Economic Commentary: Mid Term Blues

Midterm election economy: the vote may shape 2027 fiscal policy but almost certainly not monetary policy. Here is what it means for your household.

Midterm election economy: the vote may shape 2027 fiscal policy but almost certainly not monetary policy. Here is what it means for your household.

Economic Commentary: Higher, Faster, Not Better

US inflation pressures are broadening and accelerating, squeezing real wages and household budgets as policymakers weigh the outlook for 2027.

Inflation is a real problem.  If you are a central banker, anywhere, the proper response to that statement is “of course.” Some economists, pre-disposed to equivocating, might answer “maybe”; Exhibit No. 1 is John Maynard Keynes who famously observed that a little inflation can be a good thing when trying to pull an economy out of the doldrums. (Exhibit No. 2 would be Japanese economists who watched the country struggle with deflation for many years.) The US inflation numbers released last week for consumer prices, producer prices and import prices put great emphasis on the reality, however: upward pressure on prices has now spread across the US economy, appears to be accelerating, is no longer attributable to “special statistical circumstances” such as the calculation of rent, and has caused real wages — wage growth in excess of inflation— to fall.  Furthermore, as has become increasingly apparent, the cumulative effect of years of elevated inflation has raised price levels to a pain point for many households.

Five Charts for the Week that Was: October 16, 2026

Chief Economist Jeanette Garretty provides 5 economic charts covering topics including Federal Spending, the French Government’s Borrowing Costs, Chinese Employment and Trade Data, and US Inflation Acceleration.

Economic Commentary: Deficit Attention Disorder

US exports increased in August, but not nearly enough to counter surging imports.  Energy played a role on both sides of the equation. As has been much discussed, diesel and LNG are exported in significant volumes.  Less commonly highlighted are the imports of crude oil required by Gulf Coast refineries  which are not configured to use the type of crude produced domestically; continued conflict in the Straits of Hormuz have kept the price of that imported crude high.  Capital goods imports, especially tech imports such as semiconductors, were also strong and at higher price points.

Economic Commentary: Trading Partner Problems 

Euro Zone inflation rose to an uncomfortably high 3.8% in August.  More inflation and economic data for Europe will be forthcoming this week, along with a number of speeches by European Central Bank officials. Despite signs of a further slowing in economic growth, it is highly likely that the ECB will continue to take a tough line on raising interest rates in an effort to slow the escalation of prices.

Economic Commentary: Good vs. Not Nearly Good Enough

Markets are eagerly anticipating the US employment and inflation numbers this week, hoping to confirm a view that the economy is running strong but not too hot and inflation is accelerating only modestly. The hope — and abundant skepticism— is that interest rates have risen sufficiently, and the Federal Reserve can pause and think carefully before yanking the proverbial punchbowl away.

Economic Commentary: The Benefit of a Clear Mind and Strong Stomach

Every home realtor knows that a 7% mortgage rate is the kiss of death.  Stock market savants know that a 5% 10-year Treasury yield is a tipping point. Lots of economists know that trade wars cause recessions. And now we are told, with a certain amount of qualified certitude, that AI could/will kill us. In all of this, it becomes extremely important to ask “Why?” or “How?”. The answer is frequently based on perceptions of historical reality, which should be tempered with the knowledge that history is a guide, not an oracle.