US job and wage growth falls back to earth in July

For the past couple of months, the US economy had been largely holding up despite still-gloomy consumer sentiment snd higher prices. Part of that was due to a jobs market that had shown signs of strength in 2026, with 3 out of the first 4 months of the year having gains of 150,000 jobs or more, and new unemployment claims being at or near their lowest amounts in 57 years.

Then the July jobs report came out on Friday, and suddenly the employment situation doesn't seem so great in the US.

The July jobs report delivered a nasty surprise: Instead of adding jobs as economists expected, the U.S. economy lost 23,000 jobs. Even worse, May and June payrolls were revised down by a combined 103,000 jobs, revealing a much weaker labor market than previously reported.

— Jon Cooper (@joncooper-us.bsky.social) August 7, 2026 at 1:19 PM

Oops? Maybe not so good. And we are back to an average of less than 50,000 jobs being added per month, much like we were for most of 2025.

But hey, at least the unemployment rate dropped to 4.1%, that's good, right? Not if you read the actual jobs report.

Both the labor force participation rate, at 61.4 percent, and the employment-population ratio, at 58.9 percent, changed little in July. Since January, the labor force participation rate declined by 0.7 percentage point, and the employment-population ratio decreased by 0.5 percentage point.

The labor force (-264,000) and the number of people listed as employed (-87,000) went down in July, and it continues a slide in both measures that we've been seeing since Trump 2.0 kicked into gear in Spring 2025.

In addition to the stagnating overall numbers for jobs, wage growth also flatlined in July.

In July, average hourly earnings for all employees on private nonfarm payrolls, at $37.62, were little changed (+2 cents). Over the year, average hourly earnings have increased by 3.2 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees, at $32.40, were little changed (+4 cents).

Even worse is that the previous two months had average hourly earnings revised down, with May being 2 cents an hour lower, and June being reduced by 4 cents an hour. Which means that average hourly earnings went lower than what was reported last month.

It also gives a clear contrast to the times of inflation of 2022, where wages were rising by 2-3 times as much as they are in Summer 2026. We're back to what wage growth was in 2017, but with inflation 1-2% higher today than it was then.

We find out this week what inflation ended up being for July, and we know gas prices stopped falling that month and creeped back up. And given how bad the jobs market and wage situation got worse last month, I can't think that consumer sentiment for August gets better. And our deteriorating savings rates will get even lower, unless consumer spending nosedives.

The stock market may be bubbly at this time, but the Real Economy for America may have started to slump. We'll have to see what the data that comes out this week and next to see if July is the start of something worse, or a bump in the road.

After a lot of thought, it's Crowley

Math is math, and while I am all in for no matter who wins on Tuesday, because Tiffany as Governor would set this state back another decade and turn the 2028 election into the worst one we've ever seen here, Crowley is the best combo remaining of "can still win the primary" and also "win in November by a solid amount and would help downticket". I blame Kara Spencer for all this mess (look her up), and her boss Sara Rodriguez for not doing more to catch the funding problems before they blew up at a late hour. Onto Great Taste Weekend we go. Have a good one and maybe see ya there (I did see Dan Shafer there a couple of years back).

Consumers spend big in Q2, but incomes did not rise with prices. That can't hold

We got a two-fer of major economic data on Thursday. This included the first look at real GDP for the 2nd quarter of 2026, and the economic growth topline was.... not great.

Economic growth was weaker than expected in the second quarter though underlying drivers were mostly solid. At the same time, inflation in June held well above the Federal Reserve’s goal and complicated the central bank’s policy path, the Commerce Department reported Thursday.

Gross domestic product, a broad measure of goods and services, increased just 1.5% for the April-through June period, according to Bureau of Economic Analysis numbers adjusted for seasonality and inflation.

Economists surveyed by Dow Jones had been looking for a growth rate of 1.8%, following the 2.1% increase in the first quarter.

Sounds bad, especially given that worker producitivty has been growing stronger than 1.5% in recent quarters, but then you dig inside the numbers, and you see consumption bouncing back in the US for Q2, and business investment staying strong. And the main reason the overall GDP number was disappointing was because of a large increase in imports and a decline in inventories.

I've often used a stat I call "Core Private GDP", which takes out the contributions to GDP from trade, government and inventories, all of which are volatile and not necessarily a reflection of the day-to-day economy. If you look at it that way, Core Private GDP growth more than doubled in Q2 2026.

