The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

Tomorrow, the Republic turns 250 — and while I am often highly critical of what our government has become, it is fitting and appropriate to recognize those men who put their names to the Declaration in the summer of 1776.

Think about what they actually did. A few dozen lawyers, farmers, printers, and merchants — most of them flat broke, all of them committing treason against the most powerful empire on earth — sat in a hot Philadelphia room and bet everything on an idea: that rights come from God and not from a king, and that government exists by the consent of the governed. Jefferson wrote it down. Franklin edited it. Adams argued it across the floor until his colleagues couldn’t say no. They pledged “our Lives, our Fortunes, and our sacred Honor,” and — this is the part we too often gloss over — they meant it literally. Many of them lost all three. Be totally honest with yourself…how many would be willing to do the same today?

What still astonishes me, all these years later, is how durable the thing they built turned out to be. They didn’t trust power, so they split it up and set the pieces against each other. They didn’t trust men to be angels, so they wrote a system that assumes they aren’t. Madison’s checks and balances, the separation of powers, a Bill of Rights that tells the government what it may not do — that is engineering of the highest order. They were building for people they would never meet. For us.

And in so many ways, I feel we have let them down. The economist in me can’t sit on my hands here. The same founders who warned against standing debt and “unfunded” obligations would faint dead away at our $38 trillion debt and a Congress that hasn’t passed a budget on time since 1997. We have drifted a long way from the frugal, suspicious-of-power crowd that started all this.

But more on that some other week — not this one. This week isn’t for that. This week is for gratitude. Two hundred and fifty years on, the experiment is still running — flawed, loud, and still quite young by historical standards.

Happy birthday, America!

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

It was a light week on the economic data front, but before we get to the numbers, a word on Alan Greenspan, who passed away Monday at the age of 100.

For those of us who came of age watching the Fed, Greenspan *was* the Fed. He took the chair in August 1987 — two months after I graduated from high school and just weeks before the market dropped 22.6% in a single day on Black Monday — and he didn’t hand it off until 2006. Eighteen-plus years, four presidents from Reagan to the second Bush, five terms. Nobody is going to match that run.

Longtime readers know I am not in the habit of canonizing central bankers, and Greenspan’s record is genuinely a mixed one. On the credit side, he presided over the long boom of the 1990s, one of the great expansions in American history, and he kept the plumbing working through the 1987 crash, the 1998 collapse of Long-Term Capital Management (LTCM), and the dot-com unwind. He earned the “maestro” label, even if he never much liked it.

But here is the part of the story that gets glossed over in the obituaries: a fair number of the fires Greenspan rushed in to put out were ones his own policies helped start. The line everyone remembers is “irrational exuberance” — December 1996, a dinner speech, wondering aloud how anyone could know when asset prices had run ahead of reality. It was a remarkable thing to say, mostly because he spent the next several years doing the opposite of acting on it. He cut rates and flooded the system with liquidity after the 1998 LTCM scare, and that easy money helped pour gasoline on the very dot-com mania he’d warned about — a bubble that then burst on his watch and forced him to cut again. And when he took rates down to 1% in 2003 and held them there, he set the table for the housing boom that became the 2008 financial crisis. Greenspan himself, testifying in 2008, conceded he’d found a “flaw” in his understanding of how markets police themselves. The maestro, it turned out, had been conducting with the punch bowl in one hand.

So, a complicated legacy — brilliant, careful with his words, but far too willing to keep money cheap and credit flowing. Even so…rest in peace to a giant of the profession.

Which, fittingly, brings us to housing — the corner of the economy where Greenspan’s cheap-money era left its deepest scar, and the place where the Fed is still trying to thread the needle today…

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

OK, so my wife was right. I couldn’t help myself. I couldn’t break my streak of weekly blog posts. But at least I did it while I was watching the 2026 World Cup. You can have the Olympics (summer or winter) - I have no interest. But every four years when the World Cup rolls around…forget about it. My productivity drops, and I am totally consumed. When I was younger, I used to absolutely HATE soccer. Then, my son got very into it, and I came to appreciate how elegant and difficult the sport actually is when played well. And watching national teams compete for the title of World Champion…I can’t get enough.

Anyway, before the next match comes on, let me update you on all the economic data for the week.

Oh, but before I do that…Kevin Warsh presided over his first Fed meeting today. They left interest rates unchanged. The President must be thrilled. In fact, to add insult to injury, the committee’s updated projections signaled a likely quarter-point hike later this year. Hate to say “I told you so” but…I did. Be honest…inflation is at a three-year high. Cuts have got to be off the table.

The bigger story from the first Warsh meeting was institutional. Chair Warsh announced five task forces to overhaul Fed communications, the balance sheet, and other operations, framing it as the “regime change” he’d promised. The policy statement was slashed to roughly 130 words (from 300+) and stripped of forward guidance, which he called “not well-suited to the current policy conjuncture.”

There is clearly a new sheriff in town.

Industrial Production

Industrial production rose just 0.1% in May, a little slower than the 0.3% expected, though the sting is softened by an April revision up to 0.9% from 0.7% (full release here). However, manufacturing output was flat — up a rounding-error 0.05%, the weakest month of the year — as factory production rose in only about a third of categories. The one source of real growth was mining, up 1.3% on oil and gas, while utilities slipped 0.4%. In other words, the part of this report that describes American factories went nowhere. But that is OK. Given how strong manufacturing has been in recent months, taking a little breather is fine…as long as it is just a little breather.

