Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the third quarter of 2025 (July, August, and September), according to the initial estimate released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent….
The increase in real GDP in the third quarter reflected increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The trade part is interesting, as I didn’t think exports would be up so much. But I suppose that is plausible, since the trade deficit did continue to decline in Q3, and imports were still going down in September (the last month reported).
I was trying to figure out how consumer spending was up by so much in Q3, so I went back to the retail sales figures from this year, and I see that retail sales rallied between May and August, which raises the Q3 average quite a bit from a lower Q2 level.
But since August, retail sales and overall spending numbers haven’t been so good. This includes the updated income and spending figures that the BEA released on Wednesday along with the GDP numbers.
I’ll also note that personal saving has been dropping in every month since April, so consumers feeling comfortable enough to spend in this Summer may not reflect much for where they are feeling today.
The Conference Board said Tuesday that its consumer confidence index fell 3.8 points to 89.1 in December from November’s upwardly revised reading of 92.9. That is close to 85.7 reading in April, when Trump rolled out his import taxes on U.S. trading partners.
A measure of Americans’ short-term expectations for their income, business conditions and the job market remained stable at 70.7, but still well below 80, the marker that can signal a recession ahead. It was the 11th consecutive month that reading has come in under 80.
Consumers’ assessments of their current economic situation tumbled 9.5 points to 116.8…..
The conference board’s survey reported that 26.7% of consumers said jobs were “plentiful,” down from 28.2% in November. Also, 20.8% of consumers said jobs were “hard to get,” up from 20.1% last month.
I suppose it’s nice to know what was happening to fill in the blanks and figure out where we were coming from in September. But it’s also data from 3 months ago, and much of the data that we have seen indicates softening since then.
I also took notice of this part of the GDP report.
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $166.1 billion in the third quarter, compared with an increase of $6.8 billion in the second quarter.
This put the annual rate of pre-tax corporate profits over the $4 trillion threshold for the first time ever, and continued a sizable run of profit growth over the last few years.
I also recall that manufacturing has shed jobs while increasing output in each of the first 2 quarters of 2025, due to sizable increases in worker productivity. I want to see if the same trend holds for Q3 overall, since we’ve seen the jobs situation stay lame for those months despite the big jump in GDP.
The initial report of 4.3% GDP growth is an interesting data point, and helps us to bridge the gap between where we were in Spring and where we are today. But some of it feels a bit fluky and not sustainable, especially the boosts that trade and consumer spending gave for the last quarter. I’m not counting on that continuing for Q4.
I’ll also bring up that Q3 of 2007 was originally reported as 4.9% growth, with 2008 predicted to stay at 2% growth. It turned out the actual growth in Q3 2007 was 2.5% and 2008 is a year remembered for economic collapse. So file that away as 2025 ends, when we are allegedly in a period of continuing economic growth.
It’s December, so that means property tax bills are out in Wisconsin. And ours are especially big here in the Capitol City.
You dig into the Wisconsin Policy Forum report, and it says this is the largest property tax increases for schools that we have had in decades.
Property tax levies for all Wisconsin K-12 school districts combined are expected to rise by about $476.1 million to $6.58 billion on December tax bills, according to preliminary data from the Wisconsin Department of Revenue (DOR).
This would be the largest percentage increase since 1992 to these gross tax levies, which account for nearly half of all property taxes statewide. It also would be a significant bump from last year’s 5.7% statewide school levy increase, which at the time was the biggest annual increase since 2009…..
Typically, a portion of the per pupil revenue limit increase is covered by rising state general school aids. Our previous research details the interaction between per pupil revenue limits and property taxes. Nearly every two-year budget over the past two decades has included at least one annual increase in general school aids, a form of aid that is distributed to school districts based on factors including property values, spending, and enrollment. This time, state leaders instead kept the funding for these payments flat, leaving property taxes as the sole means by which school districts collectively could access the allowed $325 per student increase.
And without help from the state and with costs still rising due to inflation, the Policy Forum says that property taxes for K-12 schools are jumping by nearly 8% for this year, while other municipalities have increases in line with recent years.
I still have a mailing in my office from the Wisconsin Realtors Association from this Summer that pleaded with the GOP Legislature to add funds to K-12 public schools to keep this from happening.
So let’s see if the typically right-wing Realtors go after WisGOPs next Fall for not doing so and causing much of the large increase in property taxes that Wisconsin homeowners are now having to pay. If you want to check what changed with state aid for your district, click right here.
In Madison's case, that district had a reduction of $11.94 milion in state aid vs 2024-25 - a loss of 19.5%. That throws even more costs onto the property tax, above and beyond any referendum. But then combining it with this being the first year of the referendum's increased revenue limit and the large enrollment in the district, and the property tax increase for Madison schools is by far the largest in the state.
