Income-spending revisions make things a bit better than they were, but the bad trends are the same

Even as gas prices started back on the rise, the Bureau of Economic Analysis reported on Wednesday that overall price increases had settled down in August.

A fresh reading on the Federal Reserve's preferred inflation gauge released Wednesday showed prices cooled more than expected in August — and is likely to quell some of the urgency for another interest rate hike next month.

The Personal Consumption Expenditures (PCE) Index rose 3.4% in August, less than expectations for 3.7% — a level held for much of the summer. Excluding volatile energy and food prices, core PCE rose 3%, beating expectations for a rise of 3.3% and marking a drop from 3.3% in July. Month over month, core PCE inched down a tenth of a percentage point to 0.2% from July and beat expectations of a 0.3% rise.

But most of the “drop” from 3.3% is actually due to a recalibration of the PCE index for prices that first took effect today. The Royal Bank of Canada gave an easy-to-understand analysis on the modifications to US PCE inflation.

RBC says that the two main sectors that caused that change were:

· Portfolio management and investment advice services.
· Computer software and accessories.

And the main reason why seems to be related to how the basic unit of these product is determined. For portfolio/investment work, it’s this.

The new methodology replaces the PPI series with a derived price index, obtained through the relationship between nominal and real spending—where real spending is implied by the new quantity extrapolator (i.e., hours worked and aggregate earnings).

RBC says that PCE was also having computer software run hot, because there are more units needed than what was previously assumed.

The PCE price index for computer software and accessories has been significantly elevated since November 2025. The average contribution to headline PCE has run strong at 0.12 percentage point between November 2025 and July 2026, unusual for a segment that typically subtracted from inflation prior to 2025. This likely reflects recent demand surges for memory and computing products.

Put it together, RBC says it will tamper down the PCE inflation numbers that have been reported for this year by a small amount.

We anticipate an 18-basis-point reduction in the annual pace of core PCE as a result—meaning core PCE in July would be revised down to 3.1% from 3.3%.

Importantly, we caution against misinterpreting a lower-than-expected reading on Wednesday as a sign of disinflation ahead.

Year-over-year core PCE still dropped in August from that 3.1% to 3.0%, so good sign there. But that’s still well above the alleged 2% target that the Fed wants, and for both core and overall PCE inflation, it’s still not much different than the year-over-year inflation levels we’ve had for most of 2026.

And if you look at the PCE energy numbers, this measure already feels irrelevant to where we are today. “Gasoline and other energy goods” rose by 4.4% in August, but was still down 7.8% compared to May, according to the BEA.

But we know gas prices have gone up nearly 10% from the end of August and end of September and is now back at May’s highs. So you would think the PCE numbers are headed higher in the next report (which conveniently drops the week before the midterms, after many Americans have voted). And if some of America’s record-high diesel prices are getting passed ahead into other products, that core number will be over 3.0% as well.

On the income side, growth was a tepid 0.2%, making for a third straight month of weak increases.

However, that report also showed additional evidence of American consumers continuing to spend in August. That increase is spending of 0.8% was significantly higher than the increase in disposable income, as it has for most of 2026.

This made for a significant decline in US personal saving of more than $122 billion for August. And yet, the personal savings rate went from less than 3% in July’s report to 4.1%. I saw it, and immediately said "WHAT IS THAT?"

Turns out the BEA also used today to release five years of revisions for both national output (GDP and such) and income and spending stats. And it led to a sizable modification for both the income and spending side.

For income, there was a significant undercounting of the money that Americans made on interest over the previous three years, in the wake of the Fed raising interest rates in 2022 and 2023 and then keeping them at levels well above the 0% rates of the COVID era. Conversely, income from dividends and income to business owners was overstated from 2023 through 2025, while the original reports of worker income were pretty much on target.

The big piece of missing data that we will start to see in the next couple of weeks is whether the spike in gasoline and especially diesel prices started to make American consumers back off of their high-spending ways. Or did they save even less, which should make the Fed more likely to raise rates again to get that Bubbly, inflationary behavior to stop?

Also, can American workers get any benefit in wage growth, or will they continue to fall further behind as prices keep going higher? Things kept moving along in August, but this unsustainable pattern has to change some time soon, doesn't it?

