Tag: economy

Axios Looks for Silver Lining in Trump’s Tinfoil Economy

Axios (10/5/26) thinks it’s spotted a mystery: “President Trump’s economic data keeps getting stronger. His economic polling keeps getting worse by the day.”

Or as the political news site put it in an earlier story (9/30/26): “America’s economy is roaring ahead. And Americans feel lousy about it.”

As both stories note, people don’t feel like the economy is “roaring ahead.” So what’s the proof that they’re wrong? As is its wont, Axios provides bullet points in the October 5 piece to lay out the “ample evidence the economy is, statistically speaking, relatively strong.”

First up: “Economic growth is solid and accelerating.” The link that backs that up goes to the September 30 piece, which reported, “The economy grew at a 2.2% annualized rate in the second quarter, a sharp upgrade from the 1.5% previously reported.”

Is 2.2% growth “relatively strong,” though? Average annual GDP growth since 1947 is 3.2%, a full percentage point higher. If that seems like too long a time frame for comparison, the Biden years—a period when the economy was rarely described as “roaring ahead” or “relatively strong”—averaged 3.7% annual GDP growth. Leaving out 2021—an exceptional year when the economy bounced back strongly from the Covid recession—still leaves Biden’s economy growing at 2.8% a year.

Relatively speaking, then, Trump’s growth is rather weak. It’s not “accelerating,” either; over the six quarters so far of Trump’s second term, the average annual growth rate has been 2.2%—the same as in the most recent quarter.

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Who Really Controls Interest Rates?

People constantly ask who has more power over interest rates, Treasury Secretary Scott Bessent or Federal Reserve Chairman Kevin Warsh. Warsh certainly has the more visible lever because the Federal Reserve controls the federal funds target and can influence short-term liquidity throughout the banking system. Bessent, however, sits at the Treasury where the government must actually finance the deficits Congress creates. Congress spends the money, the Treasury must borrow it, and the Fed attempts to influence the price of money, but NONE of them ultimately control global capital.

This is the great misconception surrounding the Federal Reserve. No Fed chairman controls the business cycle. Warsh can raise or lower the overnight rate, but he cannot simply decree that the 10-year Treasury should yield 3% if investors around the world demand 5%. The long end of the curve reflects inflation expectations, sovereign risk, competing investment opportunities, debt supply, and international capital flows. The Fed can intervene and buy bonds, but then it risks expanding liquidity and creating precisely the inflation it claims to be fighting.

Bessent faces the opposite side of the same problem. Treasury must continuously sell enormous quantities of debt because Washington has accumulated more than $40 trillion in obligations and continues running deficits. Bessent can alter maturities, conduct buybacks, and attempt to improve liquidity, but he cannot FORCE investors to finance Washington at the yield he prefers. If global capital demands greater compensation for holding U.S. government debt, then the Treasury eventually has to pay the market price.

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Wall Street Expected To Have Its Best Year Ever As Americans Drown In Debt

Money is flooding Wall Street as Americans thirst for financial relief amid war-fueled inflation and soaring household debt.

New York’s securities industry is on pace to blow past last year’s record profits, according to a new report from New York State Comptroller Thomas DiNapoli. Wall Street firms made $45.9 billion in just the first half of 2026, already eclipsing what New York City expected them to make for the entire year. (RELATED: Wall Street Banks Finance Both Sides Of America’s AI Race With China)

The money has poured in as companies race to build artificial intelligence infrastructure, businesses return to the dealmaking table and investors trade through a year marked by war, tariffs and market swings, the Comptroller’s report found. Virtually every major Wall Street revenue stream grew during the first half of the year, with underwriting seeing particularly strong gains.

Wall Street’s boom looks much different from the economy many Americans are living in. Families have rationed showers and hauled water from creeks as water bills climb into the hundreds of dollars, while gasoline prices have risen sharply and record diesel costs threaten to make already expensive grocery bills even worse due to the wars in Iran and Ukraine.

Many Americans are leaning increasingly on borrowed money. Household debt has continued to climb, with consumers carrying growing credit card and auto loan balances as high interest rates make that debt more expensive to service, according to the Federal Reserve Bank of New York.

Credit cards have become a particularly costly pressure point. Americans now owe more than $1 trillion on their cards, Fed data show, while credit card delinquencies have climbed to levels not seen since the aftermath of the Great Recession. Total household debt had climbed to a record $18.8 trillion in the first quarter of 2026.

Meanwhile, billions continue pouring into AI and Wall Street is preparing for another potentially record-breaking payday.

