Will It Be a ‘Hard Landing’?

Posted on September 18, 2026 by Popular Economics Weekly

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 some pain.

Harlan Green © 2026

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

Posted in Consumers, COVID-19, Economy, Macro Economics, Politics, Weekly Financial News | Tagged , , , , , , , , , , , | Leave a comment

Good Retail Sales

Posted on September 17, 2026 by Popular Economics Weekly

Financial FAQs

“Advance estimates of U.S. retail and food services sales for August 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $773.9 billion, up 1.2 percent (±0.4 percent) from the previous month, and up 6.0 percent (±0.5 percent) from August 2025.” Census Bureau

FREDretailsales

What a difference in just a month! I was overly pessimistic earlier this year when consumers’ confidence was declining on how consumers would behave during the holidays because of the energy shortages and higher tariffs.

Surprisingly, American shoppers are out in force for the first time this fall after several pauses as they rushed to get ahead of rising prices for the holidays.

Retail sales jumped +1.2 percent in August after declining -0.7 percent in July. That’s a huge rise with some inflation indexes above 5 percent. It seems homeowners and investors benefiting from the financial markets can afford more dining out and leisure travel these days.

For good reason. The 162,000 new payroll jobs tallied in August may have emboldened them after miniscule job gains the prior three months. Add in that third quarter economic growth predictions are now clustered around 4 percent because of the A.I. build out and record corporate profits after very meek growth in Q1 and Q2.

The August 162,000 total nonfarm payroll employment was a total surprise, given the average monthly gain of just 31,000 over the prior 12 months. Why the sudden rise? These are largely new service sector jobs, which means summertime travel and leisure activities pick up, schools will soon begin, and nonresidential construction of the A.I. data centers is going full speed.

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 as well. 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 at the start of the second Trump administration? It will depend on how consumers are feeling about the economy as I said.

They aren’t feeling that well at present. According to Joanne Hsu, the University of Michigan sentiment survey Director:

“Democrats and Republicans alike posted sizable declines (in sentiments), while independents were little changed from August. Year-ahead expectations for both personal finances and business conditions plunged. With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come.”

But this is before the new tariffs on our largest trading partner’s Canadian exports kick in that will boost construction costs and vehicle prices even higher.

Maybe some consumers want to enjoy the present while they can rather than worry about the future and what the $trillions being invested in A.I. might do to the job market. What do they know?

LATE BULLETIN—The Federal Reserve just announced a +0.25 percent raise in their Fed Funds rate for the first time in three years, with maybe more raises to come because of the worsening Mideast conflict.

Harlan Green © 2026

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

Posted in Uncategorized | Tagged , , , , | Leave a comment

What’s the Fed To Do?

Posted on September 15, 2026 by Popular Economics Weekly

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. build out 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. build out 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,” the BEA chimed in.

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 build out, 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

Posted in Consumers, COVID-19, Economy, Politics, Weekly Financial News | Tagged , , , , , , , , , , , , | Leave a comment

Inflation Out of Control?

Posted on September 11, 2026 by Popular Economics Weekly

Popular Economics

The Producer Price Index for final demand moved up 0.4 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. On an unadjusted basis, the index for final demand increased 5.4 percent for the 12 months ended in August. BLS.gov

FREDppi

The FRED graph makes it painfully obvious just what illegal tariffs and wars are doing to wholesale prices and will be passed on to retail prices for finished goods in the years to come.

It means just that. Inflation at the wholesale level takes time to change retail (CPI) prices; maybe a long time. Inflation is a measure of the behavior of prices, and seldom do they point in a downward direction, unless there’s a surplus of supply, or a shrinking in demand due to job losses or too much debt, or, there’s an outright recession.

The slight drop in the June/July 2025 was because of the 60-day cease fire, so we can imagine how settling the Iran war could improve inflation. But, alas, Trump is lying when he says the war is no big deal, as if choking off Middle East oil and gas supplies in definitely won’t matter.

Yet we know it could morph into an endless war that does great damage to world economies, as did the OPEC oil embargo of the 1970’s that turned into a decade of stagflation.

The current inflation surge is mainly in goods rather than the service sector—things rather than services. The index for final demand goods (such as computers and chips) advanced 1.1 percent in August following two consecutive decreases (June-July). Over three-fourths of the broad-based rise can be attributed to energy prices, which moved up 4.2 percent.

But the Consumer Price Index was released the following day, in which the index for gasoline rose 3.9 percent in August, accounting for over one third of the monthly all items increase.

And we now must add in the additional tariffs on imported Canadian oil, steel, lumber and electrical goods, which makes it even more likely the Fed will raise interest rates this month. But that won’t help in the near term.

In attempting to squeeze Iran’s economy with the Strait of Hormuz blockade Trump and Iran are squeezing other economies as well!

