We had higher prices and a slower economy even before the bombs started falling

After a sizable increase to start off 2026, there was a step back in February on income growth. But Americans did keep spending in the month before bombs started to fall on Iran.

Personal income decreased $18.2 billion (0.1 percent at a monthly rate) in February, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)— personal income less personal current taxes—decreased $18.3 billion (0.1 percent), and personal consumption expenditures (PCE) increased $103.2 billion (0.5 percent)….

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $106.5 billion in February. Personal saving was $931.5 billion in February, and the personal saving rate—personal saving as a percentage of DPI—was 4.0 percent.

If you balance it out with a relatively strong first month of this year, personal income has risen compared to the end of 2025, and while growth in work-related income is lower than what we had in 2024, we are still seeing the number be safely above zero.

The main reasons that overall incomes fell in February was due to a drop in a big source of investment income, and Trump/GOP’s cuts in assistance to pay for health care.

Personal dividend income decreased $39.7 billion, reflecting dividend information from company financial statements.
• Personal current transfer receipts decreased $21.6 billion, led by a decrease of $34.4 billion in other government social benefits reflecting estimated Affordable Care Act enrollments.

That lack of ACA assistance was already a strain on a lot of Americans’ finances, but the lack of help is now compounded by something we saw in another part of the income and spending report. That showed prices were rising at a significant rate even before oil and gas prices spiked in March.

…[W]hen taking elevated inflation into account, spending rose just 0.1% from January, when it was flat.

Thursday’s report also showed that inflation remained stubbornly higher than typical: The Personal Consumption Expenditures price index – the inflation gauge the Federal Reserve uses for its 2% target rate – climbed 0.4% from January, which held the annual rate at 2.8%.

Excluding food and energy prices, which tend to be quite volatile, the core PCE price index also rose 0.4%, bringing the annual rate to 3% from 2.9% the month before.

“Core prices are actually gaining momentum, up 4.4% annualized the past three months, compared with 3.4% in the past six months … and this is before spillover pressures from the Iran war,” Sal Guatieri, senior economist at BMO Capital Markets, wrote in a note to investors. “Goods prices popped 0.7%, the most in about four years, indicating some lingering tariff effects.”

UGH! There goes any increased tax refund you may have had this year.

And there goes the one-month bump in the personal savings rate that happened in January. It’s back down to the 4.0% level, and significantly lower than what Americans were saving when Trump declared his “Liberation Day” tariffs in April.

Also notice how the 2022 savings rate declined as gas prices and general inflation exploded in the first half of that year. Seems like a good guide for where we are going in the next few of these reports.

On Friday, we will get our first indication of how much overall prices grew last month when we have the March release of the Consumer Price Index. And last week’s strong jobs report also included a lame hourly wage increase of 0.2%, which likely means real wages are going to decline by quite a bit, as prices are likely to rise by much more than that.

But even that March report is only going to show the first few weeks of the price spikes, and not the continued increase into April. It’s not a good sign when inflation-adjusted income and spending growth was tame through February, because we know it’s going to get worse in March, April, and likely beyond.

Less immigration means less population growth for Wisconsin

Recently, the Census Bureau released their annual estimates of population for all counties in the United States, as well as the reasons behind why population changed. And much like the rest of America, Wisconsin saw its population growth slow down in 2025, largely due to Trumpian policies against immigration.

Wisconsin saw an estimated more than 18,000 people move to the state from abroad each year from 2022 through 2024, according to Census data.

But the number of people who moved to Wisconsin from other countries dropped from 19,395 in 2024 to 7,260 in 2025, Census Bureau figures show.

As a result, overall population growth slowed from an estimated 26,818 in 2024 to an estimated 15,619 in 2025, the Census Bureau reports.

As Wisconsin Public Radio points out, Wisconsin continued to get more people from other states vs those who moved out of Wisconsin, but a 62.6% drop in net immigration caused the decline in population growth.

The third part of the population change equation involves the “natural change” of births vs deaths in the state, which added 1,161 people to Wisconsin in 2025 (59,167 births, 58,006 deaths). That finally got Wisconsin back into the positive for the 2020s in natural change after a sizable loss at the start of the decade when there was that COVID thing going on.