Venture capital investment in AI companies reached $407 billion during the first half of the year, already dwarfing the amount invested throughout 2025, the report found. The spending has helped buoy markets even as investors question whether companies can eventually make enough money to justify the enormous sums flowing into the technology.

Big Tech companies are increasingly borrowing to finance the data centers, chips and power infrastructure behind the AI boom. Amazon, Google, Meta and other tech giants are now competing with governments for investors’ cash as they flood debt markets with new borrowing.

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Americans Are Spending More Because Everything Costs More

Economists keep pointing to consumer spending as proof that the American economy remains strong. Americans spent 0.9% more in August, and naturally this is being celebrated as the resilient American consumer. But real disposable income did not increase AT ALL, while the personal savings rate fell to just 4.1%. Americans are spending more while their inflation-adjusted income is going nowhere and savings are being depleted to maintain their standard of living.

The cost-of-living crisis is showing up in the numbers. Consumer spending can rise during inflation simply because everything costs more. If your grocery bill rises from $150 to $200, you increased consumer spending by 33%, but you did not become wealthier or eat 33% more food. You simply handed over more dollars for the same necessities.

Personal consumption expenditures increased by $190.8 billion in August while personal income increased only $66.6 billion. Real consumer spending rose 0.6%, but real disposable income was flat. You can maintain that imbalance temporarily by reducing savings or borrowing, but you cannot maintain it forever.

This is what Washington never understands about inflation. They tell people inflation has fallen because the RATE of increase is lower than it was at the peak. That does not mean prices went back down. Consumer prices are roughly 30% higher than at the end of 2019. Something that cost $100 then costs roughly $130 today. Lower inflation merely means prices are rising more slowly from an already elevated level.

This is why consumer confidence can collapse while spending remains strong. The Conference Board’s Consumer Confidence Index plunged to 81.9 in September, its lowest reading since 2014. The University of Michigan’s sentiment index fell to 48.1 and is now 15% below January. People are continuing to spend because they must continue living, but they are increasingly worried about what comes next.

The University of Michigan reports that consumers’ expectations for inflation over the next year climbed to 4.6% in September, up from 3.4% in February. Consumers’ assessments of both their current and expected personal finances also deteriorated. The paycheck may still be coming in, but it simply does not stretch as far as it once did. Americans feel the conditions of the economy daily.

Even if inflation fell to 2% tomorrow, today’s elevated price level would remain. Prices would simply continue increasing from that higher base. This is how inflation quietly destroys the middle class. Savings decline, debt rises, homeownership becomes harder, young people delay families, and retirees discover that their savings purchase far less than expected.

The American consumer has kept this economy moving, but there is a limit to how long households can spend faster than their real incomes grow. You cannot raid savings forever, increase credit-card balances forever, or finance your standard of living indefinitely.

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Turkey’s Fix For Its $20 Billion Hedge Fund Meltdown: Kindly Ask The Winners To Give The Money Back

Two weeks after a cluster of Istanbul asset managers stopped honoring redemptions, triggering a market-wide circuit breaker and the liquidation of 131 funds held by some 455,758 Turkish retail investors, Ankara has unveiled its plan to make everyone whole. Or at least, to make everyone a little bit less un-whole.

As Bloomberg reports, Turkey will start payments to investors caught in the fund crisis. The Capital Markets Board (SPK) approved interim payments of up to 1 million lira (about $20,400) per eligible investor in funds run by Tera, Pusula, Atlas and Hedef, calculated on each investor’s “net investment” as determined by the Central Securities Depository (MKK). Below a million lira, you get your money back; above it, you get a million and a place in the queue. Money market funds get paid first, the rest in descending order of investor count, with A1 Capital, Bulls and Pardus funds slotted in afterward. The interim payments are advances against whatever the liquidation ultimately recovers, which is a polite way of saying nobody knows yet.

Finance Minister Mehmet Simsek, meanwhile, insists that “we are not talking about a systemic problem,” pointing out that public debt is just 22% of GDP and the budget deficit is “roughly half the developing country average.” All true, and also not much consolation to the investor who, as Turkish Minute recounts, sold her Istanbul home before moving to Portugal, parked the proceeds in stock funds as an inflation hedge, and has watched her account fall ~90% while being unable to withdraw even that. “It is melting away before my eyes, and I can’t do anything about it.”

The “please give it back” account

The payouts are the boring part. The truly bizarre part is how Turkey – long the biggest banana in crowded bus of capital markets banana republics – plans to refill the pot.