US gas prices, bonds and debts all aren't showing what you want

Here in Wisconsin, you may have noticed that gas prices have been on a roller coaster for September. AAA says that regular gas prices in our state are up 43 cents a gallon in the last month (+11.3%). But AAA also says gas prices have gone down 14 cents in Wisconsin over the last week, while there has been little change nationwide.

The average national regular gas price has been over $4 a gallon for more than two months. Combine those two months of $4 gas with the two-and-a-half months above $4 in the Spring and early Summer, and we are nearing the five-and-a-half months that gas was above $4 in 2022. In addition, prices at the pump today are also significantly above what regular gas was in late September 2022.

Continued higher gas prices are a reason why US bonds keep selling off, as there is an expectation of inflation and interest rates going higher and staying there for a while. The 10-year and 30-year Treasury yields have especially spiked in the last 3 months, as oil and gas prices have re-surged.

10-year note

30-year bond

But maybe ongoing inflation is part of Trump/GOP’s plan. Remember how I mentioned that Scott Bessent claimed the growing US debt wasn’t a problem because America "would grow its way” out of it a few weeks ago? Fortune magazine (via Yahoo Finance) followed up on that, and noted how higher US economic output could make debt seem less burdensome.

….the prospect of a hot economy that adds more inflationary pressure has sent Treasury yields soaring, creating a heavier burden for servicing $40 trillion in U.S. debt.

That means the economy is stuck on a hamster wheel, scurrying to outrun borrowing costs and avoid a reduction in speed that allows debt to grow faster than the economy.

For now, GDP is staying ahead of interest rates. While growth adjusted for inflation has been around 2%, nominal growth has been well above 6%—still more than the 5.16% 10-year yield, even after it jumped more than a full percentage point since the Iran war began.

Growth in the third quarter could show even more acceleration, as a recent gauge of U.S. business activity for September hit a five-year high.

There’s one problem with this – you need tax revenues to also grow at a faster rate than the bond yields to limit the growth at the debt. And so far, that isn’t happening, since overall federal tax receipts are only up 3.3% for Fiscal Year 2026 vs FY 2025, with September’s numbers left to wrap up the Federal Fiscal Year.

US tax receipts, FY 2026 vs FY 2025 thru Aug
FY 2025 $4,690.95 Billion
FY 2026 $4,845.45 Billion

That’s not going to cover the 5.25% interest on the existing 10-year bonds- or 5.6% on the 30-year, let alone the additional debt that has to be sold for each year the US runs a budget deficit.

But we would be coming close to having nominal tax revenues increase past the higher debt costs if we had corporations paying the same amount of taxes as they were before Trump/GOP signed Tax Scam 2.0 into law.

US corporate tax receipts, FY 2026 vs FY 2025 thru Aug
FY 2025 $389.61 Billion
FY 2026 $294.86 Billion (-24.3%)

This is directly what should be happening, as corporate profits have gone through the roof in the last year. Seems worthy to mention as debt costs keep spiraling in this country.

And one last item to note - the higher inflation of 2026 means that 2027's Social Security payments will likely rise by the largest rate in four years, and with inflation outpacing wage increases, income taxes go down due to annual indexing that raises how much income is taxed at a lower rate.

I can't see these as good trends for this country'a economic outlook, can you?

Incomes up and "official" poverty down for 2025. But costs were up, and it's definitely worse in 2026

Earlier this month, the US Census Bureau gave its annual updates for income and poverty in America for the previous year. On the income side, it looks like 2025 was a very good year, as inflation-adjusted incomes rose to a new record level.

In 2025, median household income was $87,460, an increase of 2.6 percent from the 2024 estimate of $85,210. Household income in 2025 was the highest on record dating back to 1967….

Median household income after accounting for taxes and credits increased by 3.1 percent, from $73,760 in 2024 to $76,060 in 2025.

As you can see, most demographics of American households gained vs inflation in 2025, but there is still a wide disparity of incomes among groups.

However, not everybody got ahead in 2025. This detail was notable to me, given that Trump won in 2024 in no small part due to bros of all races thinking that Mr. Businessman would help them get richer.

Among full-time, year-round workers, median earnings increased 3.2 percent for women but did not change significantly for men between 2024 and 2025.

For full-time, year-round workers, the female-to-male earnings ratio in 2025 increased to 83.9 percent from 80.6 percent in 2024.

In fact, men who worked full-time and year-round saw their inflation-adjusted earnings drop by 0.9%. Not enough for statistical significance, but an interesting decline in the face of women having those gains. Hispanic Americans (a group that heavily shifted toward Trump in 2024, allegedly on economic reasons) also saw earnings from their full-time job fall behind inflation last year.