There is one type of K-12 schooling that Republicans have had no problem funding in the 14 years they have been in control of the State Legislature. And this latest budget continues to increase voucher payments from the state even as General Aids for public schools were passed over.
The Policy Forum report mentions how this increase in voucher payments also raises your public school’s property taxes.
One additional factor that contributed to the tax increases was the growth in enrollment and payments for private school choice programs. Under the state’s complex K-12 funding system, growth in publicly funded private school enrollment can contribute to property tax increases. In addition, the 2025-27 state budget raised the amount paid per enrolled student in these programs, further increasing their impact.
That’s because vouchers for kids that live outside of Milwaukee are funded by taking money away from the public school district that the kid lives in – even if the child never attended a day of public school. For Madison schools, this led to a reduction of $6.6 million in state aid. In Wauwatosa, which had a 34% increase in its tax levy after two referendums passed in 2024, vouchers cut $1.58 million for this year. And in Beloit, whose school tax levy went from $5.6 million to $16.2 million this year, they had a double-whammy, where General Aids went down by $9.8 million, and vouchers cut another $1.76 million.
Losing some potential students to vouchers isn’t going to cause a current facility to be sold off or generally any kind of reduction in staff – especially if those kids never attended public schools in the first place. But it does cost them money, so in order to keep the same amount of resources going to provide the education that public K-12 students are required to have, that voucher takeaway raises property taxes.
My suggestion for any Dem running for office in 2026 is to campaign on getting rid of that reduction in aid that vouchers require. If we’re going to have two publicly funded education systems, then let’s pay the full amounts for those two systems. We already do this for kids in Milwaukee, by the way. Doing so statewide would allow for another shift away from property taxes being used for K-12 education, and state tax dollars paying for them instead.
In addition to using more state aid to pay for school expenses and getting rid of the voucher takeaway of aid instead of offloading both those items onto property taxes, I have another idea for property tax relief. Why not an up-front $300 rebate that could be passed into law and sent to homeowners in early 2026. This would could essentially be an increase in the tax credit for property taxes and rent that already exists, but hasn’t been boosted since 2000.
As the Legislative Fiscal Bureau noted this Spring, this property tax credit is limited to $300, and only applies to the first $2,500 in property taxes a homeowners pays, or $1,500 in rent paid. The LFB says that doesn’t account for anywhere near as much today, given what’s happened to housing prices and the amount of property taxes paid.
Proponents of enhancing the PTRC might argue that the credit targets individuals who pay property taxes (or the rent equivalent) more effectively than other modes of property tax relief (such as the school levy credit) that also benefit commercial properties. If the $2,500 maximum property tax amount eligible for the credit had been adjusted annually for inflation since 2000, the value would be $4,770 in tax year 2025 (implying a maximum credit of $572) and estimated at $4,900 in tax year 2026 (a maximum credit of $588). Setting the maximum allowable property taxes at these levels would decrease estimated individual income tax collections by $228.6 million in 2025-26 and $245.7 million in 2026-27
Why not make it easier and double up the credit limit to $600 for property taxes? I would think a whole lot of Wisconsinites pay $5,000 or more in property taxes these days, which would put the price tag around…$255 million a year? Not a small amount to be sure, but we just cut income taxes by $323 million for this year in the last budget, and cut taxes on retirees’ income by $395 million for this year (retirees who already didn’t pay state income tax on Social Security as well as some IRA/401K income and military retirement benefits, by the way).
Given that our surplus is projected to dwindle away, we would need to figure out a way to pay for the $255 million in boosting the property tax and renters’ credit and/or the $600 million a year in general aids that was part of Evers’ budget for 2025-27 that the LFB said would have limited this year’s K-12 property tax levy increase to 1.6% instead of the nearly 8% we got.
But there are plenty of ways to do that, and Evers had a few of those as part of the state budget. That includes limiting the Manufacturers and Agriculture writeoff to $300,000 (around $395 million a year), stopping a write-off for capital gains for individuals making $400,000 or more and couples making $533,000 or more (around $210 million a year), or legalizing marijuana and making taxes on vape products be based on prices vs volume ($83 million a year). Or it could be as simple as taxing people making $1 million or more at a higher rate ($650 million a year).
There are many ways to pay for it, and it seems like this is a great time to advocate moving K-12 school costs off of the property tax and onto the state side. The Waler/GOP-imposed system of “constrain district resources and cause referendums” isn’t working, and it was why I voted against the boost in operational limits for both the City and School District here in Madison in 2024. School financing needs wider reforms instead of band aids, and while my wife and I will grumble but still be able to afford the additional $1,500 in property taxes this year, other people are going to find that higher bill along with jacked-up health care and food costs to be a burden they can’t put up with this Winter.