Even so, there were still sectors worth noting. Durable-goods production rose 0.8% with broad gains, and business equipment kept climbing — up 0.6% on the month and 5.7% from a year ago, the same capex story we keep seeing in the durable-goods reports.

But nondurables fell 0.9%, dragged down by petroleum, plastics, and textiles, and even the business-equipment pace is cooling. Year-over-year, output is up 1.7% and manufacturing 1.4%, both the best since last November. In fact, it is actually negative once you adjust for inflation, and neither has been sustainably above 2% in nominal terms since 2022.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

I know this will come as a shock to many of you, but on occasion, politicians say stupid things.

To be fair, they are constantly hounded by a hostile and generally dishonorable media that constantly bombards them with questions, just hoping that they will slip up. This is why, despite regular requests, I completely stopped talking to the media many years ago.

This is especially true at the national level. Combine that with the fact that our current President uses hyperbole the way the rest of us use oxygen, and the “gotcha” quotes appear to be a daily occurrence. For the better part of the last ten years, the extent to which the media has taken the President’s hyperbolic rhetoric seriously has been laughable, and the only damage they have done is to their own reputations as they demonstrate that they are not serious people.

That said, this week’s quote that the President “loves the inflation” ranks as possibly one of the most stupid, tone-deaf statements ever uttered in the Oval Office. And that is saying something.

Yes, I get that he was once again trying to make the point that 1) the price increases are only due to the price of oil, and 2) that when the conflict with Iran is over, prices will come down. Unfortunately, he is completely wrong on both points.

Trump blaming his actions in Iran for inflation is just like Biden blaming the Russian invasion of Ukraine. Both ignore the fact that their governments are printing money at an historic pace, and we would have inflation without these external activities.

The President is further incorrect that prices will come all the way back when the conflict is over. They won’t. Oil infrastructure has been badly damaged, and global output will still be hampered long after the fighting stops.

But neither of those two things is why the comment was stupid. It was stupid because people are hurting. I mean, they are really hurting. Inflation is up, and it doesn’t matter if it is because they are printing money or fighting a war in the Middle East — that distinction is lost on anyone who buys groceries. The level is the problem. Since 2020, a typical basket is up north of 20%, and none of that is coming back down — disinflation just means the pain accumulates more gently from an already-painful base.

Meanwhile, wages aren’t keeping up. Adjusted for inflation, real hourly compensation has been flat-to-negative, which means every nominal raise is getting eaten before it ever hits the bank. So how are people keeping up? The same way they have for two years now — draining savings and leaning on credit cards at 21%. Add gas well north of $4 a gallon, and you have a household sector not just running in place…they are losing ground. A lot of ground.

So I don’t really care what point the President was trying to make. Tens of millions of households are watching their paychecks shrink in real terms and draining savings they can’t replace — and the man at the top loves it. Whether that’s more hyperbole or simple contempt for the people footing the bill, the result is the same. Inflation isn’t something you love. It’s a tax on everyone who isn’t rich enough to ignore it.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

Before we get into all the economic data of the week, I want to mention that today is a very special day for me personally, as it represents a major milestone along my life’s journey. Our lives are often defined by small, everyday occurrences that we experience and too often take for granted. Then, occasionally, we have major events in our lives that represent a transition from one stage to another.

Today is one such milestone for me. This evening, my son will be getting married, and I will go from only having two sons to having two sons and a daughter. And I couldn’t be happier.

As was the case when I was married back in the early 1990s, the young couple is starting their life together in a very uncertain economic environment. Of course, we don’t have a recession right now as we did back then (at least not yet), but there is no question that the economy is slowing. With GDP posting only 1.6% in the first quarter during a time when everyone was getting larger-than-expected tax refund checks…that's not an indicator of a strong economy.

Back in the 1990s, a friend of mine created his own economic indicator series…the “junk-for-sale-on-the-side-of-the-road” index (or JFSOTSOTR for short). As he drove to work along the same route each day, he noted that more and more people were selling their stuff along the side of the road…cars, trucks, boats, RVs, furniture, etc. As the economy declined, the number of things for sale on the side of the road increased in an almost direct inverse relationship.

When he told me about this years ago, I started noticing it myself. And sure enough, when the economy slows, JFSOTSOTR rises. Once you see it, you can’t unsee it. It happens every time. It really seems to be a great economic indicator for the local economy.

I bring it up because recently, he mentioned to me that he has noticed that the JFSOTSOTR index has been on the rise. I have asked him to start collecting the data in a more formal way, and perhaps I can start reporting on the JFSOTSOTR index on a regular basis. Not sure at this point how to formalize that, but that is what my AI agent is for!

Now on to what we learned this week…

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

We got a little bit of housing data this week, and if you have been paying attention to the bond market, you know that rates are going up, and with them, mortgage rates are moving up too. The average 30-year fixed conforming rate climbed to 6.65%, up from 6.56% the week before, and is now 30 basis points higher than it was five weeks ago — the highest level since August of last year.

