Booming corporate profits aren't being taxed by Feds, but are balancing the books in Wisconsin

As part of the revised GDP figures that came out for Q1 last week, there also was a revision in another stat for the first three months of the year in that report.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $74.4 billion in the first quarter, revised up $34.0 billion.

Oh? So profit growth nearly doubled from what we had in the original report? And that's on top of what has been a remarkable runup in that figure over the last few years, including an increase of nearly 13% between Q1 2025 and Q1 2026.

And companies are also squeezing out higher rates of profit from their products than they have for most of our lifetimes.

Corporate profits, on an after-tax basis, represent 12.4% of US gross domestic product, the highest reading since the second quarter of 2021, when profits peaked as the COVID pandemic ebbed. It also marks the second-highest quarterly reading ever in the data, which goes back to 1947. Compared against a closely linked measure of US gross domestic income, the total income earned by residents and businesses, corporate profits are even healthier, with a ratio of 12.2%, according to Axios, the highest figure since the early 1950s.

No matter how you slice it, corporate profits in 2026 are soaring higher from what were already historically high levels as a variety of factors — from the AI boom to improved efficiency — have yielded even better returns for corporate America and its investors....

The data also shows that high corporate profit margins have become a longer-term feature of the US economy for years now. From 1950 through 2010, corporate profits as a percentage of GDP were nearly always below 10%.

But in the 16 years since, those margins have been above 10% nearly every quarter, outside of a modest dip during the early stages of the COVID pandemic.

But because of the 2 GOP Tax Scams of the last decade, we aren't seeing those higher corporate profits translate into higher corporate tax revenues at the IRS. Corporate tax revenue is down nearly 30% through May of this fiscal year compared to the same 8 months in FY 2025, and it's down over $100 billion from the same time period in the last full fiscal year under Joe Biden.

Ironically, these corporate tax breaks at the federal level might well have led to much higher corporate taxes being collected for the State of Wisconsin. We haven't had too many additional corporate giveaways at the state level since Tony Evers became Governor in 2019, and while we don't have May's state revenues publicly available, we do have them through April, and Wisconsin's corporate tax is up more than 11% compared to the same time period in Fiscal Year 2025.

That comes on top of a major jump in state corporate taxes that started in 2021 and hasn't come down since.

So while the result of all this profit-taking in corporate in America in the 2020s may suck for everyday people, and has helped to blow up our deficit even more in recent years, I'd say it's helped out Wisconsin's fiscal situation at the same time. That extra $1 billion+ a year has opened the door for income tax cuts for individuals to spend down some of the surplus that's come about in the last few years, and in an odd way, has likely made for more tax fairness in Wisconsin in a time of massive increases in inequality in the US.

Oil and gas prices falling fast in June. Too fast for reality

One of the odd developments that I've seen in recent weeks is how oil futures have plunged back toward what they were before the US went along with Israel's plan to drop bombs on Iran. And it's clearly based on future hopes that oil supplies will recover to pre-war levels, despite the fact that the amount of supply coming out of the Persian Gulf the Middle East today .

is nowhere near where it was back in February.

Graph of Strait of Hormuz crossings since June 2025. See that little spike all the way on the right? The one that's much lower than the leftward 2/3 of the graph, and immediately crashes back down? That's what the US government and quite a bit of US media tell us is fully open, with normal traffic.

[image or embed]

— Nicholas Grossman (@nicholasgrossman.bsky.social) June 21, 2026 at 4:30 PM

Before we've gotten to August, which is when those sub-$70 oil contracts are dated to, we've seen national gas prices fall below $4 a gallon ahead of next week's high-travel 4th of July weekend. That's well ahead of what happened the last time gas prices spiked up in the US, back in the first half of 2022, when prices got up past $5 a gallon nationwide and didn't get under $4 a gallon until August.

What's interesting is that, if anything, gas was more plentiful in the US at this time in 2022 than it is today.