On Friday, we got the release of the "gold standard" Quarterly Census of Employment and Wages for the 2nd Quarter of 2025. The QCEW from 3 months ago played a large role in the Bureau of Labor Statistics projecting a reduction of 911,000 jobs through March vs previous reports, so it's worth looking to see if this QCEW report indicates further benchmark reductions would be coming in a couple of months.
The QCEW report shows year-over-year job growth between June 2024 and June 2025 dropping off to just over 420,000 total jobs, and 236,575 private sector jobs. As you can see, this is a growth rate barely ¼ of what it was between June 2023 and June 2024, continuing a trend of diminishing job growth that we’ve had since unemployment dropped to 3.5% at the start of 2023.
The QCEW shows Wisconsin on a similar trajectory, even with our lower population growth rate compared to the rest of the nation. Our 12-month job growth kept up for most of 2024, but it started dropping off at the end of 2024 and was at or below 0 by Spring of this year.
That’s not good, although several of our Midwestern neighbors were doing even worse in the June 2025 QCEW report, including Minnesota, Michigan, and (especially) Iowa.
An especially weak part of the jobs market over those 12 months was in manufacturing, with a loss of 207,548 jobs in the sector in the latest QCEW report, and 46 of 50 states having fewer manufacturing jobs in June 2025 than they did in June 2024.
You can see manufacturing-heavy Wisconsin was among those losers, with 7,777 jobs lost in that time period. That’s been a constant story since mid-2023, when the Fed finished its tightening phase, putting interest rates at their highest levels in 22 years in order to deal with 2021’s and 2022’s inflation spike.
Bad signs all around, and now I’m going to give you an even more alarming one. Remember what the jobs growth chart looked like from 2023 to 2025? Here’s another one that looks like that.
So you could say the US jobs market was sputtering in the first half of 2025 like we were at the end of 2007 and early 2008. And it’s worth noting that US unemployment reached its cycle low at 4.4% in May 2007 and had a slow rise to 5.0% in April 2008 before the roof started caving in. For the post-COVID world, we started rising from a lower point (3.5%), but were still down at a 4.0%-4.2% plateau between June 2024 and June 2025, before unemployment began its current rise from 4.1% in June of this year to 4.6% by November. Uh oh.
I think officials at the Federal Reserve see these echoes of the end of the Bush Presidency as well, and they would rather get out ahead of the recession that the 2025 jobs market is pointing toward. And just like how the Fed started cutting interest rates in mid-2007 from its peak, central bankers started cutting from a similar level in September 2024 this time around. Today, the Fed Funds rate is at similar levels to early 2008.
But all the rate cuts in 2007 to 2008 weren’t enough to keep the Bubbles from popping, and the end of job growth and lack of real economic activity ended up wrecking the false front that the late 2007 economy had. Uh oh again.
One major difference – core inflation (less food and energy) was never above 2.5% even as the rate cutting was going on in mid-2007 and throughout 2008. Yes, gas spiked (remember $4+ gas in Summer 2008? I sure do), which surged total inflation past 4% in late 2007 and up to 5.5% by mid-2008. But core inflation never really did, and core inflation is higher is higher in 2025 (even with the alleged decline to 2.6% that we saw in November’s flawed report). And today it is food prices that threaten to have overall inflation run higher this time, instead of gas prices.
Doesn’t it kind of feel like 2007-08 in the sense it feels like things aren't going well and the economy doesn’t have any real growth engine in it, but on the surface, things don’t seem too screwed up yet? And it only takes one more kink in the chain to cause a lot of bad things to accelerate.
Inflation unexpectedly – and sharply – slowed in November, a seemingly welcome change for Americans weighed down by the persistently high cost of living.
However, economists were quick to caution Thursday that the Consumer Price Index slowing to 2.7% from 3% in September was likely the result of shutdown-related distortions of economic data.
“It’s hard to read too much into the November inflation data. The shutdown clearly had a big impact on data collection,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a note on Thursday. “Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”
And Long was far from the only person not buying that reported decline in inflation.
“I don’t take it at face value,” Stephanie Roth, chief economist at Wolfe Research, told CNN. “It seems like the government shutdown had a big impact.”
Or, as Wells Fargo economists quipped: “Take it with the entire salt shaker.”
With this in mind, I did a crude calculation of how much prices would have had to have changed in order to meet the 12-month change that was listed in the November 2025 CPI report. The archives of the older CPI reports are here, at least till they get pulled away.
The calculation I made is:
1. 12-month change in Sept 2025 CPI report (last one before the shutdown).
2. MINUS total change of Oct-Nov 2024 CPI, since that won’t be part of the 12-month Nov 2025 CPI
3. PLUS X = 12-month CPI change Nov 2025
For example, let’s look at food at home (“some may call it groceries”).