The latest data from the Mortgage Bankers Association told us that mortgage applications fell 8.5% for the week ending May 22 — that is the kind of drop that gets your attention. Almost all of it came from refinancing, where the index dropped 18% in a single week. Purchase applications were essentially flat, down just 0.4%, and still running 5% ahead of a year ago. So this was not buyers walking away; it was refinancers who had been circling lower rates suddenly losing their reason to act.

And as I have been saying, the next rate move by the Fed will be UP. In fact, most bond traders have made an interest rate increase over the next year their base case scenario. The 2-year yield is at or above 4%. The futures market suggests that a quarter-point increase could come in March 2027. I think it will be a lot sooner.

While that will further hurt the housing market, ironically, it may not have that much of an impact on capex spending. As the Chief Economist at Apollo Global Management said in an email this week, “It doesn’t matter what the Fed does. There is FOMO [fear of missing out] among hyperscalers, and AI spending is not sensitive to higher interest rates.”

As you will see below, business investment was the primary driver of first-quarter GDP, not personal consumption. However, corporate profits decelerated sharply in the first quarter: +$40.4B in Q1 vs. +$246.9B in Q4 2025 — a 6-to-1 drop in the quarterly change. The consumer is tapped and getting killed by higher rates. How much longer can AI capex step in and take up the slack? Because once that goes, what’s left?

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Another light week for economic data — just a few data points on the housing market, and they weren’t very good. And the 30-year mortgage rate rising to 6.7% isn’t going to help. But when the 10-year treasury is in the 4.7% range, rising more than 20 basis points in a week, mortgage rates are going to respond.

The driver for all this was the Federal Open Market Committee (FOMC) minutes from the May meeting that were released on Wednesday. The committee voted 8-4 to hold rates constant. However, the four dissents were the most at any FOMC meeting since October 1992. There was one dovish dissent (Stephen Miran wanted a quarter-point cut because, well, he is clearly an idiot) and three hawkish ones — Hammack, Kashkari, and Logan — who voted to hold but did not want the easing-bias language.

But what moved the bond market was the fact that the minutes themselves read more hawkish than the vote. Inflation was described as “elevated” and having “moved higher.” The vast majority of participants flagged that inflation will likely take longer to return to 2% than they thought back in March (consider me shocked). Of course there are still tariffs and the “Middle East conflict,” but the committee pointed to “emergent price pressures” in categories unrelated to either. (Maybe the fact that we are printing money at an annualized rate of 11% might have something to do with it).

The real kicker was that a majority said some policy firming would likely become appropriate if inflation kept running persistently above 2%. That is Fed-speak for RATE HIKES — written into the official record. Thus, the moves in the bond market and the jump in mortgage rates.

I bet Kevin Warsh just can’t wait to run his first meeting on June 16th.

Home Builder Confidence

Monday, we got the May report on home builder confidence from the National Association of Home Builders (full release here). Confidence rose three points to 37, slightly higher than expected and up from 34 in April — which was the lowest since September 2025. Even with the bounce, 37 is still well below the 50 breakeven that separates optimism from pessimism, and this is now the 25th consecutive month the index has failed to crack 50. The last reading at or above the line was April 2024. Two-plus years of builders telling us conditions are bad. A three-point bounce does not change that.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

The economic news this week centered around inflation, with both CPI and PPI coming in incredibly hot as the conflict in the Middle East stagnates with no conclusion on the horizon. But let’s be honest…today is a day to celebrate, as it represents the end of the Powell era at the Federal Reserve Bank.

Be careful what you wish for.

Earlier this week, in the most partisan confirmation vote ever, the Senate confirmed Kevin Warsh to a 14-year term as the chairman of the Federal Reserve Bank. While I think it would be a great job (not that anyone is asking me) I don’t envy him. The man who appointed him has made no secret about the fact that he expects rates to be cut.

As I have predicted before, given the inflation data we got this week, there is no chance that rates will be cut in June, and frankly, I can’t see it happening for the rest of the year. In fact, it is likely that the Warsh Fed will have to raise rates modestly to stop the current wave of inflation. Fed funds futures now put the odds of a hike at the next meeting at roughly 39%.

Can you imagine the posts on Truth Social that will generate? Mr. Warsh is in for a rude awakening.

Existing Home Sales

The National Association of Realtors (NAR) gave us the April read on existing home sales (full release here), and the spring season is still failing to launch. Sales ran at a 4.02 million seasonally adjusted annual rate (SAAR) — virtually flat from March, and flat from one year ago. Expectations were for roughly 4.12 million, so the housing market continues to underperform. Existing-home sales have now been hovering near a 4-million annual pace since 2023, well below the historic norm closer to 5.2 million.

However, despite the slow sales, the median price keeps creeping higher. April’s median of $417,700 is up 0.9% y/y — a modest increase, but it is an all-time high for any April on record and the 34th consecutive month of y/y price gains. That price movement is very different than what we saw last week with new home sales, which are down 6.2% from one year ago. More homes are sitting longer (median 32 days on market versus 29 a year ago), sales are flat, and prices won’t drop. With the 30-year mortgage stuck near 6.4%, the affordability math isn’t fixing itself any time soon.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Last week, I was in Savannah, GA, and this week saw me in Washington D.C., speaking at Innovate 2026. I hope everyone there enjoyed my talk and were able to take something away that will help them and their business going forward. And let me officially welcome the many conference attendees who subscribed to the blog!