Alongside the interim payments, the regulator announced the creation of “Voluntary Return Accounts” at Birlesik Fon Bankasi “for individuals seeking to return excessive profits obtained from pre-liquidation share sales.” Proceeds will be funneled to the fund liquidation estates and on to Ziraat and Isbank for distribution to investors. A separate “General Share Refund Account” has been opened for anyone who would like to hand back profits from speculative trading in listed stocks, and a new fund inside the deposit insurer TMSF will receive assets later determined to be proceeds of crime (details here).

To summarize: Turkey’s plan to compensate 455,000 losers is, in part, to ask the winners nicely.

Bloomberg’s Eric Balchunas summed it up best: “Turkey wants investors who made a lot of money in market to gift excessive returns to the other investors who lost $20b.”

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Iran’s Disappearing Oil Is Becoming Everyone’s Problem

Iranian oil is disappearing from the market just as its biggest buyer returns for more. China’s recovering crude demand is colliding with the loss of a supplier that sustained its independent refiners through the crisis, forcing them to compete for increasingly expensive alternatives. The consequences reach beyond China: every replacement barrel tightens supplies for other buyers, while Tehran faces a growing incentive to disrupt the Strait of Hormuz, which is now carrying an unexpectedly strong 13 million barrels a day (just 5 million below pre-crisis level), while its own oil remains trapped.

Iranian crude has long been an underestimated part of the global oil balance. After Bashar al-Assad’s government fell in December 2024, breaking the political relationship that sustained Iranian shipments to Syria, China became Iran’s only crude buyer – in 2025, it received an average of 1.4 million b/d. The war initiated by the US and Israel in late February initially made Iran even more important to Chinese buyers: while Tehran blocked other tankers from crossing Hormuz, its own cargoes passed freely, lifting Chinese intake of Iranian oil to around 1.76 million b/d in April.

That competitive edge ended with the US blockade announced on April 13. Loaded tankers could no longer leave the Gulf, while empty vessels could not enter. Loadings at Kharg Island, Iran’s main export terminal, collapsed from 1.8 million b/d in March to 260,000 b/d in May. A June 17 memorandum allowing Iranian cargoes to pass for 60 days offered temporary relief: loadings recovered to 740,000 b/d in June and 890,000 b/d in July. But the reprieve expired in August, shipments slumped again to 250,000 b/d, and no Iranian loadings were observed in the Gulf in September.

The more important part of the story, however, was unfolding outside the Strait. Iran had accumulated a vast floating stockpile that allowed deliveries to China to continue even when fresh cargoes could not leave the Gulf. In mid-April, that cushion stood at about 160 million barrels, spread across waters around South, Southeast and East Asia. Drawing on those stocks, China still imported 1.37 million b/d of Iranian oil in May, just 10% below February’s level. But the buffer was shrinking; floating storage fell to 106 million barrels by mid-June before the temporary reopening replenished it to 128 million by mid-July.

That replenishment of available floaters has since stopped. China still received 980,000 b/d of Iranian crude in August, but only 475,000 b/d in September, with arrivals ceasing from September 26 (all of the last arriving cargoes had been loaded in June).

Iran still has around 86 million barrels on the water, the lowest volume since January 2025. Yet 23 million barrels (more than a quarter) are trapped inside the Gulf. The total has barely changed since Chinese arrivals have wound down to an almost complete halt over the past two weeks, with evident loadings in the Kharg island stopping completely. With onshore storage gradually filling up (Kpler data suggests Iranian storage tanks are now 60% full, storing around 70 million barrels), Iran will face the inevitable choice of cutting production. Whilst roughly 2.2 million b/d of production is relatively safe due to demand from its refineries, Tehran’s pre-war crude output of 3.2 million b/d seems to be no longer achievable.

For China’s ‘teapots’ (the smaller independent refineries concentrated in Shandong province), this removes a cornerstone of their crude supply. Accounting for roughly a fifth of Chinese crude imports, these refiners have built their purchasing strategies around discounted sanctioned barrels, particularly from Iran and Russia. Now they must search for barrels farther away, from the Middle East, West Africa and South America. In mid-September, ten Chinese independent refiners reportedly sent traders to Singapore to secure available supplies from the mentioned regions.

The shift is visible at Shandong’s ports. Qingdao, connected by pipeline to 12 independent refineries, relied on Iran for 40% of its 690,000 b/d incoming flows in 2025. In recent months, it has increased purchases of Brazil’s Tupi and Buzios grades and even started receiving Guyana’s Golden Arrow in July, while still relying on Saudi and Russian supplies. Nevertheless, intake has fallen to a record low of around 150,000 b/d over the past three months.