At the halfway point of the 2020s, Wisconsin has seen our population go up by 78,464 to nearly 5,972,800. That’s not fast enough to keep Wisconsin from being on track to lose a member of Congress after 2030, and the reduced immigration to the state is worrisome when it comes to future growth, because that’s accounted for 6 out 7 additional Wisconsinites over the last 5 years.

As mentioned, the other part of that Census Bureau report showed the changes in population for all US counties, and in Wisconsin, the four counties with the largest percentage increases in population were small, rural ones.

5 fastest growing counties 2025, Wisconsin

Florence Co. +1.41%
Adams Co. +0.87%
Tempealeau Co. +0.79%
Lafayette Co. +0.76%
Ozaukee Co. +0.73%

But those top 4 counties only accounted for a total increase of 627 people. Meanwhile, the 6th-fastest growing county by percentage was Dane County (+0.69%), but the home county of UW-Madison added the most people out of any county in Wisconsin last year, more than doubling the increase in the next-closest county.

5 largest increases in population 2025, Wisconsin
Dane County +4,050
Brown County +1,552
Waukesha Co. +1,444
Outagamie Co. +1,109
Winnebago Co. +924

Stretch it out over the last 5 years, and Dane County also has a sizable lead, adding more people than the next 4-highest counties combined.

5 largest increases in population 2020-2025, Wisconsin
Dane County +28,868
Waukesha Co. +10,221
Brown County +7,067
Outagamie Co.+5,194
St. Croix Co. +4,742

And for those who might find Dane County's continued growth to be a scary thing, you can pour your misery down on me.

But there is a flip side on that statistic, as Milwaukee County's population declined by 107 in 2025, despite gaining from both immigration (+1,973) and more births than deaths (+2,564). That's because Milwaukee County lost 4,697 people through domestic migration last year, which also likely explains a lot of the gains in Waukesha and Ozaukee Counties. And that trend was even larger earlier in the 2020s, as Milwaukee County suffered even larger declines from domestic migration in the first 4 years of the decade.

Change in population, Milwaukee County 2020-2024
Domestic Migration -41,672
Immigration +17,332
Natural Change +9,885

So the crackdown in immigration is something that can especially hamper Milwaukee County's chances at growth, as having newcomers from other countries limited losses from people moving out. And the lesser amounts of immigration also hit Dane County, as it barely added 2,000 people from other countries in 2025 after adding an average of more than 4,000 a year from 2020-2024.

If we continue to see lower immigration, it's going to be a headwind on population and economic growth for as long as that continues. That's true in both the US and in Wisconsin, and it's something that needs to be mentioned more as part of the conversation surrounding what TrumpWorld wants to do to make the country whiter regarding foreign-born people that are in our country. But even Dane County's strong growth got affected by the crackdown in immigration, only adding slightly more than 2,000 people from international migration

Updated guide and numbers to Tuesday's Supreme Court election

With another statewide election in Wisconsin looming for Tuesday, I wanted to take my typical look back at the trends of recent April elections, so we know what to look for as the returns come in.

We will start from the last Supreme Court election that right-wingers won in Wisconsin - Brian Hagedorn's squeaker win over Lisa Neubauer in April 2019, and we'll take it through last April's big win by Susan Crawford over Brad Schimel in the most expensive state court race in US history. A race that featured this absurdity on the Sunday before the election.

pic.twitter.com/JlJkuvzvJU

— Elon Musk (@elonmusk) March 31, 2025

We haven't seen much of Elon or any other right-wing oligarchs trying to buy this April's Supreme Court election. But the huge stakes and large amount of money thrown around on the 2025 race likely was a big reason behind a record turnout of 2.365 million votes, nearly double the amount of votes cast in Hagedorn's 2019 victory.

For statewide elections, I like to split the state into 7 different segments.

1. The City of Milwaukee
2. The rest of Milwaukee County
3. Dane County
4. The Fox Valley counties of Brown, Outagamie, and Winnebago (collectively known as the BOW Counties)
5. The three suburan Milwaukee counties of Waukesha, Ozaukee and Washington (aka the WOW Counties)
6. The combined totals of Racine and Kenosha Counties

Those 6 areas generally combine for slightly more than half of the votes in a statewide election. Then, we look at what happens in the rest of the state of Wisconsin, which you can translate into "rural Wisconsin", but also includes smaller urban areas like La Crosse, Eau Claire, Wausau, and Sheboygan.