Of course, many households are two-earner households, so that may help explain why overall household incomes went up by a rate close to those by women working full-time or we have a lot more people working multiple jobs. There are also other ways to earn income besides work, with those people seeming to be doing especially well in these Bubbly times.

Moving over to the poverty side, the lowest percentage of Americans were in poverty in decades, if you look at things from an income perspective.

In 2025, the official poverty rate fell 0.5 percentage points to 10.2 per cent, the third consecutive annual decline and one of the lowest rates on record (Figure 1). There were 34.5 million people in poverty in 2025.

So if poverty keeps declining and incomes were beating inflation in 2025, why did so many Americans not like the way things were going by the end of that year? The Census's Supplemental Poverty Measure (SPM) may fill in why.

Figure 4 presents SPM and official+ estimates from 2009 to 2025. The overall SPM rate (13.1 percent) was 2.9 percentage points higher than the official+ rate (10.2 percent) in 2025. In recent years, differences in how the poverty thresholds are adjusted explain part of this gap. While the official poverty thresholds are annually adjusted using the CPI-U, which includes a wide range of consumer expenditures, the SPM thresholds are based on a 5-year moving average of expenditures for a smaller bundle of goods, lagged by 1 year. When the cost of one or more of the components of the SPM bundle, such as food, outpaces overall inflation, it causes the SPM thresholds to increase more than if they were simply adjusted by the CPI-U or another inflation factor.

Notice how the SPM was lower than the official poverty rate for 2020 and 2021? That reflects the addition of items such as the expanded child tax credit, continuous Medicaid enrollment and other supports during the COVID pandemic. Then those supports went away in 2022 and beyond, while costs got higher, and this SPM chart helps explain why "affordability" is an issue that is overriding any increase in income for many Americans.

Let me also give you the footnote that explains the difference in the two cost-inflation bundles.

The CPI-U includes expenditures on food and beverages, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services. The SPM bundle of goods includes food, clothing, shelter, utilities, telephone, and internet.

With food, shelter, and utilities being particularly inflated in the 2020s, it’s not surprising that the SPM is higher than the official poverty rate these days, especially for older Americans.

In 2025, the SPM rate for 18- to 64-year-olds was 12.3 percent, while the official+ rate was 9.2 percent. Those 65 years and older had the largest gap between measures (5.6 percentage points), with an SPM rate of 15.4 percent and an official+ rate of 9.8 percent. The larger gap among those 65 years and older was primarily due to differences in the treatment of medical expenses between the two measures—medical expenses are subtracted from resources in the SPM but are not accounted for in the official poverty measure.

Then realize that 2025 was the last year before the expanded tax credits for Obamacare policies were taken away, causing sizable increases for many Americans in their health care premiums and out-of-pocket costs. Combine that with higher inflation without higher wages in this year, and it seems likely that 2026’s SPM poverty measure will be the highest in nearly a decade.

2025 wasn’t great in general, but for a lot of Americans, it might be the best we get for a few years when it came to incomes and making ends meet. And if that’s true, I sure wouldn’t want to be running for office as a member of the Republican Party that cut health care supports and supported policies that led to price hikes, leading a lot of Americans to believe things are significantly worse than they were in the Fall of 2024.

$2 billion more for Health Services and SNAP among reasons next Wis budget will be tight

Even though we don't know who Wisconsin voters will choose as their next Governor, state agencies are going ahead with their required budget requests, which were officially submitted into the Wisconsin Department of Administration earlier this month.

J.R. Ross and Anya Van Wagtendonk of Wisconsin Eye's Rewind show gave a good rundown of what these agencies are asking for in their requests (other than the Department of Public Instruction, who will send in their full request in the coming weeks). And one agency in particular is going to need a lot more money just to continue as-is from 2027 through 2029.

So let's talk about the Wisconsin Department of Health Services will require an additional $1.99 billion in state tax dollars over the next two years, which would take care of well over half of the $3.275 billion that is projected to be in the state’s bank when the new biennium starts on July 1, 2027. And that $2 billion is on top of the fact that we already have a state budget that is spending more than it takes in for taxes. Even with the $450 million in higher-than-projected tax revenues for Fiscal Year 2026.

Here are the reasons that the Department of Health Services says the state will need all of this extra money.