Another interesting trend is that while Americans were using much more gas in March and April 2026 vs the same months in 2022. But that has now changed, and the amount of usage has now dropped to similar levels in May and June, which may indicate some recent adjustments in habits and vacation plans.

In both 2022 and 2026, the US has released oil from the country's Strategic Petroleum Reserve to temper oil prices. But we had much less oil in that reserve when prices shot up in 2026, while the depletion has been happening at the same rate in both years.

So I look at these numbers and am confused and suspicious over why gas and oil prices are so much lower than they were at this time in 2022. The supply availbility today is the same or lower than it was in 2022, with supplies in other parts of the world even lower, so you'd think the world market price for oil would go lower as well. Stocks aren't going to be replenished any time soon, especially if we keep on bombing Iran after the markets close, but the oil markets ignore this reality in favor of....hope? Avoidance?

Plus, even after shipments from the Straits of Hormusz get halfway back to pre-war levels, there's so much less in reserve from the SPR in America that there has to be at least some kind of risk premium that keeps oil and gas prices higher than they were in 2023 or 2024. That is, if we have markets that take into account supply and demand of actual products these days (and that does feel like an "if").

Something feels fishy when it comes to the oil/gas situation these days, and that there has to be some kind of correction coming from what seems to be an absurd amount of recent selling and price declines that appears out of touch with what the actual situation is.

Americans kept up spending in May, even if their wages weren't keeping up with prices

Consumer spending is holding up in America, despite prices going up at a higher rate in recent months. There was more proof of that in Thursday’s income and spending report for May.

Personal income increased $181.6 billion (0.7 percent at a monthly rate) in May, according to estimates released today by the U.S. Bureau of Economic Analysis (BEA). Disposable personal income (DPI)— personal income less personal current taxes—increased $164.9 billion (0.7 percent), and personal consumption expenditures (PCE) increased $156.1 billion (0.7 percent)….

The $156.1 billion increase in current-dollar PCE in May reflected increases of $94.3 billion in spending on services and $61.8 billion in spending on goods.

Real PCE increased $43.8 billion (0.3 percent at a monthly rate) in May.

0.7% increases in spending and incomes over one month are pretty good, and above the rate of inflation, as the increase in real PCE indicates.

But you dig into that income part, and this stands out.

The May increase of $181.6 billion in personal income primarily reflected increases in farm proprietors’ income and compensation.
• The increase in farm proprietors’ income reflected an increase in payments from the American Relief Act of 2025. In May, The U.S. Department of Agriculture issued a second round of Supplemental Disaster Relief Program payments to producers.

OH? The increase is income is mostly due to farm program payments?

That’s a second round of farm payments signed off on to allow for relief from damages due to natural disasters in 2023 and 2024. It led to a increase in farm income of nearly $60 billion (annualized) in May.

If you just deal with wages and related compensation for workers, it’s a lesser 0.4% increase for May – not much different than what we’ve seen for most of 2026.

And a 0.4% monthly increase also shows up in this report in another areas, as the PCE price index had its inflation rate go up by that same amount.

From the preceding month, the PCE price index for May increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

That 0.3% increase in the core PCE index may be more concerning than the overall increase, because it shows that prices are up in areas beyond gasoline. It means core inflation will likely stay high in future months, even if there is a reprieve in June’s overall inflation number due to gas going down from its highs in May.

Add that inflation figure to what we’ve had since last May, and it’s another report that shows 12-month increases going over 4% overall, and well over 3% for core.

This results in the US personal savings rate staying at its multi-year low of 3.0%, the lowest it’s been since the peak inflation days of Summer 2022, and half of what it was at the start of 2024.

Along with other data, it indicates that “higher inflation but real GDP keeps growing” is going to be the story of the second quarter of 2026 for the US economy. That’s good if you want to keep jobs, but those jobs still doesn’t seem to have their wage growth keep up with the higher prices, so it’s the savings that keep bleeding away.