It's all the more remarkable when you realize that the same GDP report says prices in its gross domestice purchases index was up by an annual rate of 5.7% in Q2, so core GDP was up by over 9% before inflation. You read that, and it sounds like we are in boom times and money should be flowing everywhere.

But that's not really true, as that same Thursday's income and spending report showed. In fact, the increase in Employee Compensation for those three months was lower than any of the last 4 quarters of the Joe Biden presidency (a time when many felt they could not keep up with rising prices), and lower growth than what we saw in Q1 2026.

The largest source of increased aggregate income for the second quarter came through non-work sources such as interest and dividend income, and owners' income. That includes billions in payments in May to farmers to make up for losses due to natural disasters in 2023 and 2024.

So if people aren't seeing getting much more money from their jobs, why has been consumption been so strong in the face of higher inflation? Because Americans aren't saving anything, as the national savings rate declined again in June, down to 2.7%. The only time it has been lower in the last 5 years was during the peak months of inflation in the Spring and Summer of 2022.

But if you think our savings rate will rebound as the Summer winds down, I'll note one major difference between August 2026 and August 2022. 4 years ago, gas prices were coming down from their Ukraine War-induced spike, while in 2026, they've been back on the rise for most of the last month.

If you think spending ourselves broke in the face of rising prices is a bad thing, one way that can be stopped is by making it more lucrative to save. And that's done by having the Fed raise interest rates and other methods to slow down price increases and the economy in general. The Fed passed on raising its Fed Funds rate last week, but the bond market has been acting on its own to make it more expensive to borrow.

The Clampdown is coming, and may well already be underway (consumer spending slowed in June). The question is who and what gets clamped on as a result.

A few primary thoughts from Up North

Made my annual trip to Vilas County on Wednesday to hang with family through Saturday. Good to check in with everyone and catch up.

Unlike Madison, its been stormy here, with the power knocked out twice this week. Not really something they're used to in these parts, but might be something that needs adjusting to in the 2020s.

I was looking for any indications on the primary election that's already having early voting for our state. Couldn't find much, including almost no yard signs or radio ads for any candidate from Wausau northward, despite it being in the 7th Congressional district, which has a multi-candidate GOP primary for Tom Tiffany's seat, in addition to the Dem primary for Governor.

Sure seems like a candidate could get a bit of boost in these parts with a few signs or billboards that give the impression to others on the road that they're someone with support and worth checking out. Since I've been away, did anything happen with the Governor's race in the last 2 days?

Silly goose, of course I know that Mandela Barnes pulled the plug right before a story was going to come out about him creeping on young Dem staffers. What an absolute dud of a campaign for that guy - spent the most money, had by far the highest name recognition, and Dem voters overwhelmingly turned him down and how he lacked the juice.

And now we find out Mandela had this time bomb of bad behavior towards women looming? Just underscores how this guy was up his own backside, and never learned the lessons of blowing that 2022 race vs Ron Johnson.

If there's a lesson to be learned from this bizarre primary, maybe the biggest is that high-priced Dem consultants are no substitute for getting in front of voters (both online and in person), and maybe that idea of "yard signs don't vote/professional organizations win campaigns" is also outdated in a time of an attention economy where voters don't trust the pros that have lost races for Dems too many times.

Weird and wild stuff. I'll have more to break down in both economy and the last week of this race when I get back to the big city.

Dem guv candidates have different specifics on budget surplus, while Tiffany has nothing

Ahead of tonight's debate, I wanted to draw your attention to a goosd rundown from the Wisconsin State Journal on what the various governor’s candidates say they would do. Among the list of questions given to each of the candidates for governor in this article was one that asked why each candidate had opposed the property tax and school funding deal from May that Tony Evers and GOP Legislative leaders tried to get through (click here if you want a reminder of what was in that). And the State Journal also asked what they’d want to do with the estimated $3 billion that would be in the bank for the state for the 2-year budget that would start next July 1.

Let’s start with the GOP Guv candidate Tom Tiffany on why he opposed the budget surplus deal and what he’d do with the money.

The last state budget increased spending by roughly 15%, exceeding $100 billion for the first time in Wisconsin history, so I believe the full surplus should be returned to taxpayers. The problem isn't that taxpayers aren't sending enough money to Madison. The problem is that government has drifted away from its core responsibilities. Government should focus on doing the basics well: keeping our communities safe, maintaining our roads and bridges, educating our kids and funding special education, caring for our most vulnerable citizens and protecting taxpayers. Instead, we've seen too much growth in bureaucracy, too many new programs and too little accountability.