2.7% Sept 2025 year-over-year change
MINUS 0.6% Oct-Nov 2024 change
2.1% + X = 1.9% Nov 2025 year-over-year change. -0.2% = X, the Oct-Nov 2025 price change.
Do we believe grocery prices dropped by 0.2% between September and November? As a person who got outside in those 2 months, I say no.
What’s interesting is that food away from home (some may call it “going out to eat”), went up by 0.5% between September and November. Are we to believe that the increase was all because of overhead, salaries and profits for restauranteurs? I’m doubting it.
Likewise, do we really think the rent and other housing prices didn't go up in October or November? That's what the CPI report was saying.
Also, let’s note that the typical survey dates are in early-to-mid November, while 2025’s CPI survey likely went a week or two later. Given what I remember my email inbox looked like in mid-to-late November, that may be an important difference.
Sam Tombs, chief US economist at Pantheon Macroeconomics, pointed out another wrinkle: “A higher proportion of price quotes than usual for November likely were sourced during the Black Friday discount period,” he said in a note to clients.
“November’s CPI data have to be treated cautiously, given that CPI data collection resumed only on the 14th after the end of the shutdown,” Tombs said.
Input cost inflation accelerated sharply in November, hitting the fastest rate for three years barring the jump in costs seen in May. Tariffs were again the predominant reason cited by companies for increased costs, alongside reports of higher wage rates. Service sector costs rose at the fastest rate since January 2023. In contrast, manufacturing input price inflation cooled to the lowest since February but remained well above the average seen over the past three years.
While higher input cost inflation fed through to a steeper rise in average prices charged for goods and services in November, competitive pressures restrained pricing power and meant selling price inflation remained below recent peaks. Overall, the increase in prices charged was the second lowest since April. Divergent trends were apparent at the sector level: selling price inflation slowed in manufacturing but reaccelerated in services.
So that likely will translate into a significant slowdown in profits for firms, and an increased risk of cutbacks on orders and layoffs. But hey, maybe an inability to sell stuff could keep inflation in check!
But let's hold off on the party hats on the inflation front. The nice version of how to take this November report is “let’s wait until December’s report to see if prices really are leveling off, as there could be a lot of snapback from an artificially low reading in November.”
The cynical version is something I hinted at in my post about the jobs report that dropped earlier this week.
This is the first report where I think TrumpWorld messed with the BLS numbers. Almost no specifics for Oct and Nov, and no way groceries are up less than 2% over the last 12 months, with barely any increase between Sept and Nov.
And low CPI encourages lower interest rates.
@mchinn.bsky.social
We knew the US jobs report that was coming out today was going to be an odd one. Not only would it include the first look at some October and all November data, and the effects of the US government shutdown of that time period, it also would let us know more about how many federal employees took the DOGE buyouts throughout 2025.
And while the news wasn’t expected to be good, what was released indicates the US jobs market is in quite a bad place.
Unemployment rose to a four-year high of 4.6% in November, and the economy added 64,000 jobs last month, new data from the Bureau of Labor Statistics showed Tuesday.
Last month’s job gains, which came in higher than expected, followed a 105,000-job loss for October, according to a jobs report that was one of the most atypical in recent history….
In October, the federal employment sector had a reported loss of 162,000 jobs, a result of the “fork in the road” deferred resignations from the Department of Government Efficiency that were put in place earlier this year but were effective as of September 30.
Economists were looking for a net gain of 40,000 jobs for November and for the unemployment rate to stay unchanged from its September rate of 4.4%, according to FactSet.
Federal government employment continued to decrease in November (-6,000). This follows a sharp decline of 162,000 in October, as some federal employees who accepted a deferred resignation offer came off federal payrolls. Federal government employment is down by 271,000 since reaching a peak in January. (Federal employees on furlough during the government shutdown were counted as employed in the establishment survey because they received pay, even if later than usual, for the pay period that included the 12th of the month. Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.)
Basically, many of these people have been off the job for several months, but were still getting paid until the Fiscal Year ended on Sept. 30, so they didn't show up in the BLS numbers until today.
Those losses finally showing up in the numbers led to this dreck from the US Number 2.
Q: The unemployment rate currently stands at 4.6%, the highest since the pandemic. So how do you inspire companies to hire people?
JD VANCE: You're talking about government sector jobs. We want to fire bureaucrats and hire these great Americans out here.
I dunno. I'd much rather have a government run by faceless bureaucrats who know stuff and honestly deal with problems over lying political grifters like JV Vance and RFK Jr. Call me an idealist.
(Additional note – as always, FUCK ULINE.)