It also gives no reason for the Fed to cut interest rates, and if core inflation keeps rising above the 3% level, there will be a need to raise rates sooner than later to encourage more savings and stop speculation Bubbles from causing even more damage when they inevitably deflate.

Sure, we will likely see a reprieve in the headline inflation numbers for June. But if work-related income continues to be stagnant, it's not going to matter that much to Americans who spent their savings in the gas price spike of 2026. And unlike 2022, there isn't multiple years of COVID-related stimmy checks and other assistance that were banked, nor is there the same level of job and wage growth that we had four years ago.

Big drop in housing starts for May doesn't translate into something bigger...yet

As US interest rates seem more likely to be headed up than down, and home prices remain high to outright unaffordable for many Americans, let's take a look at the recent release of home building activity from US Census Bureau.

Building Permits
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,413,000. This is 0.7 percent below the revised April rate of 1,423,000 and is 0.2 percent below the May 2025 rate of 1,416,000. Single-family authorizations in May were at a rate of 886,000; this is 0.6 percent above the revised April figure of 881,000. Authorizations of units in buildings with five units or more were at a rate of 474,000 in May.

Housing Starts
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,177,000. This is 15.4 percent (±9.8 percent) below the revised April estimate of 1,392,000 and is 8.7 percent (±8.2 percent) below the May 2025 rate of 1,289,000. Single-family housing starts in May were at a rate of 882,000; this is 1.9 percent (±10.8 percent)* below the revised April figure of 899,000. The May rate for units in buildings with five units or more was 284,000.

Housing starts down more than 15% in May??? That seems like something to worry about. Among non-COVID months, it's the lowest annualized, seasonally adjusted rate of housing starts in more than 7 years.

But as you will see, one month does not a trend make, and it comes on the heels of March having the highest (seasonally adjusted) level of housing starts in more than 2 years.

So that may mean housing starts got pushed forward due to a warmer winter, and this "decline" may just be a leveling out. Permits for home construction indicate have been less volatile over the last year, although I will note a large increase in February - before war expanded in the Middle East, leading to higher inflation and higher mortgage rates.

And those 4 years of reversion to a post-COVID "normal" in permits also shows in the number of homes being completed drifting back down to 2023 levels.

These numbers aren't conducive to increased hiring in the construction sector for the future. That would be a change from what we've been seeing since October, where jobs have resumed a trend of impressive post-COVID gains after declining for much of 2025.

Now, there are other forms of construction beyond homebuilding, and we will have to wait another 10 days to see what the rest of the sector might have done in activity as the construfction season peaks. There isn't any indication of a major slowdown yet, even as costs and interest rates go on the rise, and it'll take more than 1 seasonally adjusted drop in housing starts before we can say we are going on a slide.

Social Security, Disability, and Medicare funds only "go broke" if we choose it

"Social Security is on a collision course toward insolvency"???? You may have seen an uptick in this type of talk in the last couple of weeks. So what's it all about?

Social Security is hurtling toward a fiscal cliff that, if left unaddressed, will force an automatic 22% benefit cut for tens of millions of retirees, survivors, and their dependents in just six years.

That's the stark warning from the release last week of the 2026 Social Security Trustees' Report. A nonpartisan fiscal watchdog, the Committee for a Responsible Federal Budget (CRFB), found the program's financial imbalance has reached its most severe point in nearly 50 years—and that inaction by lawmakers is making a bad situation measurably worse.

So let's go into the summary of the Social Security Trustees report, which is sparking this discussion, and talk about what these findings are, and what can be done.

Let’s first talk about the four main trust funds that Social Security trustees look at. OASI is what we generally know as Social Security, money paid to older Americans and/or dependents of those who have died. DI is basically what we would know as Disability, HI is Medicare’s Hospital Insurance program (Part A), and SMI is Medicare Part B (regular services) and Part D (drugs).