Higher than budgeted costs are projected across most Medicaid benefits and programs in FY 27, and the Medicaid program is expected to enter the 2027 29 biennium at an expenditure level higher than its FY27 base budget level. The projected difference between base funding and FY27 adjusted base costs is an increase of $748.5 million GPR in the next biennium, before considering any further adjustments due to intensity, enrollment, or other trends expected to occur in FY28 and FY29. This represents 42% of the total GPR cost to continue.

In addition to higher costs in general, the Wisconsin DHS projects the people served by Medicaid will be sicker and more costly than in previous years.

Intensity is a composite adjustment representing expected changes in the level, frequency, or quantity of service utilization. FY28 and FY29 service lines are adjusted for expected changes in intensity above adjusted base funding. Intensity adjustments are expected to cost $787.8 million GPR over the 2027-29 biennium, or 44% of the cost to continue. FY28 and FY29 service lines are also adjusted to account for the expected costs or savings due to changes in program enrollment. Caseload adjustments are expected to cost $451.1 million GPR over the 2027-29 biennium, representing 25% of the cost to continue.

Along with the general increase in intensity, it'll cost hundreds of millions more to take care of the Medicaid recipients with the largest and most ongoing needs. Some of that is higher costs in general, but also because more Wisconsinites are in need of long-term care services

The largest share of projected cost growth in the next biennium is related to Medicaid long-term care (LTC) programs and services, including fee-for-service (FFS) nursing homes (NHs), Family Care, PACE, Partnership, IRIS, CLTS [Children's Long Term Services] and FFS personal care. These services are expected to cost an additional $816.2 million GPR over base funding in the next biennium, which is a 15% increase to base GPR funding for LTC services. These costs make up 45.5% of the total GPR cost to continue.

Managed LTC programs account for $306.8 million GPR of the cost increase, due to a combination of robust enrollment growth and expected managed care organization (MCO) monthly capitation rate growth of 3% per year in the 2027-29 biennium. FFS NHs account for $220.5 million GPR of the cost increase. FFS NH intensity (cost per resident) is expected to grow by 5.1% annually. In addition, after years of declining annual patient days, Medicaid-funded days grew by 5.5% in FY25 and 2.5% in FY26 and are expected to grow by 3% per year from FY27 through FY29. Ongoing CLTS enrollment growth accounts for $141.3 million of increased costs, with expected enrollment growth of 12% in FY27, 11% in FY28 and 10% in FY29. IRIS enrollment growth and annual intensity adjustments account for $112.2 million of the cost increase and FFS personal care and other home care services make up the remaining $25.6 million.

Put it together, and Medicaid alone is projected to cost nearly $1.8 billion more than what is in its base funding.

The total biennial cost to operate the Medicaid program in the 2027-29 biennium is projected to be $20.339 billion AF ($5.696 billion GPR, $1.561 billion SEG, $1.430 billion PR, and $11.652 billion FED) in FY28 and $21.153 billion AF ($6.114 billion GPR, $1.423 billion SEG, $1.496 billion PR, and $12.120 billion FED) in FY29. It is projected that $688.1 million GPR in FY28 and $1.107 billion GPR in FY29 is needed to fully fund projected costs in the Medicaid program. This sums to a request for additional funding of $1.795 billion GPR in the 2027-29 biennium.

Of course, there is a way to avoid spending all of these extra state tax dollars on Medicaid, and that's by taking the Medicaid expansion that's still allowed under the Affordable Care Act.

Yes, the Trump/GOPs are requiring extra paperwork and other red tape to make people in expansion states keep their Medicaid, but we also know that taking the Medicaid expansion would have reduced state Medicaid costs by $578 million from 2025-27 for the type of expansion that will be available in 2027-29. And given all of the increased costs coming for 2027-29, you can bet that savings would be quite a bit more for 2027-29. Sure, taking Medicaid expansion would cost our Federal government more, but Trump/GOP are also shoving down costs to the State of Wisconsin, so why not make up for that? For example, Tom Tiffany and every other GOP Congressman voted to cause the state to pay more for food assistance as part of Tax Scam 2.0 in 2025.