What JD “I’m creating stories” Vance didn’t mention was the fact that November’s unemployment would have been even higher had the government shutdown gone on for another week. BLS made that note when discussing the household survey that determines the unemployment rate.
In the household survey, people are considered employed if they did any work at all for pay or profit during the survey reference week or were temporarily absent from their jobs or businesses. The lapse in appropriations lasted from October 1 through November 12, 2025. The survey reference week was November 9 through 15. Because the government reopened before the end of the November reference week, federal government workers were counted as employed in the household survey.
So it could likely have been an even higher jump in unemployment beyond the 0.5% increase we've had in the last 5 months? That's not good at all, especially since we saw similar runups in unemployment right before the recessions that started in 2001 and 2007.
And someone should tell JV that it wasn’t all peaches in the private sector either. The average of private sector growth for October and November was no different than the 60,000 a month over-estimate that Fed Chair Jerome Powell says is happening in the BLS data. Manufacturing especially continued to hurt, losing a total of 19,000 jobs between August and November, with 11,000 jobs lost in the auto manufacturing sector. Huh, maybe Trump/GOP shouldn’t have cut off the Biden-era boosts to electric vehicle manufacturing, eh?
In fact, the BLS says there were only three areas that saw significant job growth in November.
In November, health care added 46,000 jobs, in line with the average monthly gain of 39,000 over the prior 12 months. Over the month, job gains occurred in ambulatory health care services (+24,000), hospitals (+11,000), and nursing and residential care facilities (+11,000).
Construction employment grew by 28,000 in November, as nonresidential specialty trade contractors added 19,000 jobs. Construction employment had changed little over the prior 12 months.
Employment in social assistance continued to trend up in November (+18,000), primarily in individual and family services (+13,000).
Take those two sectors away, and the US lost 23,000 jobs last month.
And even the growth in those 3 sectors comes with asterisks. Construction was only a “gain” because warm mid-November weather limited seasonal layoffs to 67,000 vs October. Also, do you think health care and social assistance is going to keep hiring as millions more Americans go without health insurance and doctor’s visits, or lose access to social services due to other Trump/GOP austerity and other needs costing more? Me neither.
Lastly, the rise from 4.4% to 4.6% in the “main” unemployment rate between September and November underplays that other measures showed other measures of unemployment going even higher.
Look at broader measures of unemployment—including people who want a job but aren't in the labor force or who are working part-time but want a full-time job—and the labor market is in the worst place since the pandemic
See that green field? That reflects the fact that the number of Americans listed as having to settle for part-time work for economic reasons jumped by 909,000 over those 2 months, to nearly 5.5 million. This helped raise the U-6 unemployment rate (which includes those Americans) from 8.0% in September to 8.7% in November - the highest non-COVID level since early 2017.
So things really did get worse in the jobs market in October and November, both inside the federal government, and in a lot of parts of the private sector. And no matter how low the unemployment claims stay, it sure isn’t a good situation for workers – and that’s before we account for 12-month growth in average hourly wages in the private sector hitting a post-COVID low at 3.5%.
Well, some people did think Trump was going to bring back the economy of 2019. But I don't think lower levels of wage growth was what they had in mind, and now prices rising by a higher amount on top of that.
Fed officials must have been assuming the jobs numbers would be bad when they cut rates last week, and this is the type of jobs market you’d see in an economy that’s about ready to tip over into recession. Now the question becomes whether the Trump Administration messes with the inflation numbers later this week to make them lower than the reality Americans are dealing with, to try to convince the Fed that they need to keep lowering rates.
After all, there’s not much in the real economy to keep things going these days. So why not try to further inflate the Bubble of AI BS that is one of the few things that are keeping things above water these days?
At issue is a monthly estimate the Bureau of Labor Statistics performs of how the labor market is affected by businesses closing and opening. The estimate, known as the birth-death model, takes a guess at the jobs gained by openings and lost by closings.
Powell said the model has probably overstated jobs by about 60,000 per month since April. With job growth averaging just shy of 40,000 in that period, an overstatement that size would equate to payroll losses of about 20,000 per month.
The chair called the discrepancy “something of a systematic overcount” that likely will see big revisions to job growth numbers.
In September, the BLS released a preliminary benchmark estimate that job growth was overstated by 911,000 in the 12-month period preceding March 2025. A final count is scheduled to come out in February.
In “a world where job creation is negative, I just think we need to watch that situation very carefully and be in a position where we’re not pushing down job creation with our policy,” Powell said.
"Job creation is negative"? That would indicate that the consistent losses that we have been seeing in the ADP private sector report have been more likely to be accurate, and the item about the birth-death model goes along with the ADP's finding that small businesses lost a lot of jobs in November, while larger companies kept gaining.