Social Security and Disability comes out of your paycheck via FICA taxes, and also taxes that current recipients pay on their benefits. Medicare Hospital Insurance is another payroll tax that takes 1.45% out of paychecks, and a slight bit more kicks in once you make over $200,000 for individuals or $250,000 for joint filers. Medicare Part B and Part D gets most of its money from “government contributions” – aka tax dollars that the US Treasury uses for this part of Medicare and also a lot of other government programs, but also through premiums paid by Medicare recipients, and a small amount from states on drug payments that Medicaid would have owed.

Now let’s look at the numbers, which show that Social Security paid out $200 billion more than they took in taxes for 2025, while Disability took in nearly $40 billion more than it spent. Medicare Hospital Insurance also had more than $18 billion in surplus, and Medicare Parts B and D basically broke even.

And those “reserves” are the trust funds that are supposed to be able to pay for any overage of expenses vs revenues. As you can see, OASI/Social Security is seeing the amount of its trust fund decline. This will continue and that deficit is slated to grow under current law, which leads to this well-documented finding from the Social Security Trustees.

At that point, Social Security and Medicare Hospital benefits would not be able to be fully paid under current law. So in theory, something will need to be done in the next 6 years or else there would be a significant cut in benefits to make ends meet. The reason why is because under current law, few to no "outside funds" are supposed to pay for Social Security, Disability and Medicare Hospital benefits.

But Congress needs to find ways to fund and change a lot of things in the next 6 years, so why would Social Security and Medicare’s Hospital funding be any different? You already saw how Medicare B and D (aka SMI) gets most of its money from everyday taxes, so why wouldn’t the same be true for the rest of Medicare or Social Security, and keep disruptions for our seniors (and future seniors) to a minimum?

That can be done a number of ways, including, I dunno…..TAXING THE RICH just a fraction more than we are today? We also could possibly make everyone else under 65 buy into Medicare and pay premiums for their insurance (call it some kind of option for the public or something), or just be like any other civilized nation and use a few extra tax dollars to get a simple baseline of medical coverage for all Americans, which likely would cut some of the taxpayer costs that we currently have for medical services to older Americans. Maybe?

But if you don’t want to discuss solutions beyond the current payroll tax-based financing system, we can do that as well. Let’s start with the fact that Disability is running a sizable surplus while Social Security is running a deficit. Since both of those funds are paid for in the same FICA tax withholding from your paycheck, you may wonder if something can be switched up there.

The answer to that question is not only “yes”, but it has been changed numerous times over the years, including as recently as 2019, which was the sunset of a provision in the 2015 Budget Act that changed the allocations between the two funds for 3 years.

At the time, it was Disability that was running out of money, as recounted in this Congressional report in early 2016.

Over the past few years, Congress has grown increasingly concerned with the financial outlook of the DI trust fund. Cost has exceeded total income since 2009, causing the balance of the DI trust fund to shrink. In their July 2015 report, the Social Security trustees projected that the DI trust fund would be depleted in the fourth quarter of calendar year 2016. Upon depletion of its asset reserves, the DI trust fund was projected to have enough ongoing revenues to pay only about 80% of scheduled benefits. The trustees projected that the OASI trust fund would be depleted in 2035….

The decreasing solvency of the DI trust fund is the result of an increasing imbalance between the fund's income and cost. Over the past 20 years, tax revenues to the DI trust fund have remained relatively flat as a percentage of taxable payroll, whereas cost as a share of taxable payroll has grown markedly. The increase in cost stems largely from the growth in the number of beneficiaries in the program. Between 1995 and 2014, the number of disabled workers and their dependents in receipt of SSDI grew 85%, from 5.9 million to 10.9 million. Because benefit payments account for nearly all program spending, the growth in the SSDI rolls has contributed heavily to the financial difficulties of the DI trust fund….