The One Big Beautiful Bill Act of 2025 (OBBBA) made multiple changes to long-standing federal programs and funding arrangements, including increasing state administrative costs. The most direct impact to Wisconsin is through a reduction in the federal share of FoodShare administrative costs covered by the federal government. The Department requests an increase of $17,451,300 GPR and a decrease of ($17,451,300) FED in FY28, an increase of $17,451,300 GPR and a decrease of ($17,451,300) FED in FY29, an increase of 65.93 GPR FTE, and a decrease of (65.93) FED FTE to provide full funding for the reduction in federal financial participation (FFP) for SNAP administration.

The Governor and Legislature previously provided (approximately $72.0 million in) funding for this purpose in 2025 Act 116. However, the act increased the Department's base budget by only the equivalent of nine months of funding because the federal FFP change takes effect on October 1, 2026, in FY27.

Let me reiterate that this is not due to any increased costs or new workers being hired over the next 2 years, but instead, it is due to less money from DC and the state having to make up the difference.

Bottom line is that Medicaid is one of many state needs that are going to cost quite a bit more in the next budget. Some of that is due to increased costs and caseloads, and some of that is due to Trump/GOPs sending down theHir responsibilities because they thought cutting taxes for billionaires and corpoations were more important. Having to take care of those added and costly needs are going to put a limit on how much taxes can be cut or other services expanded, even with a few billion in the bank on July 1, 2027.

Tom Tiffany's constituents pay more to Oneida Co than 414 folks do under "tax hiker" Crowley?

As part of the annoying level of ads I see from the Hendricks/Uihlein PACs and Tom Tiffany campaign (as if there's a difference), there's some that try to call David Crowley some kind of tax hiker over his 6 years as Milwaukee County executive.

A big reason it's annoying because it refuses to admit that maybe Wisconsin's largest-population county by 400,000 people presents a unique situation. And perhaps many other parts of Wisconsin don't have the scale of fiscal needs and services that exist in all-urban and densely-populated Milwaukee County.

But it led me down a rabbit hole, because I wanted to see what taxes look like in Tom Tiffany's home county of Oneida and home town of Minocqua, because maybe it's not just David Crowley's Milwaukee County that has rising taxes in the 2020s. I'll use the Wisconsin Policy Forum's Property Values and Taxes database for much of this.

Let's start from 2020 itself, as that's when Crowley was first elected as Milwaukee County executive, and we can look at what has happened to property taxes in the County since then. The last budget under Chris Abele had a total county tax levy of just under $302 million, so what's happened to property taxes since then in the County.

So this is where the Uihlein PAC makes the argument of "David Crowley raised property taxes 5 times in 6 years". Sure, but as you can see, the tax levy for Milwaukee County was less in 2026 than it was in 2022. Pretty good when you consider how much costs and prices have gone up over those 4 years (and how much more they will go up with 2026's inflation).

Of course, a big reason for that is the 2023 shared revenue bill (aka Act 12) that allowed for Milwaukee County to institute a 0.4% sales tax (described as "nearly doubling" by the GOP oligarch PACs). Now, much of that 0.4% sales tax is to pay off pension obligations and there are other requirements on public safety staffing and other handcuffs, but enough funds were freed up to allow for the property tax cut in 2024 that you see.

Now let's step away from Milwaukee County and look at Tom Tiffany's home of Oneida County. And their have a similar trajectory, except their property tax cut is one year later, as Oneida County got a big boost in shared revenue under the bill for 2025 (more on that later).

I'll add that, Oneida County's property tax levy went up by 12.6% in the 3 years before their Act 12 assistance, while Milwaukee County only had its levy go up by 3.8% in the 3 years before it got its sales tax.

Given that Oneida County had a little over 38,000 people for much of the last 4 years and Milwaukee County was between 921,000+ and 924,000+ for those years, how do we best compare tax burdens? One way might be to see what these places pay on property taxes per capita, and when you do that, Oneida County residents pay nearly 50% more in property taxes to their County than Milwaukee County residents do, and that was true even before Milwaukee County's sales tax.

But at the same time, the county property tax rate is more than double in Milwaukee County than in Oneida. Although I will add that both have seen significant declines in the last 4 years as property values keep going up.

Which hints at a major difference between Oneida and Milwaukee Counties. There's a lot more property value to tax per person in Oneida County than in Milwaukee County, three times as much.

And while GOPs may cynically rip on Crowley for approving a higher sales tax for Milwaukee County, it's worth noting that Oneida County was getting a lot more sales tax per person from its 0.5% sales tax before 2024 than Milwaukee County was, as a function of the high amount of tourism that the Northwoods relies on. And even with the sales tax now being 0.9% in MKE Co, it barely puts Crowley's county ahead of Tiffany's on a sales taxes paid per capita basis.