At Dongying, on Shandong’s northern Bohai coast, situated near 32 independent refineries, Russia and Iran supplied virtually all of last year’s 330,000 b/d intake, accounting for two-thirds and one-third respectively. Iranian deliveries started to decrease in summer months, with just two cargoes arriving in August and just one in September. Total intake fell to a mere 220,000 b/d in September as crude-deprived refiners were compelled to cut refinery throughputs.

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Global Crop Prices Log Biggest Quarterly Jump Since Ukraine Invasion As Sticky Inflation Hits Grocery Bills

The Bloomberg Agriculture Spot Index (BCOMAGSP) posted its largest quarterly gain since Russia invaded Ukraine in early 2022, as Black Sea disruptions, a crisis in the Strait of Hormuz, and mounting El Niño risks have formed what could be considered a perfect storm poised to drive food prices higher.

BCOMAGSP, which tracks 10 major crops including corn, soybeans, wheat, coffee, sugar, cotton, cocoa, and others, jumped 13% in the third quarter.

Beyond the Russia-Ukraine fighting and disruptions to grain shipments from the Black Sea region, the next big threat to the crop space is a strengthening El Niño, on track to rank among the strongest on record. This puts various types of crops in major growing belts around the world at risk and has sent harvest yields plunging. 

Already, India’s weakest monsoon season in a decade has added to concerns about harvests and food prices.

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When Confidence Turns, the Economy Follows

There is one economic indicator governments consistently underestimate because they cannot control it with legislation or manipulate it with an interest-rate announcement: confidence. The Conference Board’s Consumer Confidence Index collapsed 6.7 points in September to 81.9, the lowest reading since April 2014. Economists expected 89.2. This was not some marginal statistical miss. Americans are becoming increasingly pessimistic about their jobs, their purchasing power, and what they see coming over the next six months.

This is how an economy changes direction. People do not wake up one morning because the government announces a recession and suddenly stop spending. They begin changing behavior long before the official statistics catch up. They cancel the vacation, stop eating out as often, hold off on that new car purchase, and begin putting whatever they can aside because they no longer TRUST what tomorrow will bring. That change in confidence then becomes economic reality because consumer spending is the backbone of the American economy.

The Conference Board’s Present Situation Index dropped 7.9 points to 109.3, while its Expectations Index fell another 5.9 points to just 63.6, the third consecutive monthly decline. The Expectations Index is particularly important because people are telling you what they THINK is coming. Confidence is not merely about whether somebody has a job today. It is whether that person believes the job will still exist six months from now.

That confidence in employment is clearly deteriorating. Only 23.6% of consumers now say jobs are “plentiful,” the lowest since February 2021. The share saying jobs are “hard to get” increased to 21.9%, the highest since January 2021. The gap between those two measures has collapsed to just 1.7 percentage points from 4.2 points in August. That labor-market differential has historically moved with unemployment, and consumers are clearly sensing weakness beneath the surface.

The government’s own job-opening data confirms that something is changing. Open positions fell by 256,000 in August to 7.079 million. There are now roughly 1.01 job openings for every unemployed person, compared with nearly two openings for every unemployed worker during the frenzy of 2022. Professional and business services lost 119,000 openings while healthcare and social assistance lost another 115,000. Construction, manufacturing, and government openings also declined. People feel these changes before economists sitting behind computers recognize them.

At the same time, the cost of living refuses to cooperate. Consumers told the Conference Board that references to prices, goods and services, and particularly oil and gasoline had risen to new highs. The University of Michigan’s separate survey tells essentially the same story. Its September Consumer Sentiment Index fell to 48.1, down 15% since January, while consumers’ one-year inflation expectations have risen to 4.6%. Views of both current and future personal finances deteriorated sharply.

This is precisely why confidence matters more than politicians understand. Inflation does not have to continue rising at 8% or 9% for people to remain angry. Prices NEVER went back to where they were before the COVID inflation. The rate of increase may slow, but the accumulated increase remains. A family paying substantially more for groceries, insurance, electricity, gasoline, housing, and automobiles does not care that some economist announces inflation has moderated. Now add interest rates.

The Federal Reserve raised rates this month for the first time in three years, taking the federal funds target to 3.75%-4.00%, because renewed inflation pressure has left policymakers with little choice. Meanwhile, the average 30-year mortgage has climbed above 7%. A young couple trying to purchase their first house is being crushed from both directions. The house itself costs more and the money required to buy it costs more.

Americans are becoming less willing to voluntarily leave their jobs. That is not necessarily a sign of a healthy labor market. During periods of strong confidence, workers quit because they believe they can find something better. When people become frightened, they cling to whatever employment they already have.