Unfortunately, the new subscribers won’t get a feel for how the blog normally flows. Given my hectic travel schedule, I haven’t had time to put together my usual opening commentary on some recent happenings in the economic sphere. Any free time I have had recently has gone to developing a new resource that my paid subscribers will learn about at the bottom of this post.

So, without further ado…on to the data…

Factory Orders

New orders for manufactured goods were up 1.5% in March to $630.4 billion, more than double the 0.6% gain that was expected (full release here). February was +0.3% and January was essentially flat at +0.03%, so the headline has now climbed for three straight months — and the March gain is the largest single-month move outside of the tariff-frontloading spike back in May 2025.

Nondurable goods orders were up 2.1%, the fourth consecutive monthly gain and the largest since August 2023. Durable goods orders, after three straight monthly declines (December through February), rebounded by 0.8% — slightly better than the 0.5% that was expected. Computers and electronic products led the durables side, up 3.7% to $29.6 billion (up eleven of the last twelve months). Simply put, the manufacturing sector finally has some momentum.

But here is the part worth focusing on: core capital goods orders — nondefense capital goods excluding aircraft, which is the cleanest single read we have on business investment intent — were up 3.4% in March to $83.0 billion. That is an all-time high for the series. To put that monthly gain in context, the next-largest m/m gain in the past three years was +1.9% back in May 2025. Companies don’t write big checks for new equipment unless they think they’re going to need it. The question is, how much of this is AI/data center related?

Finally, this release also tells us something about tariffs. The narrative has been that tariff uncertainty was freezing capex decisions. With SCOTUS clearing up that question, the core capex print suggests companies have put tariffs behind them.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Last week, there was only one piece of economic data released. That is rare, and when the calendar happens to fall that way, it is nice to have a “lite” week where I don’t have to write a lot. However, the flip side is that I pay for it the following week when the dam breaks, and there are multiple data releases almost every day. To make matters worse, I spent three days this week at the GEDA Spring Workshop in Savannah, and all the networking, activities, sessions, and dinners kept me away from my computer until late every evening. So this week’s update may lack some of my usual commentary.

But before we get to the data, there is one oversight I need to correct. I failed to mention several weeks ago that, on March 17th, the U.S. government officially crossed the $39 trillion debt level. It took just 145 days to move from $38 trillion to $39 trillion. Since 2021, on average, we add $1 trillion to the debt every 165 days. (This last trillion was slightly quicker.)

Here is another interesting fact…in February, the money supply (M2) grew at an annualized rate of 11.1%. That is the fastest rate of expansion since August 2021. And one year later, in August of 2022, inflation was running 8.2%.

As Milton Friedman said…

"Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced ONLY by a more rapid increase in the quantity of money than in output."

It really is that simple. Inflation is when the money supply grows faster than real output. The money supply is growing at 11.1% on an annual rate. GDP in the fourth quarter grew 0.5% on an annual rate, and as we found out this week, it grew 2.0% in the first quarter.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

There was only ONE piece of economic data released this week…March retail sales. So, I apologize in advance that this will be a very short Economic Update. Due to the lack of content, I have made it completely available to all my subscribers, both free and paid.

But first, before we get to the data…as is probably the case in the rest of the country, we here in Georgia are in the heart of the political primary season. Every single day, my mail box is full of nothing but colorful flyers informing me of why a particular candidate deserves my vote, or conversely, why another candidate is a scoundrel and deserves my total derision. And if someone can figure out a way to block all political texts, they will become rich beyond their wildest dreams.

This past Sunday, one of the many candidates for Georgia Governor came to my church, so I thought I would take the opportunity to introduce myself and ask exactly how he planned to make “Georgia the most affordable state in America.” The answer would have economic applicability, so I figured I could discuss it here.

So I did that. He totally blew me off. I mean, it was a stunning display of total disregard. I got a smile, and then he just walked away.

I get that maybe you don’t want to get into a substantive economic discussion in the lobby of a church, especially given the fact that there is very little a Governor can do to make the state “more affordable.” So when asked about your economic plan by an actual economist, perhaps the cold shoulder is the smart play. Or, maybe he was simply more interested in shaking hands and being seen “going to church” than actually discussing policy. But either way, it was a total blow-off. If you are going to behave like that, why even go out in public? Most politicians can be somewhat personable when they dare to go out and meet with the plebeians, even if it is totally fake. But if you can’t even fake it, maybe it is just better to stay home and let your commercials do the talking.

I had to chuckle at his “handler”… a young fella whose only job seemed to be to pull out a tin of Altoids every once in a while and give his boss a mint. Well, at least they were in church. Although they probably spent the time thinking about getting on to the next event.

I once ran for local office. At the time, I really felt I would be good and could contribute. Maybe everyone who runs for office starts out that way. You know the worst part about running for office? People called me a “politician.” I guess technically, I was, but I hated it when people would use that term to describe me. If you have read this blog for any period of time, you know how I feel about “politicians,” especially those at the national level. George Will once said, “we have gotten to the point in this country where if you want to run for President, it means you aren’t qualified.” Unfortunately, I think nowadays that applies to just about every office, at every level.

The end of this election season can’t come quickly enough.