Now the idea decades ago was that shared revenues were supposed to be some kind of equalizer for inequities like these, and that Milwaukee County should get a larger share because of all of the economic activity and income tax that it generates (counties cannot have its own income tax by Wisconsin law). Likewise, property rich counties like Oneida were supposed to not need as many shared revenues, because they could make up the difference without making their residents pay a large tax rate. But when state shared revenues to counties and municipalities were raised in 2023 for the first time since Scott Walker, Tom Tiffany and the GOP took control of state government and gerrymandered the Legislature, there was some rebalancing done.

Not surprisingly, this 2023 adjustment favored property-rich and/or rural counties. And to compensate for being allowed to raise a sales tax, both Milwaukee County and the City of Milwaukee had a much smaller increase.

Change in shared revenues post-Act 12
Oneida Co. +1,034.4%
Milwaukee Co. +16.2%

And while you might say "C'mon Jake, Milwaukee Co still got another $7.6 million while Oneida Co only got another $450,579." , on a per capita basis, Oneida County got 43.5% more in shared revenue than Milwaukee Co.

Lastly, David Crowley isn't the only candidate in the governor's race that signed off on raising a sales tax for his constituents. In 2015, Tom Tiffany approved of a state budget that allowed the Oneida County city of Rhinelander to put in its own 0.5% sales tax, as a way to help pay its bills without having to shove all the burden onto the property tax.

In addition, Tiffany represents Eagle River, which has had its own sales tax for 20 years, and Bayfield, which has had one for 23. And now Tiffany's own hometown of Minocqua has joined the club of 0.5% local sales taxes, even after a 275% boost in shared revenues the year before. But I don't hear Tom Tiffany or other WisGOPs complaining about Minocqua not being able to handle its own budget, so what's the difference?

(oh, we know the difference).

These are the numbers. I'm not even going to go much into the fact that Tom Tiffany and the rest of the WisGOPs approved of a tax writeoff in 2011 to manufacturers and ag businesses that is now likely to exceed half a bilion dollars a year....without requiring any job creation.

That $500 million a year could reduce property taxes for Wisconsin owners by approximately 3.75% (I'm using the LFB estimates of statewide property taxes). There's your property tax freeze right there, without blowing a hole in the budget.

I guess my main point is - if Tom TIffany and other WisGOPs want to get on David Crowley for Milwaukee County's tax situation, maybe he and the rest of them should look in their back yards and realize that a lot of local governments are still dealing with financial issues. And that a lot of Wisconsinites have higher tax burdens than residents in the 414, possibly including Tom Tiffany himself. And that's largely because of WisGOP policies over the last 15 years, where they chose to give away things to their donors while passing the taxes down to local governments.

Wisconsin jobs up and unemployment down in August

We got another Wisconsin jobs report this week discussing the employment market in August. And it looks like things went very well in our state last month.

Employment – There were 3,046,200 people employed in Wisconsin, up 9,300 over the month and up 36,900 over the year.
• Labor Force – The state’s labor force participation increased to 64.7% which is 3.1 percentage points above the national rate of 61.6%.
• Nonfarm Jobs – The total nonfarm jobs in the state were 3,057,300, an increase of 11,800 over last month.
• Unemployment – The state's seasonally adjusted unemployment rate ticked down to 3.2%, which is 0.9 percentage points below the national unemployment rate of 4.1%.

3.2% is the lowest unemployment rate Wisconsin has had in 2026, and the increase in our state’s participation rate over the last year has happening as the country continues to have its percentage of people working go down.

On the payrolls side, the 9,300 additional jobs continued a string of good jobs reports for our state in the middle of this year, and July's gain was revised by another 2,600. That comes after recent benchmark estimates that indicate Wisconsin held level for jobs in 2025 and early 2026, instead of losing jobs.

Yes, 2/3 of the additional 9,300 jobs were in local government and likely reflect new hires by public schools ahead of the start of the 26-27 school year (the US had an increase in these jobs of 41,900 in the same month, and likely for the same reason). But there were other good numbers in the Wisconsin jobs report, including the construction sector continuing its boom in our state, and another small increase in manufacturing jobs.