And after delays due to the government shutdowns of October and part of November, we are due to get some catch-up data from the Bureau of Labor Statistics this week, with the release of November's jobs data and the 2nd quarter update of the Quarterly Census of Employment and Wages (QCEW). The QCEW should be especially interesting, as it was QCEW data that led to September's news of 911,000 fewer jobs in March. Would we see another QCEW number that might show lower job (and wage?) growth than we've had in the monthly reports?
If so, then Jerome Powell and the Fed might be picking correctly when they continue to cut rates, as it would show the US economy to be in or near recession. And while you may be rightfully skeptical of anything that the BLS might put out after Trump got rid of its commissioner when his fee-fees got hurt by bad jobs numbers, I'll remind you that Trump and other rich insiders are so strung out on debt that they need loose money and lower interest rates, and weak jobs numbers would allow the rate-cutting to continue.
As of November 15, we estimate that the effective tariff rate for goods imported into the United States is about 14 percentage points higher than the roughly 2.5 percent it was a year ago, measured by applying current tariff rates to 2024 trade flows. We now project that increases in tariffs implemented from January 6, 2025, to November 15, 2025, will decrease primary deficits (which exclude net outlays for interest) by $2.5 trillion over 11 years if the higher tariffs persist throughout the 2025–2035 period. By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by $0.5 trillion. In total, the tariff changes will reduce deficits by $3.0 trillion. Those estimates do not account for effects on the size of the economy. The additional budgetary effect of the economic changes will be incorporated in CBO's next set of economic and baseline budget projections that will be published in The Budget and Economic Outlook: 2026 to 2036.
Our current estimates are smaller than those from August (reflecting the effects of tariffs implemented between January 6 and August 19, 2025), which projected an 18 percentage point increase in the effective tariff rate, a $3.3 trillion decrease in primary deficits, and a $0.7 trillion reduction in interest outlays. Roughly two-thirds of the downward revisions result from adjustments to reflect new data. Modifications to tariffs, which on net lowered the effective tariff rate (although rates on certain products were higher in November than they were in August), also reduced the estimated effect on the deficit.
Since then, we've seen tariff revenue numbers come in for October and November, and it indicates that we are getting around $20 billion to $25 billion a month more in customs duties than we were getting at the start of 2025.
So I'd say a reasonable estimate for would be around $275 billion for 12 months of these tariff taxes, but that number may diminish over time as consumers and companies adjust (IF companies ever change their sourcing and manufacturing of materials). So CBO's $3 trillion in deficit reduction over the next decade seems to be in line.
That $3 trillion in tariff revenue would make up around 60% of the nearly $5 trillion in lost revenue that is projected to happen from Tax Scam 2.0 over the same time period. But hey, if you combine it with the cuts to programs such as Medicaid, Obamacare tax crdits, and SNAP, total deficits would only end up increasing around $700 billion in total over the next decade between the tariffs and the One Big Bunch of Bollocks passed back in July.
(Reminder - that's increasing the deficit beyond the baseline budget deficits of those years, which were already projected to be between $1.7 trillion and $2.6 trillion in each year.)
Keep those numbers in mind when Trump blathers his BS about a $2,000 "tariff refund check". The Committee for a Responsible Federal Budget ran the numbers, and said tariffs wouldn't come close to that kind of check.
President Trump proposed paying a dividend of “at least $2,000 a person” with new tariff revenue in a post on Truth Social this weekend. The post noted that “high income people” would be excluded from the dividend and also discussed paying down the national debt.
Assuming these dividends are designed like the COVID-era Economic Impact Payments, which went to both adults and children, we estimate each round of payments would cost about $600 billion.1 In comparison, President Trump’s new tariffs currently in effect have raised approximately $100 billion thus far and – including those tariffs that have been ruled illegal pending a Supreme Court appeal – are projected to raise about $300 billion per year.
While the President did not specify the frequency with which dividends would be paid, nor the precise amount (he said “at least $2,000 a person”), we estimate that $2,000 dividends would increase deficits by $6 trillion over ten years, assuming dividends are paid annually. This is roughly twice as much as President Trump’s tariffs are estimated to raise over the same time period.
Yeah, don't think anyone living in the real world has an appetite for adding even more to the deficit and our already-rising long-term interest rates with a gimmick like this. And while a $500-per-person relief check may be able to be afforded from the tariff revenue, that sure isn't going to make up for the higher inflation that CBO says tariffs have caused for this year.
Recently, TrumpWorld has also been talking about another taxpayer-funded reaction to tariff costs - this one targeted to farmers.
President Donald Trump announced the $12 billion bailout package alongside Agriculture Secretary Brooke Rollins and Treasury Secretary Scott Bessent on Monday afternoon during a roundtable with farmers at the White House. The money comes from a U.S. Department of Agriculture fund, Politico reports.