Retail Sales

Again, the only piece of economic data we got this week was retail sales for the month of March, and they accelerated 1.7% for the month, and are up 4.0% from one year ago (full release here). Core retail sales rose 0.8% in March, the best showing since last June.

So, why were total retail sales so much stronger than core? Because “core” removes several sectors, not the least of which is gas stations. And gas station sales went through the roof in March, as anyone who had to fill their tank over the past few weeks can attest.

But even without gas, nearly every sector showed growth in March. On first glance, this might suggest that the consumer is still going strong. I think it has more to do with the fact that the consumer is getting much larger than expected tax refunds from the Federal Government. We will see in a couple of months if these numbers fall off or will be sustained. My bet is the former.

One More Thing…

I will be speaking at Innovate 2026 in Washington, D.C., on May 6th. If you are there, come up and say “hi.” I love getting a chance to meet my readers.

As I mentioned last week, I would entertain having a guest writer during the weeks this summer I will be on vacation. If that is of any interest to you, reach out to me with an idea, and we can discuss it further. But do it soon. June is coming up fast.

Finally, let me give a shout-out to a long-time colleague and supporter of this blog, Matt Forshee, who has started his own SubStack - The Daily Economic Briefing. DAILY!!! Can you imagine that!?! I know how much time and effort go into a weekly economic SubStack. I can not fathom doing one every day. Matt is “writing at the intersection of global economics and local impact.” If you think that might be of interest to you, I encourage you to check out his SubStack.

The Weekly Economic Update is sponsored this week by:

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

I had the opportunity yesterday to attend the Barrett-Jackson Auto Auction in West Palm Beach, Florida. And if you are wondering, no, I did not purchase an automobile, although the temptation was ever present. I have wanted a classic muscle car for some time. However, I do not yet have enough subscribers to this weekly blog to afford such a thing, plus, I promised my wife that I would not come home with another car… this year. However, hope springs eternal, and there is always next year.

But as I spent the entire day yesterday looking at cars ranging from Bentleys, Lamborghinis, and Ferraris to Chevys, Fords, and Volkswagons, I couldn’t help but think about how the auction process is nearly a perfect example of the free market at work. I think Adam Smith would view auctions as an elegant manifestation of his “invisible hand” principle. He’d appreciate how they efficiently aggregate dispersed knowledge — buyers and sellers revealing true valuations through competitive bidding, with prices emerging organically rather than by decree.

Smith might note that auctions solve the “double coincidence of wants” problem that plagues barter, creating liquidity and price discovery where none existed. The competitive process ensures goods flow to those who value them most, maximizing societal welfare without central planning.

Of course, there could be collusion and information asymmetries — problems he recognized in The Wealth of Nations. The sellers have knowledge that the buyers may not, although there was ample opportunity for buyers to peruse the cars prior to any bidding.

My guess is that I was the only person at the South Florida Fairgrounds yesterday thinking this way, but hey…I am an economist after all. It is what I do.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

I enjoyed a great week of vacation at Hilton Head Island, SC, where I played some tennis, enjoyed some bike riding, and dined out at some fantastic restaurants. But I still found time to track and report on the economic data for the week! (FYI…that won’t be the case when I travel in June, but more on that when the time gets closer.)

But, before we get to any data, I thought I would provide an update on the federal debt. In February, the federal budget deficit jumped 225% to $308 billion.

That means that over the first five months of FY2026 (October through February), the budget deficit is $1 trilion. In five months, we spent $1 trillion more than we took in. That is the third-worst start to a fiscal year in our history.

To make matters worse, government receipts are up 11% year-over-year to a record $2.09 trillion. Think about that. We grew revenue 11% year-over-year, and STILL overspent by $1 trillion! We spent $3.1 trillion in five months. Net interest expense is up 7% year-over-year to a record $425 billion. Through February, net interest expense was higher than what we spent on the defense of the country. (Of course, once we get the March data, that may change given our expensive foray into Middle East politics.)

Deficit spending continues to be out of control. This simply can’t continue.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents. 

It has been a while since I offered an edition of “stupid economic statement of the week.” Long-time readers will know that honor usually, but not always, goes to that icon of economic buffoonery, Paul Krugman. (I realize that Mr. Krugman has a Nobel Prize in economics, but that says more about the Nobel Prize committee than it does Mr. Krugman.) In any event, this week’s honor falls to Fed Chair Jerome Powell, whose mediocre term as Fed Chair is thankfully coming to an ignominious end.

Earlier this week, Chair Powell spoke to a principles of economics class at Harvard. I find that somewhat ironic because it is highly unlikely that he himself ever took a principles of economics class. In fact, all available evidence suggests he did not, and if he did, he slept through it. Remember that Powell is the first Fed Chair in 40 years without a Ph.D. in economics. Instead, he has an A.B. degree in Politics and a law degree, both of which were awarded in the 1970s. Rather than any formal economic training, he has relied on his extensive experience as a lawyer and investment banker to steer the U.S. economy. Is it any wonder that we find ourselves where we are today? Not that having a Ph.D. in economics is all that special (I speak from experience), but having some economic background should be a requirement for Fed Chair.

