But then September comes around, SweeTangos hit the shelves, and Honey Crisps suddenly seem bloated, mundane, and—let’s be honest—overpriced. A SweeTango is simply divine. You can’t capture its splendor in words, though Applerankings.com takes a good run at it. Really, do yourself a favor and get one while they’re in season.

Why are we opening this economics newsletter with apples? To lighten the mood before diving into what was a fairly dismal week of news and data.

Inflation? High. Treasury yields? Highest in decades. Diesel prices? Highest ever. With no end in sight to the trade war with Canada and the technically-not-a-war with Iran, a rate hike now looks all but certain at the Fed’s meeting next week.

Tuesday

Oil Stuff

Diesel prices surged to an all-time high this past week, with real-time data showing the national average now above $6.00/gallon for the first time ever. Diesel hit $9.99/gallon at some pumps in California and presumably would have gone higher if the signs could accommodate another digit.

Gas prices also rose and, at $4.30 per gallon, have never been this high this late in the year.

Given that oil prices have surged back to around $100/barrel, gas and diesel prices will likely rise again next week.

Needless to say, this is bad news on the inflation front.

NFIB Small Business Optimism Index

Small business owner optimism worsened in August but is still in relatively decent shape. The comments on these surveys tend to be more interesting than the reading itself, and this one was no exception. Big issues are difficulty finding good workers, high interest rates, and uncertainty.

TSA Checkpoint Travel Numbers

It was a fairly strong Labor Day weekend for air travel, according to TSA gate check numbers, but the total number of flyers is still down about 3.5% since the middle of August.

Wednesday

Mortgage Applications

Mortgage applications fell again, continuing their downward trajectory. Given rates, don’t expect this to change anytime soon.

Thursday

President Trump Promises $5,000 Stimulus Checks

President Trump vowed to send every U.S. adult a $5,000 check, just as long as the GOP holds the House in November’s election. He suggested the checks would be paid for with tariff revenues, but given the $1.3 trillion estimated cost, that’s not going to work out.

Aside from tariff revenues not covering the cost of such a stimulus package, this would 1) require congressional approval, 2) drive up inflation, 3) massively add to the national debt, and 4) be as unlikely as all the previously promised stimulus checks that didn’t materialize.

Producer Price Index

Prices received by domestic producers rose pretty sharply in August, with the increase concentrated in goods rather than services. This is less important than the Consumer Price Index but still suggests that inflation is picking up.

Existing Home Sales

Sales of existing homes (i.e., not newly built) fell 2.0% in August and are down slightly over the past year. At the risk of sounding repetitive: blame rates.

Mortgage Rates

Mortgage rates rose again. The average 30-year fixed is now up to 6.76% and will be even higher next week.

Jobless Claims

Initial jobless claims stayed low. If you’re ever in need of good economic news, this is the place to start (at least over the past year or so).

Friday

Consumer Price Index

Consumer prices rose faster than expected in August. The relatively large increase had a lot to do with gas prices, but core prices (excludes food and energy) also jumped, rising at the fastest pace since May. That, combined with the fact that gas prices are now higher than they were in August, is bad news on the inflation front.

The big takeaway: there’s now a roughly 90% chance of a rate hike at the Fed’s meeting next week, according to markets.

Treasury Yields Keep Ripping

Treasury yields continued to soar this week, with 10-year yields—which heavily dictate mortgage rates—ending Thursday at levels not seen since 2007 (with the exception of a single day in October 2023). While yields have fallen somewhat this morning, they remain well above 4.9%.

Which is to say, borrowing costs are not falling in the near future.

University of Michigan Consumer Sentiment Index

Consumer sentiment fell pretty sharply in early September, and inflation expectations jumped to the highest level since June. Unsurprisingly, this has a lot to do with tariffs and oil prices.

Links of the Week

Insuring Against Success? Are Universities Using Prediction Markets to Fund Their Athletic Compensation Schemes? (Economic Forces)

Will AI soon lead to double-digit growth? (Ghosts of Electricity)

Liberalism needs a new philosophy of immigration (Noahpinion)

Final Thoughts

After this week, Anirban’s outlook for the economy is: Worse

The biggest thing that happened this week is diesel prices rising above $6/gallon for the first time ever. That’s going to create cost pressures throughout much of the economy. As a result, the Fed must hike.