These are a bunch of random words that add up to nothing. Where are the specifics as to how any of this will be done? HOW will the money be “returned to taxpayers”. HOW will our most vulnerable citizens be cared for or our schools and our roads and bridges be funded? What are these “basics” of government?

It’s not like Tiffany was asked off the cuff as part a video/radio interview for a 30-second answer. This is a written, allegedly thought-out response to the question! And that "$100 billion" comment on the budget isn't the total being paid in state taxes. It's the total over 2 years for ALL sources of funds, including $33.7 billion from the Feds, and another $31.4 billion is paid for by fees for services like campground admissions, UW sporting events, room and board fees, and licensing. The total over two years is $111 billion up front and another $3 billion being borrowed.

And a guy who has spent the last 2 years in Congress voting to explode our US budget deficit with tax cuts to the rich and major increases in funding for ICE and to give $1.15 trillion to our military next year has zero credibility on fiscal items.

Compare Tiffany's response with what the current leader in the polls for the Dems wants to do.

[State Rep. Francesca Hong:] The deal used a temporary surplus for one-time payments, new spending and permanent reductions in state revenue. It’s not fiscally responsible to make permanent monetary commitments without permanent revenue to sustain them. A recurring program funded only by one-time money creates the same structural problem as a permanent tax cut funded by a temporary windfall.

One-time money should pay for one-time needs; permanent commitments require permanent revenue. I would use surplus dollars to strengthen our reserves, pay down debt and deferred costs, repair public buildings, replace lead pipes, clean up PFAS contamination and capitalize revolving funds that finance affordable housing and infrastructure.

“One-time money for one-time needs” seems pretty fiscally conservative to me, doesn’t it? Hong also reminds us that the state package included an exclusion of income taxes on tips and overtime premiums that would have gone on beyond 2028, when those Trump/GOP tax cuts end at the federal level.

There is a guy in this race who oversaw the arranging of the state budget for Tony Evers for both the 2019-21 and 2021-23 budget cycles – Joel Brennan. So let's see what he would have done.

There was a better one-time option sitting right there. The Child Care Bridge Payments program was about to expire. Renewing it instead of letting it lapse would have been real, targeted money solving an actual crisis, not a check that skips over the families who need it most. And that commitment would cost the state a little over $100 million, not the entirety of the expected surplus. We must be cautious in a Trump economy, because we know that gas prices will continue to be volatile and that Trump tariffs have already cost Wisconsin families nearly $1,100 this year. More harm to our economy over the next year from Trump’s federal actions is a near certainty.

I like Brennan’s idea of bridging the funds on Child Care Bridge Payments to avoid long-term commitments. But I’m not a fan of banking the rest of the surplus, because additional funds will be needed to both reduce property taxes and reverse the damage to education and our economic competitiveness that we’ve had to deal with over the last 15 years.

That said, I also understand that there are a sizable number of unfunded mandates in Medicaid, SNAP and other federal programs whose costs are going to be shoved down to the State in the next 2 years due to the Trump/GOP Tax Scam 2.0 that Tom Tiffany voted for. So we won't have nearly the cushion that some may think we have.

As for the other candidates – Milwaukee County Executive David Crowley also uses Hong’s “one-time surpluses should be used strategically for one-time needs” theme, and goes on to say the surplus should be used for generic Dem priorities that he says improves the economy with investments in “education, workforce development, infrastructure, housing, and childcare.”

Mandela Barnes is relatively generic as to how he would use the billions at his disposal for 2027-29, but he does mention the need for Dems to win both houses of the Legislature to get “the deal Wisconsinites deserve”. Which I agree with, and I recall Crowley telling “Up Front” over the weekend about the need to be a Dem “team captain” as the nominee. Which makes it all the odder that Barnes has run such a sluggish campaign that isn't geared toward firing up Dems with the rare opportunity that is out there.

Barnes’ budget plans include

fully funded schools, make the wealthy pay their fair share, and cut taxes for middle-class families. We will do that by using the surplus responsibly—ensuring we do not create a structural deficit—alongside taxing the rich and closing the loopholes that let billionaires get away without paying their fair share.

Good themes to be sure, and I'd call it as a "less specific progressive" plan.