The Social Security Administration's Office of the Chief Actuary (OACT) projects that the reallocation will extend the solvency of the DI trust fund from the fourth quarter of 2016 to the third quarter of 2022. Although the reallocation will reduce the solvency of the OASI trust fund slightly, OACT estimates that the depletion year for OASI will remain unchanged at 2035.

Needless to say, the DI trust fund is still around in 2026, and has been adding money in recent years. Why is it different now? Because the number of Americans on Disability (at least this form of Disability) stopped the steep rise that it had between 2000 and 2010, and declined from nearly 11 million in 2013 to less than 8.2 million in 2025.

Why is there such a drop? Here’s what the Social Security Administration said in its report on Disability Insurance last week.

…The drop in the 2011-13 period is concurrent with the recovery from the 2007-09 recession. Since 2013, incidence rates through 2025 have dropped to levels well below those expected over the long-term, and even below the levels that would be expected from the economic recovery alone. Contributing factors to the decline through 2019 in disability applications and awards include the changing nature of work in the economy, the improving economy indicated by the low unemployment rate, the greater availability of health care, and increasing job flexibility and accommodation by many employers in a competitive labor market. Incidence rates declined to an extraordinarily low level in 2019, at the end of an extended period of economic recovery, resulting in the lowest disabled-worker prevalence rate for men since 2001, and a similarly low level for women. Incidence rates dropped even further in 2020 and 2021, and to an all-time low in 2022, partly due to the effects of the COVID-19 pandemic. Incidence rates have increased since 2022 but still remain near historically low levels. Future policy changes, technological advancements, shifts in the nature of work, and economic cycles will undoubtedly continue to cause fluctuations in disabled-worker incidence rates.

With that in mind, Congress should at least reallocate the taxes paid in FICA so that Social Security gets more funding and Disability gets less, to get both funds closer to balance. But because Disability collects much less money (just over $191 billion in payroll taxes in 2025), that isn’t going to do much to slow down the depletion of the Social Security fund, as the annual deficit in that program (before interest earnings) is projected to go from $262 billion in 2025 to more than $400 billion in 2030. So a $30 billion shift in allocations would only hold back the depletion date by 1 year, to 2034.

That means there is going to have to be adjustments to how the Social Secuirty system is funded and paid out to keep it fully funded by the time my Xer self is eligible And on the revenue side, the answer is obvious - by raising the limit on the amount of income that Social Security and Disability are taxed on.

Currently, anything past $184,500 in wages doesn't get taxed another dime for Social Security. This situation means that someone making a $1 million income stopped paying for Social Security on March 9. Yes, that date gets moved back every year as the cap is indexed for inflation (so if 2026's inflation ends up at 4% for example, next year's cap would be near $192,000), but it still makes for yet another tax advantage the rich get that everyday people don't.

Because the ultra-rich have gotten much larger gains than the workers who pay the full Social Security/Disability tax, there is a lot of income in 2026 that avoids the Social Security tax compared to 40+ years ago.

Earnings inequality has contributed to Social Security’s current trust fund shortfall, according to recent research from the Roosevelt Institute, a liberal think tank, student network and nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum. The share of earnings subject to Social Security payroll taxes was 90% in 1983. Yet the payroll tax did not rise fast enough to maintain that 90% coverage, according to the Roosevelt Institute. In 2000, it was approximately 82.5% and has since stayed at about that level, with some fluctuations, Roosevelt Institute research found. About 6% of workers have earnings above the cap, a share that has held steady. But those workers’ real earnings grew by an “unexpectedly large” average of 62% from 1983 through 2000, according to the Roosevelt Institute. Meanwhile, the remaining 94% of workers with earnings below the cap saw their average real earnings go up just 17% during those years.

Back in April, the Committee for a Responsible Federal Budget ran some numbers on what to do with Social Security now, as well as lamenting the delay in action that makes it harder to keep the current trust funds from going dry.