After this week, Zack’s outlook for the economy is: Worse

Between rising rates and record high diesel prices, there’s just not much to like.

Looking Ahead

Next week is all about retail sales data, some housing stats, and the Fed’s next meeting.

Construction labor cost escalation cooled considerably from late-2022 to late-2024, but that trend is now firmly behind us. Average hourly earnings for non-managerial construction workers are now up 5.0% year over year.

That—stop us if you’ve heard this one before—is largely due to data centers. Specialty trade contractors are leading the labor-cost-escalation charge, with electricians (+7.3% year-over-year) at the vanguard.

There are other potential factors at play, like stricter immigration policy. The share of construction jobs unfilled is near a two-year high and right in line with 2019 (when construction workers were pretty hard to find). That’s what you’d expect to see if immigration policy was shrinking the industry’s workforce.

But you’d also expect to see faster wage gains outside of specialty trades, and we really haven’t (at least not yet). It’s possible that immigration policy is shrinking the workforce but activity is weak enough that it’s not dramatically impacting labor costs beyond AI-related segments.

What’s Next

Next up is Week in Review, our every-Friday post that covers all the economic news and data in a breezy, five minute read.

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Hot growth can cause overheating, though, and this week also gave us a new year+ high in mortgage rates, rising treasury yields, and a few reasons to think that inflation is going to pick up over the coming months.

Missed our posts earlier this week? You can read about why this economy makes everyone sad, the data center boom, and today’s jobs report.

Monday

Oil Stuff

Both gas and diesel prices fell slightly during the week ending Monday 8/31, but oil prices rose pretty sharply starting on Tuesday, and these prices will keep rising next week. According to GasBuddy, diesel prices hit an all-time high on Thursday.

Big picture, the Strait of Hormuz is still effectively closed, we’re still bombing Iran, and the outlook for oil prices remains less than great.

Nationalizing (Another Country’s) Oil

The U.S. and Venezuela reached an agreement that gives the U.S. a 35% equity stake in a company that now has 100-year concessions to 65 billion barrels of proven oil reserves. Put simply, the U.S. gets extensive governance rights and guaranteed access to at least 20% of production at cost.

Note that proven reserves—an estimate with reasonable certainty of how much oil can be extracted from a field—are not the same as strategic reserves, which are existing, tucked away oil supplies.

The White House has framed this as a way to refill the Strategic Petroleum Reserves, with the replenishment starting as soon as November. Unfortunately, Venezuelan heavy crude really isn’t compatible with the SPR, so this could go one of three ways:

1. It won’t be used to refill the SPR.

2. We can technically put the heavy crude in there, but it will cause problems down the road.

3. We can trade heavy crude barrels for the medium sour that typically goes in the SPR.

Big picture, this won’t really affect oil prices in the short term—note that oil prices have risen since this announcement.

Tuesday

Job Opening & Labor Turnover Survey (JOLTS)

Hiring slowed in July, but so did layoff activity and quits. Job openings held pretty steady. It remains a nice time to have a job and a bad time to need one.

ISM Manufacturing PMI

Manufacturing activity expanded for the 8^th straight month in August, according to this survey of industry purchasing managers. That’s the good news.

The bad news is that the survey suggests goods prices are going up, and they’re going to start going up fast. As always, the respondent comments are the most informative part of this, and they’re not particularly upbeat this month.

Construction Spending

Read more

U.S. employers added an impressive 162,000 jobs in August, and the prior two months’ estimates were revised up by a combined 55,000 jobs. As you can see below, this is a nice rebound from the slower growth that occurred from May to July.

While job growth only just bounced back in August, unemployment has been improving since it reached a cyclical high of 4.5% last November. It ticked up slightly in August (from 4.09% to 4.14%) but is still low by historical standards. Nothing to worry about here.

Employment gains were ever-so-slightly broader than in previous months, though healthcare and leisure and hospitality still lead the way.

Government tacked on another 35,000 jobs for the month, and that was entirely due local governments adding 41,900 education jobs. Both federal (-5,000) and state (-10,000) government lost jobs for the month.