What's interesting is that the increase in turnout in 2025 was largely across the board. In fact, the share of turnout from outstate Wisconsin was more in line with the last 2 November elections, exceeding 46% in 2025, which is something that outstate had not done in previous April elections.

You'll notice that the WOW Counties had a lower share of the electorate in April 2025 than the other April elections, and took up its largest share in 2019. And it was the WOW Counties that put Hagedorn over the top by 6,000 votes in 2019, not only because of the higher turnout in those Republican-leaning counties, but also because Hagedorn won big there, gathering more than 2/3 of the votes.

But the WOW Counties are also a place where Democrats have consistently made gains since that 2019 election, like Democrats have made gained in a lot of previously Republican suburbs in America in the Trump and post-Dobbs eras. So much so that Kamala Harris got 7% more of the vote in her under-1% loss in 2024 to Donald Trump than Neubauer got in her similarly-close loss in 2019, and Dem-backed candidates in the last 3 Supreme Court elections have continued to get a higher percentage there.

So on Tuesday, if we are seeing Chris Taylor pulling over 40% in the WOW Counties, she's extremely likely to win. And as you'll see, she may not even need that.

That's because the largest Dem-favoring parts of the state have become even bluer in the 2020s. The Dem-backed candidates have cleared 81% of the vote in each of the last 3 Supreme Court elections, and Dems have increased their share throughout Milwaukee County in neach of the last 2 April elections.

Then combine the higher turnouts throughout the 2020s, and that increased Dem share translates into a big growth in margins for the Dem-backed candidate.

Given that turnout is predicted to be back toward 2020's levels, I wouldn't expect Taylor to get margins like Protasiewicz got in 2023 or Crawford in 2025. But if Taylor is pulling those types of margins on Tuesday, we are likely seeing an even bigger blowout than the 10-11% wins we saw Dem-backed candidates pull in the last 3 April SCOWIS races.

I also want to give a look at the other 3 areas of state and how they have voted in statewide elections. I wouldn't necessarily describe this as Battleground areas, because they lean a few points more Republican than the statewide totals. But the Dem-backed candidate has pulled either 51 or 52 percent in the BOW Counties and the combined totals of Racine/Kenosha in each of the last 3 Supreme Court elections, and have gotten at least 47.5% of the outstate vote in each of those races. That's a whole lot better than Kamala Harris did against Donald Trump in November 2024.

So if you're seeing BOW Counties and/or Racine/Kenosha going for Taylor, she's likely to win by a comfortable margin. But if that's not happening, and Maria Lazar is putting up Trumpian margins in the sticks, then things may get interesting.

One last item I personally care about as a 2-time graduate of UW-Madison is what the turnout and outcomes are around the UW campus. Let me reboot an observation I made in the wake of the November 2024 and April 2025 elections.

One of the ways that Republicans held down [the] margins in the 2024 presidential election in Dane County and the City of Milwaukee as well as other blue-voting areas was to get more votes from younger men, especially in college areas. But that "bro strategy" didn't work at all for Schimel in this election, especially in the wards in Madison near the UW campus, where Crawford kept [nearly] 5/6 of Harris's vote totals, but Schimel lost more 2/3 of Trump's votes in the same areas.

The "bro vote" also didn't seem to appear for the Schimel/Musk team in other college counties in Wisconsin, including the ones that included UW campuses in La Crosse, Eau Claire, Stevens Point, and Oshkosh.

Dem margins, 2024 Presidential election vs 2025 Supreme Court election
La Crosse (+9.3% in 2024, +26% in 2025)
Eau Claire (+10.6% in 2024, +25.6% in 2025)
Portage (+1.2% in 2024, +15.4% in 2025)
Winnebago (-4.7% in 2024, +7.0% in 2025)

As I may have mentioned before, when I worked the polls on campus in 2023 (one year after the Dobbs decision) and saw a steady line of female college students coming in on Election Day, I had a strong indication that Janet Protasiewicz was going to win over her anti-choice opponent.