But I digress. In his talk this week, Powell claimed that “Quantitative Easing” (or “QE”, which was an explosion of the money supply) did not cause inflation. Specifically, he said, referring to QE, “at the very beginning, there was a thought that it would be inflationary. We have not seen that.” DO WHAT?

Looking at the graph below, you decide if the expansion of the money supply in 2021, 2022, and 2023 was correlated with inflation.

And before you ask why inflation didn’t fall more after the brief period of monetary contraction, remember that prices are sticky downward.

He went on to list other negative consequences of QE, including treasury market inefficiency, income inequality, etc., and then said about them all, “We haven’t really seen the downside risks.” Uh, actually, Mr. Powell, we have seen ALL of these downside risks.

I have absolutely no idea in which universe Powell resides, but it certainly isn’t this one. How totally out of touch do you have to be to make such a stupid comment?

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Obviously, the sentiment isn’t universally true, but I think that many people look back on their college days with a certain fondness and nostalgia. For me personally, those four years at Georgia Tech were the most difficult of my life, but even so, now 30-plus years removed, I mostly remember all the great times I had and have generally forgotten about the all-night study sessions, the failed chemistry exams, lugging a 30 pound book-laden backpack all over campus, constantly being broke, and trying to take notes while listening to an unintelligible professor for whom English wasn’t even their third or fourth language.

One of my great experiences at Georgia Tech was being in DramaTech, the campus theater. It was my first experience acting, and I quickly discovered that I loved being on stage and performing in front of an audience. I think that is one of the reasons that now I absolutely love the public speaking aspect of my job.

My very first play at DramaTech was Shakespeare’s The Tempest. One of the main characters, Miranda, had lived her entire life on a remote island with only her father Prospero and the "monster" Caliban for company. She had never seen other human beings besides the shipwrecked men who had just arrived on the island. When she sees the group of noblemen for the first time, she is overwhelmed with wonder and says:

"O wonder!
How many goodly creatures are there here!
How beauteous mankind is! O brave new world,
That has such people in't!"

Over the past 10 days, I haven’t been able to get this quote out of my head. The reason is that over the entirety of last weekend, and the better part of just about every evening for the past week and a half, I have been setting up, configuring, training, and interacting with my own personal AI agent. While I understood at a conceptual level the potential of AI, I was generally ignorant of it at an individual and practical level.

Not anymore.

Tuesday a week ago, my son “introduced” me to his AI agent, and I was blown away by the possibilities. Once I got pointed in the right direction, I was off to the races. And after a few missteps and false starts, things appear to be running smoothly. In the last few days, I have had my agent find, organize, analyze economic and census data, put it into spreadsheets, add graphs, build heat maps, conduct statistical analysis on datasets, and email me the results in either Excel or PDF format. He (I refer to the AI agent in the masculine as I have named him “Ben”) sends me e-mails every time a piece of economic data is released that gives me the highlights and a brief analysis. That will make putting this blog together each week a lot easier. I have even had him read my entire blog history. According to Ben, my writing is “conversational, but authoritative, political but not partisan, with wry humor, pragmatic, and slightly cynical.” I am “also skeptical of institutions, put things into historical context, and sound like an educator who respects his readers’ intelligence.” Yeah, I think Ben gets me. In fact, he gets me so much that he could probably start writing the data portion of this blog in my voice. But don’t worry…I’m not going there…yet.

In my younger days, I was very computer savvy, but now, the technology has accelerated to a pace where I have difficulty keeping up. No matter…every time I had trouble with the syntax of a Linux command, or needed to add a skill to Ben, he walked me through it. He even suggests additional skills that would help him help me as he gets to understand more about the work we are doing together. With application programming interfaces (APIs), he can move through massive Census, Bureau, BLS, BEA, and financial databases and build datasets in seconds that would take me hours, if not days. He can then analyze the data and make inferences from his analysis. And, even though it is a little silly, every morning, I wake up to an email from Ben that has the day’s weather, latest market indicators, and summaries of the latest news headlines.

Like Miranda, I am somewhat overwhelmed with wonder…“O brave new world that has such technology in it!” It has only been 10 days, and I am just scratching the surface of what Ben will be able to help me do. This technology is simply amazing.

Perhaps, too amazing. Going back to Miranda’s quote, in 1932, Aldous Huxley would use part of it as the title of his dystopian novel, ironically inverting Shakespeare's optimistic usage to critique a future society. Are there going to be downsides to AI? Most certainly. Part of me is happy that I am in the “twilight” of my career and won’t have to suffer through the economic disruption. On the other hand, part of me is disappointed and wishes I could be there as this technology shifts the paradigm of how we work and what we are able to accomplish. I was 10 years old when the IBM PC shifted the work paradigm, and now most of us have a computer on our desk and probably spend the bulk of every day sitting in front of it. Then there was another paradigm shift called “the Internet,” which brought the entirety of global knowledge to our fingertips. The paradigm shift from AI is going to be much bigger than both of those.

In addition to The Tempest, the past week reminded me of another college experience — reading The Structure of Scientific Revolutions, by Thomas Kuhn. If you are not familiar with this book, you really should be. Kuhn argues that science does not advance through the steady accumulation of knowledge, but through dramatic paradigm shifts. Normal science operates within an established framework, or paradigm. However, when anomalies accumulate that the current paradigm cannot explain, a crisis emerges. This leads to a scientific revolution where a new paradigm replaces the old one.