Had policymakers eliminated the cap and applied the payroll tax to all wages starting in 1995, without crediting additional benefits, it would have generated enough revenue to extend solvency by 60 years to 2094. This would have achieved 75-year solvency at the time (through 2069) and closed 90% of the current solvency gap through 2099.

By comparison, eliminating the tax cap today would extend solvency by just 21 years – one-third as long as back in the 1990s – and close 65% of the solvency gap.

Another option CRFB brings up is “progressive price indexing”, which would keep benefits the same for all current elders on Social Security and won’t change future benefits for the lowest 30% of wage earners. But for other American workers, it reduces future benefits to the increases in prices vs that increase in wages.

The CRFB says that while progressive price indexing wouldn’t do anything to stop annual Social Security deficits today like scrapping the cap would, it would reduce costs for the future to help keep the trust fund in balance down the road.

….while progressive price indexing would no longer delay insolvency whereas eliminating the tax cap would, progressive price indexing would still do more to close Social Security’s long-term structural gap. By 2099, progressive price indexing would almost eliminate Social Security’s cash deficit, while eliminating the tax cap would only reduce it by half – or by less than one-third if new benefits were paid on wages newly subject to the tax.

You can see where the two ideas could be combined, with an immediate scrapping of the cap to avoid any cuts in benefits in the near future, and something like progressive price indexing to keep things relatively stable as Xers and Millenials get old.

Yes, younger generations might not get the amount of Social Security that the Boomers got, but these are also benefits that they wouldn’t have gotten for 20-30 years, and giving them time to adjust allows for a better way to prepare for what they will need in the post-retirement world. Also, if you combined something like A BASELINE OF PAID-FOR HEALTH CARE FOR ALL to cut the out of pocket health insurance expenses for younger people (something that especially crushes lower-income workers), I think they'd accept a slightly smaller Social Security benefit in 2045-2065.

OR….we could just use general fund money to supplement any shortfall vs today. Just like we use general fund money (and borrowing) for shortfalls in highways or our military adventures or whatever it cost to do THIS.

It’s all a choice, folks. Whether it's how you want to pay for maintaining older Americans' quality of life, or in what you decide people of all ages should OR SHOULD NOT have to pay for out of pocket. Or in how many resources our government should have and who we should get those resources from to improve both our economy and the quality of life for Americans.

While there may be a need to change the way we finance Social Security, Disability, and Medicare Hospital Insurance to get the numbers more in balance for the future, we need to stop thinking these programs will “go broke”. Because like anything else involving government programs, nothing goes broke and benefits won’t get cut unless Congress and presidents allow it to happen, and unless the voters allow them to get away with it.

May is a second straight month of strong job growth in Wisconsin

The last three months of the US jobs market has shown a bounce upwards from the near-zero job growth we had for 2025 and the first two months of 2026. And for the last 2 months, Wisconsin has also been part of that positive trend, as this week's release of the state jobs report for May came in strong.

Employment – There were 3,024,100 people employed in Wisconsin, up 4,000 over the month and up 5,800 over the year.
• Labor Force – The state’s labor force participation rate remained unchanged at 64.4% which is 2.6 percentage points above the national rate of 61.8%.
• Nonfarm Jobs – The total nonfarm jobs in the state were 3,039,800, an increase of 8,700 over last month.
• Unemployment – The state's seasonally adjusted unemployment rate ticked down to 3.4%, which is 0.9 percentage points below the national unemployment rate of 4.3%.

All of these four measures are good, and comes on the heels of a big gain in April of 11,300.

Put it together, and that's a gain of 20,000 in the last two months. And it means that the sizable job losses between last July and March in Wisconsin have now been regained, and we also have the first year-over-year increase in private sector jobs in our state in these reports since July 2025.

A main driver of May’s strong job growth in Wisconsin was construction (+2,900) and manufacturing (+2,300). For construction, it gets hiring back into the growth mode that it has been in for the last few years in Wisconsin, while for manufacturing, the last few months has been a welcome turnaround after losses between 2023 and 2025.