I'll be working the polls on campus again on Tuesday, and I'll see if the same trends as what happened in 2023 and 2025 are holding, where campus wards are trending strongly toward Taylor, or if Lazar is holding her own there. It also would be an area where we would likely see if the attacks on Lazar being an anti-choice extremist resonated (and Lazar is ia absolutely an anti-choice extremist), or if college students aren't as panicked about reproductive rights as much as they clearly were 3 years ago.

So there's your quick guide to Tuesday's election. I'll guess turnout is somewhere around the 1.55 million we saw in 2020, which would put the "win total" around 780,000 for a candidate. Let's see if the Dems keep their April winning streak going.

A strong boost in payrolls doesn't necessarily mean a strong March jobs report

Wait, now we're finding out that the US job market doesn't suck any more?

The U.S. economy added 178,000 jobs in March, and the unemployment rate ticked down to 4.3%, a showing that beat economists’ expectations and offered a bit of optimism after a shockingly bad year for jobs.

WOW! Maybe things really did turn around, higher gas prices be damned!

But more likely, this is a one-month blip, since the strong March job numbers up top mask a lot of weakness below. And the overall trend is still not the economy's friend.

“The unemployment rate dropped, but for the wrong reasons: a loss in labor force participation,” [KPMG chief economist Diane] Swonk told Fortune. The declines were concentrated among prime working-age men (twenties to thirties); young women between ages 20 and 24; and men over 55. In other words, the unemployment rate fell not because people found work, but because they became discouraged and stopped looking.

The broader U-6 measure of unemployment, which captures exactly those discouraged workers plus those stuck in part-time jobs when they want full-time work, actually edged up to 8%, even as the headline rate improved. Swonk said government workers forced to take part-time jobs during the government shutdown last month likely contributed to that increase.

That uptick aligns with the latest JOLTS report from earlier this week, which showed hiring has fallen to its lowest rate since April 2020, a level previously seen only during the Great Recession.

The jobs report marks a sharp rebound from February, which was revised to show a loss of 133,000 jobs, a number that shocked economists for how much it missed expectations. But as the saying goes, one data report is just a signal; two is a pattern; three months, really, is what tells you the trend. The three-month moving average, Swonk said, sits at just 68,000 jobs, and over the past year the economy has added only 156,000 positions total, the weakest stretch since the pandemic.

So let's look at that 3-month average of US job growth, and see what the trends are telling us.

So lower growth than we had at the start and the end of 2024, but Trump/GOPs could point out that job growth is slightly better than it was 6 months ago. Although that growth trend is very choppy given that we have not had two straight months of overall job growth since last May.

The March jobs survey was done in the second week of March, which meant that consumers and businesses have yet to make the significant adjustments that are likely to result from gas prices costing them billions of dollars more a month. When that happens, I have a hard time believing those higher costs and prices will lead to MORE hiring.

And that financial strain of higher prices is compounded by the fact that wage growth keeps going down, as mentioned by this part of the March jobs report.

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.2 percent, to $37.38. Over the year, average hourly earnings have increased by 3.5 percent. In March, average hourly earnings of private-sector production and nonsupervisory employees edged up by 5 cents, or 0.2 percent, to $32.07.

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.2 hours in March. In manufacturing, the average workweek was unchanged at 40.2 hours, and overtime was also unchanged at 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.

That's not good when we are likely to see inflation jump by a lot more than 0.2% in March. And while some people may have elected Trump to get back to the pre-COVID economy, I don't think they meant to cut wage growth back down to the levels of 2018 and 2019.

And as we saw after 2021, higher wage and job growth isn't enough to soothe the typical American if prices are going up. I can't imagine they'll be happier with lower job growth and wage growth being weaker while inflation rises in 2026.

So even if there was a strong increase of jobs in March, let's not confuse that with an economic boom,. One good month of payrolls does not make for a trend, and the unimpressive household survey numbers and declining wage growth showed things weren't great as they were. And it'll look a lot worse as inflation increases past the 3% rate it was at before the bomvbs started falling in the Middle East.

Growing Medicaid deficit and higher SNAP costs for state is lowering chances of tax cuts in Wisconsin

Wisconsin’s projected budget deficit for Medicaid grew again in the first 3 months of 2026. And the Department of Health Services says our state is not alone in struggles to pay the costs of providing medical services.