Up to $11 billion is slated for farmers who grow row crops, such as corn, soybeans, sorghum and cotton. Rollins said eligible farmers will know how much money they will receive by the end of the month, and the dollars will move by the end of February 2026.
The other $1 billion will be reserved for farmers who grow specialty crops like fruits and vegetables, she said.
In his first term, Trump provided bailouts to tariff-impacted farmers using what's called the Commodity Credit Corporation fund at the US Department of Agriculture.
The plan is to use the same mechanism this time around, despite concerns that the fund is running low and may require additional money to be appropriated by Congress.
Agriculture Secretary Brooke Rollins offered reporters some clarification, saying that "the tariffs we consider an offset" and confirming that the direct source of the funding would again be the Commodity Credit Corporation fund.
To fill it, she added, "We had to, kind of, move some things around, but we've got that $12 billion set aside." Rollins added that the president is open to adding more money in the future if needed.
CCC recoups some money from authorized activities (e.g., sale of commodity stocks, loan repayments, and fees), though not nearly as much money as it spends, resulting in net expenditures. Net expenditures include all cash outlays minus all cash receipts, commonly referred to as "cash flow." CCC outlays or expenditures represent the total cash outlays of the CCC-funded programs (e.g., loans made, conservation program payments, commodity purchases, and disaster payments). Outlays are offset by receipts (e.g., loan repayment, sale of commodities, and fees). In practice a portion of these net expenditures may be recovered in future years (e.g., through loan repayments).
CCC also has net realized losses, also referred to as nonrecoverable losses. These refer to the outlays that CCC will never recover, such as commodities sold or donated, uncollectible loans, storage and transportation costs, interest paid to the Treasury, program payments, and operating expenses. The net realized loss is the amount that CCC, by law, is authorized to receive through appropriations to replenish its borrowing authority (see Figure 2).
Notice the huge jumps in Fiscal Year 2020 and 2021. Those are to pay back the billions in bailouts that Trump Admin 1.0 gave to farmers from 2018 through 2020. The borrowing authority limit for CCC is $30 billion, which was breached during those Trump 1.0 bailouts, but Congress and President Trump agreed to “front” some of those funds to USDA through extra taxpayer dollars, which kepy the CCC from the prospect of shutting down due to too much money being borrowed for the bailouts.
As the fact sheet notes, the funds for the CCC bailout in Trump 2.0 would have to be set aside when USDA has its next budget year start on Oct 1, 2026.
Many farm program payments are required to be made annually in October (e.g., Agricultural Risk Coverage, Price Loss Coverage, Conservation Stewardship Program, and the Conservation Reserve Program). In most years, CCC has enough room within the borrowing authority limit to make these payments before receiving its annual appropriated reimbursement. In years of high expenditures, CCC could reach its borrowing authority limit before receiving its appropriation. If CCC reaches its borrowing limit, all functions and operations of CCC would be suspended until the borrowing authority is restored through the reimbursement that is pursuant to an appropriation.
So it won’t directly be “tariff funds” that will be used to pay back farmers who have suffered tariff-related losses. But given that tariff funds are mixed in with other tax dollars when it comes to Uncle Sam paying his bills, it’ll be part of the way that these bailouts are paid for. As well as the other typical way we pay for this and most other government activities - taking on more debt.
All this tariff revenue shifting seems pretty ham-handed, and it isn't doing much to protect or grow American industries. So what is this accomplishing? A partial offset of regressive tax cuts with even more regressive tariffs? But hey, tariffs do serve as a nice way from Trump 2.0 to solicit bribes from businesses who might want exceptions from the duties, aren't they?
Fulfilling expectations of a “hawkish cut,” the central bank’s Federal Open Market Committee lowered its key overnight borrowing rate by a quarter percentage point, putting it in a range between 3.5%-3.75%.
However, the move carried caution flags about where policy is headed from here and featured “no” votes from three members, which hasn’t happened since September 2019....
Fed Chair Jerome Powell, at his post-meeting news conference, said the reduction puts the Fed in a comfortable position as far as rates go.
“We are well positioned to wait and see how the economy evolves,” Powell said.
Stocks rose following the decision, with the Dow Jones Industrial Average adding 500 points. Treasury yields moved mostly lower.
Wall Streeters sure love their rate cuts, no matter what happens in the real economy. But the interest rate cut was expected. The real news was what Fed officials were thinking about that real economy for 2026 and beyond, so let's click on to the Fed's economic projections, and see what they're saying.
For GDP, Fed officials generally thought we'd see stronger growth than they were thinking 3 months ago. In particular, the Fed officials are bumping the median growth projection for 2026 from 1.8-1.9% to a place well above 2%.