The information industry (think tech and media) lost another 23,000 jobs in August. It’s tempting to chalk the industry’s ongoing struggles up to AI, but I’m skeptical. Traditional media has been shrinking for years, and the tech sector is still pulling back from its early 2020s low-interest-rate fueled hiring binge.

Over the past year, job growth is still incredibly concentrated in the healthcare sector.

Concentrated job growth aside, there’s just not much to dislike in today’s report. If you really want to quibble, the prime age (25-54) employment-to-population ratio hasn’t bounced back after dropping sharply earlier this summer, but that would be some pretty serious quibbling.

The Big Picture

The labor market is in pretty good shape. That allows the Fed to focus on inflation. Which is to say, the odds that the Fed hikes rates at its next meeting are higher than they were before this release.

What’s Next

Anirban is currently working on Week in Review. That will be out later today and is just for paying subscribers. If that’s not you and you want it to be, just click the button below:

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[The graph’s title, “Data Center Construction to the Moon,” could become a real thing. There are at least semi-serious efforts to put data centers in space/on the moon.]

The segment has grown at an unfathomable 116% annual rate since March. If that pace continues, it will expand to $162.6 billion by this time next summer, making it 29% larger than computer/electrical manufacturing construction was at its peak in June 2024.

This boom is absorbing a lot of the capital that would typically flow to other construction segments. Over the past year, data center spending has risen by 57% (+$27.3 billion), while all other nonresidential construction spending is down 3.5% (-$43.7b).

This dynamic has benefited a narrow subset of—mostly large—contractors. Our latest ABC CBI data shows that the 12% of contractors with data center work have way longer backlog (11.4 months) than the 88% who aren’t (7.5 months).

What’s Next

Next week, we’re going to look into some of the broader dynamics around data centers (like increasingly intense community opposition). We also have a Q&A post in the works, and Friday’s BLS jobs report gets its own write up.

Then it’s Week in Review, our every-Friday post that covers everything you need to know about the economy in a breezy, 5-minute read.

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Week in Review is just for paying subscribers. If that’s not you and you want it to be, just click the subscribe button.

Both of those times were objectively worse from an economic standpoint. Unemployment is just 4.1% right now. It was at least twice that high over a 42-month stretch from early 2009 to mid-2012 and soared to nearly 15% (!!!) in early 2020.

This discontent is broadly shared across demographics. Democrats? Not happy. Republicans? Also sad. Old? Young? College educated? GED? Doesn’t matter. Everyone’s upset.

[Okay, rich people are slightly less upset, but that’s to be expected.]

The vibes are bad, as the kids would say, but they’re not inexplicable.

Part 1: Inflation

People hate inflation. Can’t stand it. Look at that consumer sentiment chart above. The only other time it’s been this bad was 1980, when prices were rising at a nearly 15% annual rate.

This doesn’t need too much explanation. Rapid inflation makes us poorer. Nobody likes being poorer.

It is worth noting, however, that people hate inflation even when it causes their personal earnings to rise faster than overall prices. To be clear, that was pretty common in 2022. Take job switchers. Inflation peaked at a 9.1% year-over-year pace in 2022, while the median job changers’ pay increased at a roughly 16% annual rate.

The psychology at play here: when you get a raise or a new higher-paying job, that’s all you. When the prices you pay rise, that’s on someone else (corporations, the president, Congress, etc.).

Never mind that the same forces that push prices higher often push wages higher too.

Part 2: Real average hourly earnings

The flow chart above is fun and true: inflation pushes down sentiment even when earnings are rising faster than overall inflation, which was broadly the case in 2022 and 2023.

That changed when gas prices took off in February, and falling real earnings are a legitimate reason for people to be upset about the economy.

Part 3: Housing

Won’t belabor this one: mortgage rates are high, and that makes it really expensive to buy a house. Prospective homebuyers are justified in hating the current economy.

Part 4: Supply-constrained goods & services

The average U.S. household is richer than ever and, in many ways, enjoys a lifestyle that would be unimaginable even a few decades ago. They watch a bigger, nicer TV and drive a bigger, nicer car. Their house is loaded with time-saving appliances. They take more vacations, and those vacations take them farther from home.

But all of those things aren’t particularly supply-constrained. Society can easily up the production of TVs and cars and appliances and airplanes.