Medicaid provides essential health care services to one in five Wisconsinites and is a key cornerstone to the state’s health care system. Across the country, payors and providers are experiencing a shifting healthcare landscape with costs increasing overall. While states’ Medicaid programs vary significantly, programs are facing growing budgetary challenges with approximately two-thirds of states predicting a high likelihood of budget shortfalls in the near term. Ongoing uncertainty around federal policy implementation and unpredictable economic conditions in the medium-term are further compounding these budget challenges.

Since December, the Department received an additional three months of data regarding enrollment and service utilization. The Department now projects Medicaid expenditures will exceed the available budget by $263.5 million GPR by the end of the biennium, which is 2.7% above budgeted GPR levels under 2025 Act 15, the 2025-27 biennial budget.

Then DHS goes on to break down the areas where expenses are running higher than expected.

The Wisconsin DHS goes on to say that this is generally due to larger-than-expected enrollment and higher-than-expected costs of services in these areas.

This deficit appears is separate from the $72.7 million that was added to the DHS budget to pay for additional positions and state costs associated with SNAP benefits. Gov Evers signed that state bill into law this week, and the moves are an effect of the Big Bunch of Bollocks Bill from Trump/GOP last July that passed additional expenses and responsibilities down to the state.

Historically, the federal government covered half of the administrative costs for SNAP, known as FoodShare in Wisconsin. But the federal GOP bill dropped the feds’ share to 25% starting in federal fiscal year 2026-27.

The federal legislation also requires states to keep their error rate below 6%. Those that eclipse that mark for ineligible enrollees must cover at least 5% of the total cost for SNAP benefits beginning in federal fiscal year 2027-28. If Wisconsin hit 6%, its share of the costs for benefits would amount to $68.2 million. If it climbed to 10%, that penalty would jump to $204.6 million.

The state’s error rate was 4.5% for federal fiscal year 2023-24. The error rate for 2024-25 won’t be out until this summer.

The law Evers signed includes 28 federally funded project positions at DHS for FoodShare quality control over the next four years. It also cuts authorization for 14 other federally funded project positions elsewhere in the agency.

Put that together with the $263.5 million Medicaid deficit, and that’s an added state cost of more than $336 million if trends continues. That’ll take care of more than 13% of the $2.5 billion in the state’s bank that’s projected to be around at the end of June of next year, and the extra costs for products and services in other areas that are likely to come from higher-than-expected inflation also seem likely to cut into the budget surplus.

In addition, Wisconsin doesn’t have its sales tax put onto gasoline sales, so there isn’t going to be any extra revenue coming in as a result of that. And if people drive less, it’ll reduce available funding for an already-tight Transportation Fund.

I’m not even adding in the potential budget damage that may come if we fall into recession that results in job loss and lower economic activity in general. So I guess I’m trying to say that we may not have as much money for a special session for tax cuts than we thought a couple of months ago. Which makes me wonder if us in Wisconsin are are able to get any tax relief at all before the November elections, and that’s not a lack of outcome I would have thought we’d have before the bombs started falling in Iran.

I'd certainly hope Gov Evers holds off on any special sessions for tax cuts for at least another month, as 2025's income tax cuts at the state level that are increasing refunds, but also are reducing the amount of revenues that are going into the state's coffers. If revenues start running below the Legislative Fiscal Bureau's estimates from January, we would have even less cushion to give in tax cuts. And with Dems becoming more likely to be able to put in their plans for taxing and spending for the first time in 16 years, it would be useful for them to have fiscal breathing room to increase their chances of getting some real changes done.

Jobs market was low-hire, low-layoff before the bombs started falling

Even before war in the Middle East broke out and gas wasn't averaging $4 a gallon nationwide, the US jobs market was not in a good place. The Bureau of Labor Statistics told us at the start of March that US jobs declined by 92,000 in February, and it wrapped up the month by saying that the percentage of Americans getting new jobs was at its lowest non-COVID levels in 15 years.

US hires plunged to 4.8 million last month, down by 387,000 from a year ago, according to the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics. Outside of the pandemic, the hiring rate hasn’t been this low since the beginning of 2011.