Pretty good spot to be in, and the good jobs numbers maybe help explain how Wisconsin exceeded revenue estimates by nearly $451 million. It's helped us withstand the less favorable trends in the overall US economy.

Can you imgaine how good a position we'd be in if we used those better revenues to lower property taxes for Wisconsin homeowners and make it easier for communities and public schools to pay for their needed services while increasing our quality of life? And encouraged investments that keep our construction boom sustainable and not be endangered by the inevitable popping of the AI Bubble? Just a thought.

The Fed hikes rates! But the real story is that they likely aren't done

The Federal Reserve made it official yesterday - we are back in tightening mode.

The Federal Reserve raised interest rates for the first time in three years in a unanimous decision on Wednesday, with central bankers now seeing a second hike this year to arrest sticky inflation.

The Federal Open Market Committee voted to raise its benchmark interest rate to the range of 3.75% to 4% from 3.5% to 3.75%, the first rate hike since July 2023, as renewed tensions in the Middle East drive oil prices higher and raise concerns about broadening price pressures.

"We now have data broadly defined that says the economy has indeed strengthened," Fed Chairman Kevin Warsh said in a press conference following the meeting. "Underlying growth is higher. Inflation is the problem. Stable prices have been the problem for, now, more than five and a half years.

"So what the committee decided to do today was take an action to ensure a timely return to our price stability."

The ¼ point increase in the Fed Funds rate was expected. The bigger news is what Fed officials projected going forward for both rates and the economy as a whole. And once that information sunk in, Wall Streeters didn’t like it, with only half of those losses being recovered on Thursday.

So what freaked out Wall Street so much? It was a majority of Fed officials saying they are not one-and-done on rate hikes.

Most Federal Open Market Committee members see the need for at least one more 25 basis point rate hike this year, as 12 out of 18 members that submitted projections pegged their view of appropriate monetary policy in 2026 at an average of 4.125%.

That rate implies one more 25 basis point hike to come by year-end.

Four committee members see 50 more basis points' worth of rate hikes in 2026 as appropriate, while only two members see no more hikes this year — suggesting that the new effective target rate of 3.75% to 4% is adequate.

And that outlook was made because the Fed estimates inflation and the US economy as a whole to run hotter than what was expected 3 months ago.

Fed officials added that they expect unemployment to stay at or barely over 4% over the next 2 years. As we’ve found out in Trump 2.0, that doesn’t necessarily mean jobs will be added, but the lack of increases in the labor force and theft growth of productivity may be a trend that continues.

Another trend that seems to be continuing is Americans spending almost all of the money they make, which is also something that leans toward more rate hikes. On the morning of the Fed’s decision, the Census Bureau reported that retail sales had an especially strong August.

U.S. retail sales rebounded sharply in August as households boosted purchases of a range of goods while also spending more at restaurants and bars, reinforcing the economy's resilience even as consumers grow more anxious about high inflation.

The stronger-than-expected report from the Commerce Department on Wednesday prompted economists to upgrade their gross domestic product growth estimates for the third quarter. Inflation jitters were underscored by news of a surge in import ‌prices last month amid strong increases in the costs of capital and consumer goods….

"The pace of underlying consumer spending looks to be advancing at a healthy rate," said James McCann, senior economist at Edward Jones. "This should help​provide some reassurance around the resilience of the U.S. economy in the face of increasing short-term headwinds to growth, including higher interest rates, a renewed spike in oil prices, trade disruptions and waning support from tax cuts."

Retail​sales jumped 1.2% last month, the largest increase since March, after a revised 0.5% drop in July, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast ⁠retail sales, which are mostly goods and are not adjusted for inflation, would rebound 0.8% after a previously reported 0.6% drop in July.

Yes, some of that was due to the increase in gas prices that started in August, but retail sales also went up 1.1% if you take away gas stations, including a 1.2% increase at bars and restaurants, so Americans were still going out and spending as Summer wound down, even as consumers say they are increasingly gloomy.

The data so far shows a US economy that was still growing in Q3 2026, and the Federal Reserve sees the higher prices as the threat to the economy, and any slowdown would be as a result of spending not keeping up with the higher prices vs slowing down on its own. Of course, we’ll see if and when consumers stop accepting these higher prices, or if we higher interest rates bite back on an AI Bubble of investment that has heavily relied on debt as well as future revenues coming in to pay back that debt.

But on the spending and output side, nothing to worry about folks! At least until something comes along to change that situation.