It’s like two punch-drunk fighters in the ring with no one able to deliver the knockout punch.

This is in fact looking more like a repeat of the 1970’s stagflation when the U.S. was locked in a struggle with OPEC, and inflation rose as high as 14 percent with two recessions plus two more in 1980-81 that were caused by the cure; raising the Fed’s own rates to 20 percent.

Do we want a repeat? I don’t think so. We are once again engaged in an endless war and seemingly endless inflation spiral unless Republicans join Democrats to stop the carnage.

Harlan Green © 2026

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

Posted in Uncategorized | Tagged , , , , | Leave a comment

Jobs Picture Improves?

Posted on September 4, 2026 by Popular Economics Weekly

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

Posted in Consumers, COVID-19, Economy, Macro Economics, Politics, Weekly Financial News | Tagged , , , , , , , , , , , , , , , | Leave a comment

Not A Merry Christmas?

Posted on September 1, 2026 by Popular Economics Weekly

Financial FAQs

“Personal income increased $115.1 billion (0.4 percent at a monthly rate) in July, 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 $125.9 billion (0.5 percent), and personal consumption expenditures (PCE) increased $36.3 billion (0.2 percent).” BEA.gov

BEA.gov

We are fast approaching the shopping season and there are growing worries about consumers’ ability to soldier on the rest of year with the sudden drop (-0.6%)in July retail sales. They seem to be running out of money. And we know what that means, since consumer spending powers most economic activity

The picture of declining consumer incomes in the BEA’s Personal Consumption Expenditures graph is disheartening, to say the least, and could precipitate a recession sooner rather than later. It’s not only because the job market is shrinking, but our working population as well.

The U.S. economy lost -23,000 payroll jobs this July after gaining just +20,000 jobs in July. It’s the picture of a labor market stuck in neutral; most employers are neither hiring nor firing.

Yet the unemployment rate has been stuck at a fairly low 4.2 percent for months. Why wouldn’t employers hire more workers? Because there’s not as much demand for consumer products, which powers most economic growth. And demand is declining, not only because of the soaring inflation—3.7 percent in the PCE report above—but fewer shoppers.

Population growth in the United States has slowed significantly with an increase of only 1.8 million, or 0.5%, between July 1, 2024, and July 1, 2025, according to the new Vintage 2025 population estimates released today by the U.S. CensusBureau.

And we know why.

“The slowdown in U.S. population growth is largely due to a historic decline in net international migration, which dropped from 2.7 million to 1.3 million in the period from July 2024 through June 2025,” said Christine Hartley, assistant division chief for Estimates and Projections at the Census Bureau.

Low population growth = slow economic growth = fewer jobs, in other words. The decline in “net international migration” is the culprit, to no one’s surprise. Trump is bragging about the tens of thousands of deportations in his single-minded assault on undocumented immigrants; many who have worked long enough in the U.S. to raise children who are citizens now serving in the military.

Those believing that inflation will decline as more companies adopt A.I. software to replace those workers and improve labor productivity will be sadly disappointed. The bond market selloff is the first warning that higher interest rates are here to stay—as long as higher tariffs and ongoing wars raise the risk factors that govern economic activity.

“Government bond yields are hitting multi-decade highs, reflecting anxiety about debt levels, deficits and inflation. The effects will extend to mortgages, business loans and other types of credit,” said the NYTimes at this writing.

Who will buy the products if there are fewer shoppers? That is Silicon Valley’s A.I. miscalculation. Consumers already know this, and their declining personal savings rate to 3 percent (in graph) highlights this fact. They have less to spend, period.

Harlan Green © 2026

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

Posted in Consumers, COVID-19, Economy, Politics, Weekly Financial News | Tagged , , , , , , , , , , | Leave a comment

Not Another Greenspan

Posted on August 29, 2026 by Popular Economics Weekly

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 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 due to A.I.’s investment bubble on top of the tariffs and endless wars.

Harlan Green © 2026

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

Posted in Uncategorized | Tagged , , , , | Leave a comment

Why So Much Pessimism?

Posted on August 26, 2026 by Popular Economics Weekly

Financial FAQs

“The Conference Board Consumer Confidence Index® decreased by 0.8 points to 89.4 (1985=100) in August, down from 90.2 in July. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell by 5.8 points to 68.2. The survey period for this month’s preliminary results was August 3–16.”

Conference Board

The Conference Board’s Consumer Confidence survey is the clearest picture of public sentiments about the direction of our economy. Confidence in the American economy has been in a continuous decline since 2022, as the economy was recovering from the COVID-19 pandemics (see graph).

Their decline in confidence has been for a number of reasons, but mainly because the bipartisanship that prevailed during President Biden’s term disappeared once Republicans were no longer seriously interested in being a partner in the recovery. The predictable result has been almost no new job creation and sky-high inflation that has hurt everyone.