State Sen. Kelda Roys was one of the first legislators to publicly oppose the package, and reiterated to the State Journal about the structural deficit that would have loomed in the next budget had it become law. She follows with this explanation of what she would ask for as Governor.

One-time rebate checks do nothing to create long-term solutions to the state’s budgetary challenges or to reduce property taxes, but if we use the [surplus] balance as a bridge to help ease the transition to a functional school funding formula and a phase-out of the voucher program, we can actually improve the state’s bottom line.

Interesting connection between eliminating vouchers as a fiscally responsible move, and given how voucher funding has exploded in the 15 years that Republicans have been in power in the Legislature.

Clawing back that $394 million that was taken away from public schools (and added to in property taxes) to pay for vouchers in 2025-26 sure seems like a logical place to cut if you want to have real changes in where resources go in our state.

The state budget and the funding ideas behind it is likely the largest item the new governor of Wisconsin would do. And so ahead of tonight’s debate, I wanted to forward this thing so you can see what the Dem candidates would want to do with it, and also to note that Tom Tiffany either has no idea or is hiding his real plans about the state budget. It’s amazing that a guy who was in the majority party in the State Legislature for a decade seems to not know much about what he’d do in the Capitol should this state be dumb enough to give him the Governor’s job.

While that’s far from the only red flag you should have about Tom Tiffany, it really shows why Dems need to hammer that fool relentlessly and make him try to give some real answers. And to make our media ask him real questions.

Gas prices back up as July ends. And lower supplies will keep them high

As the US and Iran cranked up its military bombings in the Middle East this week, it drove up oil prices further, ending the week up more than 30% from where we were at America's 250th birthday.

But it’s not just speculation on fear of what might happen in the future that’s driving up those oil prices, as our real-life supplies are continuing to get more scarce today. We drew another 5.06 million barrels off of the US’s Strategic Petroleum Reserve (SPR) last week, bringing the total pull over 100 million barrels since the Trump Administration started using the SPR to try to stabilize oil and gas prices in April.

Not only are oil reserves shrinking, but so is the amount of gasoline that’s on the market in America. That’s a striking contrast to what was happening at this time in 2022, which was the last time pump prices were over $4 a gallon nationwide. 4 years ago, gas stockpiles were growing.

And unlike July 2022, gas prices have gone back on the rise in the US in July 2026, up nearly 15 cents in the last week. Given the short supplies, higher oil futures, and Trump/GOP’s inability to fold their losing hand, it seems likely that August 2026 will have higher gas prices than we saw August 2022.

In addition, Tropical Storm Bertha shut down production at a Chevron refinery for a while this week, so that cut another 2 million barrels of oil off the market.

The low supplies in the States and the need to replenish that low SPR amount sooner than later means it oil might well be taken off the market in the later part of this year instead of being added. So I wouldn’t count on gas prices going down any time soon, and with that in mind, I also can’t see Americans’ already-declining savings rate turning around for much of the rest of 2026.

Sure, we'll likely see an increase in savings for June when that gets reported next week due to that month's drop in prices. But we know prices are going back up for July, and I can't think there was a big boost in income to offset that.

So any improving feelings that consumers may have had when gas dropped down is likely to go away when they see that big 4 in front of the pump price again. And if it stays that way in August (as it likely will), they might be even more stressed than they were when consumer sentiment was hitting record lows in May.

Pt. 2 - Primary mess shows Wisconsin needs election reforms

To follow up on my thoughts about the state of the Dem Governor's primary, the way it has developed leads me to think there are 2 clear reforms to the primary system in Wisconsin that needs to happen, given how politics works in the mid-2020s.

1. There needs to be campaign finance reports in April for the 1st quarter of the calendar year before the primary. in 2026, there were no finance reports between Jan 15 and July 15, and it resulted in all of these candidates staying in and waiting to see where their money situation compared with everyone else. This led to a lack of direction as to who was up or down, and a lack of attention to the Governor’s race in general. This allowed the one candidate who was actively creating content through media and public events (Francesca Hong) to gain a following. It also allowed Sara Rodriguez’s fundraising and resource discrepancies to go unnoticed by both her and the general public until the verge of that July 15 report, when all of a sudden, she discovered that her campaign was out of money!

Yes, it is gross that money and resources are given such creedence in current-day politics over ideas and voter interest. But it’s also how media and donors measure candidates’ chances, and they slant their coverage and interest accordingly (because horse race stuff is easier to report and evaluate than actual positions). So why do we have to wait 6 months between reports to get an update on these things?