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16 U.S. Trucking Companies File For Bankruptcy In Less Than A Month As Diesel Prices Soar

Diesel prices have exploded over the past month, creating another major cost shock for an industry that was already operating on thin margins. The national average climbed from roughly $5.60 per gallon at the end of August to a record $6.53 in late September, an increase of about 17% in just a few weeks. Prices have eased slightly from that peak, but the EIA’s latest weekly reading still puts diesel at $6.38 per gallon, compared with $5.60 at the end of August.

Now the financial damage is beginning to show up. Sixteen American trucking companies have entered bankruptcy proceedings in less than a month, affecting more than 250 jobs, according to FreightWaves and the Independent. Eight filed for Chapter 11 bankruptcy, allowing them to continue operating while restructuring their debts, while seven entered Chapter 7 and are liquidating their assets and shutting down.

Among the larger companies seeking Chapter 11 protection are Xoco Transport and Globemaster. Neither specified the cause of its financial problems in federal court filings, and diesel is hardly the industry’s only problem. Carriers have also been grappling with rising labor, insurance, maintenance and regulatory costs, while seasonal slowdowns can leave them without enough revenue to absorb those increases.

But the sudden surge in fuel costs adds another layer of pressure because trucking companies have limited options when diesel jumps this quickly. They can absorb the expense and sacrifice margins, pass it through with higher freight rates and risk losing business, or cut workers and equipment. The latter can keep a company alive temporarily, but it also reduces shipping capacity and the amount of revenue the carrier can generate.

And for now, there is little reason to consider the diesel problem resolved. Prices remain near historic highs and are still heavily tied to the war with Iran and the resulting disruption to global energy supplies.

Even as crude shipments through the Strait of Hormuz have begun recovering, refined-product flows remain constrained, inventories have been depleted and damaged Middle Eastern refining infrastructure continues to limit supply. Until those disruptions ease materially, diesel remains another major transmission mechanism through which the Iran war is feeding directly into the U.S. economy.

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Why Even A Temporary Diesel Export Ban Is A Bad Idea

Energy analysts spent much of the past week laying out all the reasons why a presidential ban on exports of diesel fuel is a no good, terrible, very bad idea. As the Institute for Energy Research detailed on Thursday, such a ban would not only fail to lower diesel pump prices for any appreciable amount of time, it would also inevitably result in higher gasoline prices and supply shortages as refiners are forced to cut back runs because they have no outlet for the diesel volumes currently being exported to the global market. 

Late in the week, we saw the emergence of an alternative proposal from politicians and industry critics: A temporary ban of “only” 90 days. This, they claim, would have the benefit of helping Republican candidates in their mid-term election campaigns while also allowing refiners to see a clear light at the end of the tunnel.

As a siren song it all sounds lovely. But in the real world, it’s also nonsense.

Whether we like it or not, capital does not care if some farmers in Iowa, Nebraska and Texas might go under because diesel prices are too high. Capital does care about two hard factors: The anticipated rate of return on its investment, and the consistent application of U.S. laws and regulations. 

A 90-day pause might as well be a permanent ban where capital deployment is concerned. It would send the signal to investors that the government, even in a Republican presidency, might step in at any time to do major damage to your rates of return. 

Former President Joe Biden’s killing of the Keystone XL pipeline on his first day in office in 2021 did enormous harm to that second key factor. Biden and his autopen cancelled that long-term multi-billion-dollar project which was already under construction without siting a single violation of U.S. law or regulation. The developer — Trans-Canada, now TC Energy — had moved forward with its federal permits fully secured with the faith that no future administration would intervene to cancel the billions of dollars it had already invested by January 20, 2021. 

A Trump intervention into diesel markets would do similar harm. Perhaps even more given that it would send the signal to investors that they now cannot have faith in the consistent application of the law even in a Republican administration. 

The current crisis shines a spotlight on the folly inherent in half a century of federal regulations that have made it near-impossible to build new refineries in the United States. America needs additional refining capacity and fast to be able to restore the country’s level of energy security to pre-Iran Conflict levels. 

But here’s the thing: These are multi-billion-dollar projects which take years, often decades to execute. Convincing investors to consider pouring billions of capital dollars into such projects requires their confidence that U.S. law will be applied fairly and consistently across multiple presidents of both political parties. Biden’s Keystone XL cancellation made doing that much harder. 

Sure, there is a new greenfield refinery under construction at the Port of Brownsville, Texas today— but that project benefits from a big injection of capital by India’s Reliance Industries. A big question remains whether American investors will have the confidence to step up and invest in the series of new refining operations needed to keep more of America’s domestic production at home. 

Any ban on exports for any length of time implemented for transparently political reasons would almost certainly answer that question in the negative. America cannot afford for that to happen.

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