“3.1% is not only comparable to the COVID low point - it's also comparable to late 2009 and early 2010, when the unemployment rate was around 10%,” Guy Berger, director of economic research at the Burning Glass Institute, wrote on X. “Hiring was ice cold in February.

It’s also the first non-COVID month where there have been fewer than 5 million hires in America since 2014.

Another sign of a worsening market for workers is that quits in February were at their lowest non-COVID amount since 2016. Other than some “Trump is back in office” optimism that happened this time last year, we’ve seen a general decline in quits since the peak of the Great Resignation of 2021-22.

On the other side, while February was the first time in four months that we had over 1.6 million private sector layoffs, it’s still below what we had in most of 2025.

Which means the coming months will be important to see if the amount of layoffs go back up, and continue the slow rise that we saw between 2022 and 2025, or if we stay at a lower number for 2026.

I will say that ADP has been showing better jobs numbers than the US Department of Labor recently, as ADP's report on Wednesday said overall job growth was solid for March, although heavily concentrated in a handful of sectors.

Private sector employment growth was a bit better than expected in March, but health care and construction continued to provide nearly all the momentum, payrolls processing company ADP reported Wednesday.

Job growth totaled 62,000 for the month, down just 4,000 from February’s upwardly revised level but above the Dow Jones consensus for 39,000. ADP’s report does not include government employees.

Like February’s report, two sectors essentially provided all the gains.

Education and health services contributed 58,000 — identical to the February total — while construction added 30,000. The health services total was held back in the prior month due to a since-resolved strike at Kaiser Permanente that sidelined more than 30,000 workers in Hawaii and California.

I'd be cautious about the construction number, as it could have simply been a head start due to warmer-than-average weather in the month. But you look at the overall trend in the ADP report over the last few months, and it's not that bad, with growth averaging around 54,000 jobs a month since June.

That may give a bit of hope for a March jobs report that likely won't be heavily impacted by gas prices spiking up in that month. Many sectors are still flatlining, and actual hiring continues to be slow, but because layoffs are still historically low, we aren't in a recessionary situation. Of course, if consumers stop spending in other areas because gas prices start taking a whole lot of money out of their wallets, it won't take much for the positive ADP numbers to go back to negative very quickly.

A few numbers beyond the gas price spikes

Been on vacay and with the weirdness and outright stupidity inside and outside of America, it's been a lot to sort through. But wanted to quickly mention a few developments of the last week.

As the nationwide price of gas nears $4 a gallon and Wisconsin has seen its gas prices rise by $1.13 a gallon in the last month, has gas usage or supply actually slowed down in the US? And the answer so far seems to be "No." Which is a bit different than when gas was spiking up 4 years ago aftrer war broke out in Ukraine, and Americans dropped their usage.

I'll also add that we got indications in the last week that inflation was going through the pipeline of businesses even before bombs were falling on Iran and other parts of the Middle East.

PPI: The Producer Price Index for final demand increased 0.7 percent in February, seasonally adjusted. ... Core +0.5 percent Way above consensus forecast.

— Bill McBride (@calculatedrisk.bsky.social) March 18, 2026 at 8:06 AM

Goldman: "Core import prices rose 1.2% month-over-month, above expectations. ... We estimate that the core PCE price index rose 0.32% in February, corresponding to a year-over-year rate of +2.93%."

— Bill McBride (@calculatedrisk.bsky.social) March 25, 2026 at 10:15 AM

So we were set up to have a sizable increase in consumer prices for March and/or April outside of what will be a 30%+ increase in gas prices. Then combine that reality with the increase in the federal budget deficit that the war and the tax cuts are causing, and the bond market has seen yields jump over the last month.

And one last item I'll note is that the income tax cuts in the last Wisconsin state budget are also starting to show up in the state's bank account, as there was an adjusted decline in income tax receipts of more than 30% for February due to higher refunds.

If we get another month of lower income tax receipts for March, does that and the prospect of a possible inflation-induced recession start to eat into the $2.5 billion surplus, and tank any chance of income or property tax relief before the November elections?

More news to come in the coming days, for sure. But the trend doesn't look great for either fiscal stuff, or the US economy as a whole.