Why do we find out so late?

Our current campaign finance system in Wisconsin requires one large report with 6 months of data to collect vs 2 smaller reports that could come every 3 months. Quarterly reports allow any gaps in reporting, resources or infromation to be caught sooner to the time it hapens, and doesn't require so much staffing and campaign work for filing in July, which is one month before voters go to the polls - a time candidates and staff would rather be ramping up and meeting voters.

2. We need Ranked Choice Voting in Wisconsin, especially for primaries. In this Governor’s race, I think a lot of Wisconsin Dems are fine with most or even all of the candidates that have run. If we had ranked choice voting, voters could comfortably choose who they think is the best candidate, particularly if they thought no candidate would get 50% of the first-place votes (as will likely happen in the Dem Governor’s primary regardless of who wins). 15 miles from the Wisconsin border, the City of Minneapolis has ranked-choice voting for its mayoral elections and other local offices. And Minnesota Public Radio has a good explainer of how RCV works.

If there was a general consensus of 2-3 candidates that everyone could agree on, and those candidates were ranked 1 through 3 on most ballots, eventually an unacceptable 4th or 5th candidate would likely be eliminated, even if that 4th or 5th candidate had the most first-place votes.

Because Wisconsin only allows for first-place votes, many of us are trying to be strategic with our primary vote, choose a candidate that can win and/or defeat a certain other candidate (for a sizable group of Dems in Wisconsin in late July 2026, this means figuring out which candidate can get more votes than Fran Hong). What we don't want is to throw away our vote on a candidate that may end up at 4-5%.

My mother-in-law had voting deputies go around in her assisted living center to pick up her absentee ballot this week, and when she asked me my advice as to who to vote for, I told her to hold onto her ballot and wait until later. Because I didn’t want her to throw away her vote on a candidate that won’t be able to win, or worse, drop out before Election Day. I’m still waiting to fill out my absentee ballot for the same reason.

I know of people that have sent in their absentee ballot with a vote for the now-withdrawn Sara Rodriguez. As of today, those voters are screwed, according to a ruling from earlier this month by the Wisconsin Elections Commission.

Voters who cast their ballots early and want to change their vote – for example, if their chosen candidate drops out of the race before ] Election Day – can no longer do so under new guidance stemming from a recent court ruling.

The Wisconsin Elections Commission voted Thursday to issue guidance limiting voters' ability to "spoil" their ballots only in limited circumstances that do not include deciding to vote for another candidate….

Previously, Wisconsin voters had the ability to cancel their previously submitted ballot and request a new one for any reason, up to three times. That changed in October 2022 when then-Waukesha County Circuit Judge Brad Schimel ruled the practice, called "ballot spoiling," was illegal.

The 2nd District Court of Appeals then put the circuit court ruling on hold, and ruled earlier this year to reverse Schimel's decision. The appeals court's February 2026 decision did not address the merits of the case, but found the lawsuit was not properly served in the first place.

The Democratic Party of Wisconsin is now supporting a lawsuit to reverse that ruling, and given that absentee ballots are not opened or tallied until Election Day in Wisconsin, a successful suit by the DPW would allow those voters a second chance in this primary.

This is how the lack of RCV makes many votes worthless and often leaves voters stressed and forced to choose less-optimal candidates. In addition, because there have been so few polls and other indicators as to the state of the race, I and others are now waiting longer to make our choice as a result, in order to lessen the chances of having that vote not matter or be a regret due to later developments.

RCV may be less needed in General Elections, as it is rare that there will be more than 2 candidates that are viable or where voters are accepting of more than 1 of the choices given to them. But I'll add that RCV at least makes it worthwhile for some third-party or non-party candidates to pursue a run vs not even trying because of first-past-the-post. As long as Wisconsin would include a "sore loser" law to avoid having a candidate who loses a party primary get back in the general election.

If Dems do pull off the trifecta this November, we need to be pushing the new Legislature and Governor to get behind Ranked Choice Voting so we don’t end up in this kind of stressful mess of a primary again. There are significant flaws that the last month has exposed in our current system, and the lack of information and options that have been given to voters, media and candidates could lead to outcomes in 2 1/2 weeks that a majority of voters did not ask for.

And how does that help anyone beyond a few insiders, campaign consultants and douchebag MAGAts (who thrive on sneaking through with the support of a fraction-of-a-fraction that votes in primaries) that already have enough advantages?