In fact, Trump’s Republicans have done everything possible to trash the recovery, to go back to the era of trickle-down economics of the 1980’s ‘borrow now and repay later’, if at all.

The Biden administration started the pandemic recovery working with Republicans to cause the fastest recovery of developed countries from COVID-19, thanks to the $billions invested in infrastructure, environment, inflation reduction and the CHIPS Acts.

So, it was unfortunate that Republicans took the reins in 2025 and enacted another huge tax cut package with no Democrat votes. There was no more bipartisanship, in other words.

They attempted to pay for the tax cuts with higher tariffs levied on every country in the world and severely cutting or eliminating many of the government investments in rebuilding the American economy enacted during Biden’s term, creating today’s record $40 trillion national debt and stagnant growth.

The result of their outright reverse ‘Robin Hood’ piracy (i.e. robbing from the poor to give to the rich) was that just 584,000 jobs were created in 2025, as opposed to Biden’s 135 million jobs added in 2024 and more than 15 million jobs created during President Biden’s four years.

It’s no wonder consumers are in the dumps, per the Conference Board’s Chief Economist Dana M Peterson:

“While the share of consumers who said a US recession over the next 12 months is “very likely” ticked up, consumers still perceived a low likelihood of a recession in 12 months.”

Add to the fact that consumers are the ones paying for those tariffs with inflation stuck in the high 3 percent range, and its no wonder consumer spending is shrinking, the main engine of growth.

The Conference Board said that the three oldest generations—Generation X, Baby Boomer, and Silent Generation—were lowest in confidence; i.e., those with predominately fixed incomes.

And who have Republicans’ lack of bipartisanship hurt the most? Their own voters. Confidence among Independents and Republicans softened while Democrats were somewhat more positive in August, per the Conference Board.

Harlan Green © 2026

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

Posted in Consumers, COVID-19, Economy, Politics, Weekly Financial News | Tagged , , , , , , , , , , , , , , , | Leave a comment

Poor Retail Sales

Posted on August 19, 2026 by Popular Economics Weekly

Popular Economics

“Advance estimates of U.S. retail and food services sales for July 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $763.6 billion, down 0.6 percent (±0.4 percent) from the previous month, but up 5.0 percent (±0.5 percent) from July 2025.” Census.gov

FREDretailsales

The alarming FRED’s retail sales graph above showed sales had plunged in August after a spending surge earlier in the year. Consumers had already spent the tax perks from Trump’s Big Beautiful Tax Bill.

The U.S. economy is shrinking. Does this signal a breaking point, are consumers shopping less to preserve some of their declining savings? It is already happening, shown in part by consumer sentiment surveys.

The University of Michigan survey showed a decline in their finances.

“Consumer sentiment fell about 8% this August, ending two consecutive months of improvement,” said Survey Director Joanne Hsu. “While views of personal finances saw only minor declines, expected business conditions sank 11% for the short run and 17% for the long run. Decreases in sentiment were seen across the political spectrum, with Republicans exhibiting the strongest month-to-month decline in August.”

If so, it’s a major danger signal that consumers, who account for two-thirds of economic activity, can no longer support as much economic growth. That leaves investment activity from the record corporate profits the sole leg propping up the financial markets’ record levels.

The retail sales decline is also another sign the U.S. population is no longer growing, and the immigration deportations will only make it worse because immigrants, legal or illegal, are shoppers.

The U.S. Census Bureau reports our population grew at a much slower rate between July 2024 and July 2025 than from 2023 to 2024 (when it increased by 1.0%, or 3.2 million people). “The slowdown is largely due to lower levels of net international migration.”

Consumers’ incomes are not keeping up with inflation as well. Wages rose 3.2 percent per annum whereas retail inflation rose 3.5 percent in the latest month. So, shoppers must now borrow more to keep up their standard of living, which takes a bigger slice of their incomes.

So the job market is shrinking, to no one’s surprise. But July’s catastrophic unemployment report tells us the loss of -23,000 payroll jobs was particularly alarming. Will the $trillions in AI investment replace those jobs and keep inflation from rising more?

I doubt it, since most of the inflation is due to the Trump administration’s tariffs and two wars still raging. It’s the stagflation scenario of the 1970s all other again—energy shortages + higher inflation + stagnant economic growth for years to come.

Harlan Green © 2026

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

Posted in Consumers, COVID-19, Economy, Politics, Weekly Financial News | Tagged , , , , , , , , , , , , , | Leave a comment

Inflation is Back

Posted on August 13, 2026 by Popular Economics Weekly

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 more money to build out the AI data centers. Elon Musk’s SpaceX IPO got ahead of the crowd by netting $75 billion, which delayed IPOs for Open AI 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

Posted in Consumers, COVID-19, Economy, Macro Economics, Politics | Tagged , , , , , , , , , , , , , , , | Leave a comment