The Fed also thinks unemployment will tick up a bit from September's 4.4% figure for the rest of this year, but then will stop rising and tick back down by a similar amount next year.
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And lastly, the Fed thinks inflation will drop a bit next year from 2025's rate of nearly 3%. But they still think it will be well above its alleged 2% target.
I find that last part on inflation interesting in a few ways. The first is because that PCE Index was just updated for September in last week's income and spending report, and it showed that inflation is no different over the last year as it was between September 2023 and September 2024. And worse, PCE inflation for groceries had a 0.4% increase in September after an August increase of 0.5%, which put the 12-month jump in PCE grocery prices at 2.4%, the largest increase in nearly 2 years, and double what it was a year ago.
You'd think that the Fed's projections of continued economic growth, slightly lower unemployment and inflation above the Fed's target would lead to a greater possibility of higher interest rates next year. But that's not what the majority of Fed officials were projecting in their "dot plot" of where they thought rates would be in comparison to today's post-cut range of 3.5%-3.75%.
Yes, a couple of those dot points are from people trying to kiss up to Trump and lessen their ridiculous debt burden. But that dot plot indicates to me that the Fed thinks the real world economy is weak and in danger of getting worse next year. It also tells me that all of the talk about the Fed being dedicated to a 2% inflation rate isn't really true. Because if they're not going to raise rates as inflation stays above 2% for the 5th straight year and the economy continues to grow, that 2% figure isn't as important to the Fed as we were being told all these years.
I'm fine with that, as this country grew just fine in the '80s and '90s, even though inflation consistently was above 3%. I'd prefer another 1% of inflation over 1% of unemployment, and it seems the Fed is finally coming around to that thinking as well. Naturally, it happens when Republicans are in charge, and yes, I don't find that 100% coincidental.
The U.S. labor market slowdown intensified in November as private companies cut 32,000 workers, with small businesses hit the hardest, payrolls processing firm ADP reported Wednesday.
With worries intensifying over the domestic jobs picture, ADP indicated the issues were worse than anticipated. The payrolls decline marked a sharp step down from October, which saw an upwardly revised gain of 47,000 positions, and was well below the Dow Jones consensus estimate from economists for an increase of 40,000….
Education and health services led gainers with 33,000 hires, while leisure and hospitality added 13,000. But a broad-based decline across industries drove the total lower.
The biggest loss came in professional and business services, which saw a decline of 26,000. Others shedding jobs included information services (-20,000), manufacturing (-18,000), and financial activities and construction, both of which saw losses of 9,000.
The rate of pay also slowed, with workers staying in their jobs seeing a 4.4% year-over-year increase, down 0.1 percentage point from October.
Chinn also splits up ADP’s breakdown of employment changes between larger and smaller private sector employers. And like a lot of things in our economy these days, it shows serious bifurcation.
Notice that decline in small employers? That includes a net loss of 69,000 in November, and even that is deceptive, as ADP says the smallest employers got especially wrecked last month.
And ADP reports that around 43.5% of Americans work for businesses that have less than 50 employers. So a lot of us are in sectors and small businesses that are basically in recession over the last few months. You wonder why consumer sentiment sucks so much these days?
Naturally this meant that the stock market went up, because bad news in the real economy is good news for Wall Street greedheads and others strung out on debt.
The Dow Jones Industrial Average gained 408.44 points, or 0.86%, to finish at 47,882.90. The S&P 500 traded up 0.30% to end the day at 6,849.72, while the Nasdaq Composite added 0.17% to settle at 23,454.09.
Payrolls processor ADP reported that private payrolls surprisingly declined by 32,000 in November. Economists polled by Dow Jones had expected an increase of 40,000 for the month. Despite the tough reading, traders were likely betting that the private job losses will lead the Fed to slash rates at its last meeting of the year on Dec. 10.
“The labor market, that’s what people are going to focus on,” Scott Welch, Certuity’s chief investment officer, said in an interview with CNBC. “The numbers will come in as they come in, and it’ll either lead toward a cut or not, but I suspect that there’s no question there will be a cut next week.”
Markets are pricing in an 89% chance of a cut next Wednesday, which is much higher than the odds from mid-November, according to the CME FedWatch tool. Investors anticipate that a lower rate environment will spur loan growth and give a jolt to the U.S. economy, leading shares of key financial stocks like Wells Fargo and American Express higher Wednesday.
“The market is hinged on the Fed, and so if they don’t cut, it’s not going to turn out well,” Welch added.
Oh, so the only way out of a debt-fueled Bubble of empty promises is to get lower interest rates so already-tapped consumers with dimmer job prospects might borrow more money that they don't have. With many having big increases in health care premiums set to hit in a month.
Cool way to have an economy, isn't it? No flaws with this AT ALL!