Even more impressive is that this reflects higher-than-normal warmer-weather hiring, although I’ll check back with June’s jobs report to see if that’s merely typical Summer hiring pulled forward.

Likewise, arts, entertainment and recreation had 2,000 jobs added on a seasonally adjusted basis and 10,000 in non-seasonally adjusted jobs. Given the early Memorial Day weekend (which came the week after jobs were surveyed), is that going to be reflected in a negative number in June because fewer people get hired in that one-month period?

It feels like it's bit too much too soon, to be honest, and I am interested to see if we get some kind of seasonal snapback in June. Still, the recent trend of job growth is good for Wisconsin, and unemployment also seems to have crested at a mid-3% level for our state for 2026. Overall, it's not a bad situation to be in.

Fed admits inflation is now higher due to war, and rates more likely to go up, not down

Today marked the first meeting of the Federal Reserve's Open Markets Committee (FOMC) since Kevin Warsh took over as Chair from Jerome Powell. That in itself would warrant attention, but there's also been quite a bit of economic upheaval since the Fed last met in late April, and it would also include the first release of the Fed's economic projections for the future in the last 3 months.

The Fed made its call at 2pm Eastern, and Warsh met the media soon after.

Did the Fed do a surprise rate hike? Nope, they kept the Fed Funds rate at the same 3.5%-3.75% range that it has been in for the last 6 months. So why did the market tank after the widely expected decision to keep rates the same? Because the outlook got tighter.

Pushing US equities to the downside was news that nine out of 18 FOMC members who submitted economic projections — with Warsh as the sole member sitting out — see a rate hike coming by the end of the year. The projections pushed traders to fully price in one quarter-point hike by year-end, per Bloomberg data.

Policymakers had projected one 2026 rate cut in March, but the job market has firmed, and inflation has risen to the highest level in three years, pushed up by higher energy prices from the conflict in the Middle East.

Investors are also debating whether the blocked oil flows through the Strait of Hormuz could be cleared quickly, as they weigh the US-Iran interim deal to end their conflict. After agreeing on a draft 14-point memorandum, the two sides aim to formally sign an agreement on Friday.

The FED's "dot plot" of FOMC opinions shows that half of those 18 members thought there would be at least one increase of the Fed Funds rate from current levels for the rest of the year, and almost all of the rest thought rates would stay at their current range.

And the FOMC’s new economic projections show how their inflation expectations went up over the 3 months that the US has stayed at war in Iran.

That's a serious slide to the right - nearly 1% higher than March's projections for this year, and inflation staying higher from a more expensive base in 2027.

Another reason for this afternoon's drop on Wall Street is that traders took positive talk from Warsh on the labor market as reason to think recession wasn’t going to happen any time soon.

"The [Federal Open Market Committee] thought that the labor markets were stable," Warsh said. "There were some people around the committee who thought that it was trending better than that."

"Trends matter more than data points," Warsh continued, adding that "the jobs data has been moving in a good direction." Fed officials now predict a 4.3% unemployment rate for the rest of the year, an improvement from earlier estimates.

And good news for the labor market is bad news if you're a coked-up, debt-laden bro that wants rate cuts. Now if workers start to get any kind of pay raise with those jobs? Those guys will lose it!

The next Fed meeting comes at the end of July. By then, we'll know what the effect of this panicked giveaway Memorandum of Understanding with Iran will have on oil supplies and gas prices....assuming it ever ends up being followed, of course. And we'll see if consumers and businesses have changed their habits as the Summer has dragged on.

But for now, it's wait and see for the Fed, and to figure out what they want to do in a time of cost-based inflation, but also with a President and his newly appointed Fed Chair who aren't likely to be OK with money being tightened up so much that we fall into recession by the time voters go to the polls in November.