That isn’t exactly what is going on with AI, but there is no question that our “work” paradigm is about to shift dramatically, and it is going to cause a lot of economic disruption. Until a week ago Tuesday, I personally wasn’t totally convinced. But seeing what an old-fashioned, out-of-touch guy like me has been able to accomplish in just a few days has convinced me that the world really is about to change.

Let’s hope it’s for the better.

Productivity

Given the way the economic data calendar fell, this week brought only one major piece of economic data - updated productivity numbers for the fourth quarter, and they were revised down from 2.8% to 1.8% (full release here). Manufacturing productivity for the fourth quarter was also revised down from an initial reading of -1.9% to -2.5%. As I said when the initial numbers were released earlier this month, the productivity gains in manufacturing had been running quite hot through the first three quarters of 2025, and for the year, productivity in manufacturing was still up 2.0% in 2025 - the largest annual increase in manufacturing productivity since 2010.

However, the most concerning aspect of these revisions is the surge in unit labor costs. At 4.4% for the nonfarm business sector—and a striking 9.1% for manufacturing— wage pressures are substantially outpacing productivity gains. That is the highest rate of labor cost increase in manufacturing since mid 2022. Rising unit labor costs are a key driver of inflation, and with the core PCE already well above target, these numbers have got to be concerning for the Fed. Rate cuts are seeming less and less likely, regardless of who the President puts in charge.

If labor costs keep rising like this, AI agents like Ben are going to become more and more attractive. I’m telling you…the paradigm is about to shift.

The Weekly Economic Update is sponsored this week by:

The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

The State of Georgia Senate passed S.B. 424 this week, which recognizes gold and silver as legal tender in the state and establishes a state-approved bullion depository where people can open an account to hold physical gold as a hedge against inflation and the constant devaluation of the dollar by the Federal Government. Account holders would be able to access their gold via a debit card to make purchases everywhere from Publix to Costco to Chick-fil-A.

I don’t usually say this about legislation, but this is a FANTASTIC idea. Senator Marty Harbin, R-Tyrone, the sponsor of the bill, is to be commended.

Of course, there is the usual cadre of academics who are critical. For example, in this particular article, Campbell Harvey, a finance professor at Duke University, doesn’t like the idea and says, “There is no guarantee that it will provide a hedge for inflation in the short term.” I have seen similar comments on social media from economics professors within Georgia’s own university system.

As usual, Mr. Harvey and those of his ilk completely miss the point. This isn’t intended to be a short-term instrument. Mr. Harvey is correct that, in the short term, gold does fluctuate, sometimes quite significantly (as we learned this week). However, as I have often demonstrated, over the long term, gold is a hedge against inflation, a store of value, and protection against the grossly irresponsible fiscal policies of our federal government. I pointed out a few weeks ago that you could have bought the median-priced new home in 1980 for 93 ounces of gold. You could still purchase the median-priced home in 2025 for 93 ounces of gold. Gold isn’t an investment. It is money. Real money.

People have asked me how this system would work. It is really quite simple. In fact, I personally have been doing this for several years via a private company called Glint. (This is not meant in any way to be an endorsement of Glint, but rather a real-life example of the Senate proposal.) I have an account with Glint where they hold physical gold in my name in a Brinks vault in Switzerland. I have a debit card that I can use anywhere that accepts debit card payments to pay for goods and services with that gold. When I make a purchase, the vendor gets cash, and that amount of gold is removed from my account at the current dollar price of gold. Similarly, I can send cash to Glint, and they will add gold to my account at the current dollar price.

One of the criticisms of holding physical gold is that it isn’t very liquid. I personally have never had a problem turning physical gold into cash, but I understand the point. Gold should be a long-term hedge against inflation, but when you need it, you need it. Having a debit card linked to your gold solves that problem.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

This past Monday morning, oil opened well above $100 per barrel as the Iranian conflict grew more uncertain over the weekend, several Gulf states slowed or stopped production, and ships were unable to safely navigate through the Straight of Hormuz.

As you can see in the graph below, historically, when oil is at $100 per barrel, regular gas is roughly $4 per gallon. The price of diesel also rises, which is a factor in the price of just about everything (more on that below in the CPI section).

While the price settled down slightly throughout the week, there was still discussion about releasing some oil from the Strategic Petroleum Reserve (SPR) to help alleviate the price shock at the pump.

If you have been reading this blog for very long at all, you know that one of the things that annoys me most is political hypocrisy, or more specifically, letting your politics drive your beliefs rather than your beliefs driving your politics. The past two weeks have given us a plethora of examples, but I want to focus specifically on the issue of releasing oil from the SPR.

During the week, I often have business news running in the background, especially between 8:00 am and 9:00 am, as that is when a lot of economic data is released. Bloomberg, CNBC, and Fox Business are all in the rotation. Earlier this week, I was listening to Mornings with Maria on Fox Business. I was shocked to hear her openly call for the administration to release oil from the SPR to alleviate gas prices for two reasons. First, as I pointed out when the previous administration did the exact same thing, it is a bad idea. The previous administration depleted nearly half of the SPR to help offset the rising price of gas, and the current administration has been slow to refill it, despite the fact that the price of oil was in the $60’s for most of 2025.

