly gain of just 31,000 over the prior 12 months.

And American shoppers are out in force for the first time this fall as they rushed to get ahead of rising prices for the holidays, I said last week.

So corporations must keep hiring and not be deterred by the looming fear of A.I. robots supplanting those jobs.

Harlan Green © 2026

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