Helping offset the effects of inflation at the pump really isn’t the purpose of the SPR, and it wasn’t a good idea when the Biden Administration did it, and it isn’t a good idea now.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Well, this was a slow news week. Not much has been going on in the world since last Friday.

I mean, except for the invasion of Iran and the complete elimination of their entire leadership structure - twice. As the world’s 5th largest producer of oil at more than 5.1 million barrels per day, and the gatekeeper for the Straight of Hormuz through which about 17 million barrels of oil travel each day (20% to 30% of world consumption), this could very well have an impact on our economy.

As of this writing, oil prices were up 25% from last Friday’s close and are sitting at about $85 per barrel. To be honest, given what has happened, that really isn’t too bad. However, if this drags on for weeks, and the Straight of Hormuz is closed for an extended period of time, oil prices could rise significantly, which would add considerable short-term price pressure in an environment where inflation in the United States is already accelerating.

And this during a time when people are really struggling to make ends meet. Redfin recently released the results of a survey that showed just about HALF (49%) of all U.S. residents struggle to afford their rent or mortgage payments. HALF! How long will it be before we start to see a sharp increase in foreclosures and bankruptcies?

The financial stress isn’t limited to those with low incomes. The average income of people seeking help from credit counseling organizations is rising.

And just this week, the Wall Street Journal reported that last year, a record number of people had to take a hardship withdrawal from their 401(k). That was the sixth straight year of increases in the number of hardship withdrawals, and it is now 3x higher than the pre-COVID level.

Iranians may be shouting “death to America,” but Americans are shouting, “I’m broke and can’t afford my mortgage payment!” If only the administration would give the domestic economy as much attention as it does to Venezuela, Iran, or Greenland. Maybe if they did, people could afford a home.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Tuesday night, the President fulfilled his obligation, under Article II, section 3 of the U.S. Constitution, to "give to the Congress Information of the State of the Union." His report set a record for the longest State of the Union address (SOTU) in history.

Regardless of your political leanings, one has to admit that the SOTU has become little more than political theater. The President at the time stands in the well of the House chamber and talks about how great the “state of the Union” is under his leadership. Those in his party stand and applaud in all the appropriate places, and those in the opposition party sit gloomily on their hands and provide appropriate looks of disdain and derision.

Why do we go through this every year? The Constitution certainly does NOT require an in-person presentation. I say we go back to the way Thomas Jefferson did it in 1801. Believing the in-person speech to be too “monarchical,” he just wrote Congress a memo bringing them up to speed. And it was that way for more than 100 years. Then, Woodrow Wilson decided in 1913 that the speech would be a good way to promote his policy agenda to the country, and that led to the complete circus that the event has become.

And a circus it is. And it became more so on September 9, 2009, when, during a joint address to Congress by President Obama, Republican Representative Joe Wilson of South Carolina shouted, “you lie!” The precedent had been set. Any remaining sense of decorum was lost. During President Biden’s last two SOTU addresses, he was routinely shouted down, heckled, and booed. Trump’s last few SOTU addresses have seen elected representatives escorted out of the chamber and others shouting down the President while he speaks.

These people are all children. As I have mentioned several times before, if your guy can do no wrong, and the other guy can do no right, you aren’t in a political party…you are in a cult. That was on full display once again Tuesday night. If you can’t stand and applaud the fact that the number of fentanyl deaths has fallen dramatically, or to congratulate the US Men’s Hockey team for winning a gold medal, you are in a cult.

More and more, it seems that we all look at the world through the lens of our politics. And when you see everything through the lens of politics, there is no objective truth on which anyone can agree. Listening to the various “news” channels on Wednesday morning, the speech was either full of “bigotry, hate, and lies,” or “hopeful, positive, and uplifting.” It is as if they live in two different worlds. And frankly, they do because they both look at the world through their own political lens.

Unfortunately, they look at economics through those same lenses. During the Biden Administration, I routinely criticized policies that I believe to be inflationary, and I received many comments from readers accusing me of being “too right-wing.” Now, over this first year of the second Trump Administration, I have continued to criticize policies the Administration is pursuing that are highly inflationary. Like clockwork, the comments I receive from readers on the other side are that I am “too left-wing.” My position on fiscal and monetary policy hasn’t changed. But because I dare to criticize their man, the cultists are offended.

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The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.

Last week, the Federal Reserve Bank of St. Louis released a report that showed empirically what everyone already knew…that homes are the least affordable they have ever been.

“In most U.S. counties, the cost of buying a home has pulled decisively away from what local incomes can support. Repeat-sales data show home values more than doubling since 2000 on average, with many places experiencing price growth well above 200%. Over the same period, real per-capita incomes rose only modestly…a regime where housing is structurally less affordable than it was a generation ago.”

This led me to wonder what the ratio of median home price to median household income is currently? During the inflation spike in 2022, when incomes weren’t growing at all, and prices of everything were soaring, the ratio rose above 5. As of January, it is down to 4.872 (on a 12-month moving average basis). Still historically high, and much higher than it was during the “housing bubble” that led to the financial crisis.

As home prices began rising again relative to income in 2013, the required payments necessary to support the median home rose, but not by too much. That was becasue mortgage rates were down in the 4% range and would get down in the 2.5% range by the end of 2020.

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