It’s supply-constrained goods and services that have everyone pissed off. For example, consider these two facts:

1. The number of households with more than $200,000 in inflation-adjusted income has increased by 20x since 1967 and roughly doubled since 2013.

2. The capacity of Madison Square Garden (19,812) has not changed since 1967.

If you made (again, the inflation-adjusted equivalent of) $200,000 in 1967, you could definitely go to an NBA Finals game. You could go to all of them, maybe even the road ones too.

In 2026, it was borderline-irresponsible for a household making $200,000 to go to an NBA Finals game at Madison Square Garden; the lowest-priced tickets on resale markets were over $1,000.

This same dynamic applies to everything supply-constrained. The number of homes in nice neighborhoods has not doubled since 2013, nor has the capacity of Disney World or the enrollment at that nice private school.

This effect is present across the entire earnings distribution. The working-class family that used to rent a house at that nice local beach for a full week now gets a weekend in a condo (or a week at a cheaper destination).

An upper-middle-class family—maybe one earner is a doctor—that could be front row at a popular concert in the ’80s now sits in general admission at the Taylor Swift show.

The millionaire who would have had a Warhol hanging in their office in the ’80s now has to settle for a work by some artist you’ve never heard of.

Etc. etc.

Your ability to access these supply-constrained things/experiences depends on your income relative to everyone else rather than your income compared to overall prices, and the resulting lack of access makes people feel worse off than previous generations who attained the same level of financial success.

There’s no easy or quick solution for this. Madison Square Garden can’t double its capacity every decade, and good luck trying to get your favorite vacation town to build more housing.

What’s Next

We’ll (finally) have our Q&A out in the next few days, and maybe a construction piece too. After that, it’s Week in Review, our every-Friday post that gives you everything you need to know about the economy in a breezy five-minute read.

Subscribe now

Week in Review is just for paying subscribers. If that’s not you, just click this button.

We may never see another American achieve this level of favorability.

The economic news and data this week were a little less favorable, with fairly uninspiring updates on inflation, spending, income, saving, some housing stats, and more.

Monday

TSA Checkpoint Travel Numbers

Air travel remains in bad shape according to TSA gate check numbers.

Oil Stuff

Gas prices inched up to $4.22/gallon, which is $0.95/gallon higher than at the same time last year.

As we wrote last week, diesel prices, which are up to $5.65/gallon, are still the bigger story here. There’s a good chance diesel surges above its previous all-time high ($5.78/gallon in June 2022) over the next few weeks.

Tuesday

New Home Sales

Sales of newly built homes fell sharply in July, down more than 10% from June. While new home sales have slowed a little during 2026, they’ve also been remarkably stable—and unspectacular—over the past decade (with the exception of the pandemic boom).

Conference Board Consumer Confidence Index

Consumers lost economic confidence in August, though they felt much better about current conditions and much worse about the future. As you can see below, the expectations part of the index is remarkably low by historical standards.

S&P Cotality Case-Shiller Home Price Index

Home prices rose just 1.5% between June 2025 and June 2026. That’s good from a home-buying affordability standpoint, but virtually everyone would be happier if rates were lower and home prices were rising faster.

Wednesday

PCE Price Index (the Fed’s favorite measure of inflation)

Read more

And the Orioles have lost four in a row, so, not great.

Monday

NAHB Housing Market Index

Homebuilder confidence improved slightly in August, but that’s not saying much. Homebuying demand is historically low, and 35% of homebuilders cut prices during the month.

TSA Checkpoint Travel Numbers

Air travel continues to fall off, now about 5% below year-ago levels over the past week, according to TSA gate check numbers data. Not a good sign!

Oil Stuff

Gas prices rose modestly this week, up to an average of $4.18/gallon. That’s still extraordinarily high for this time of year, but also insignificant compared to this week’s bigger and badder oil-related story: the widening diesel crack spread. (Stop right there, Beavis.)

A crack spread is the gap separating crude oil prices and refined oil products. It’s at a record high for diesel. Diesel prices jumped about $0.20/gallon this week to $5.45/gallon. The record high is $5.82/gallon. It’s possible we break that over the next few weeks as the war in Iran continues right into the midterms.

This is bad news on the inflation front. Diesel is an input to virtually everything. It’s especially important for agriculture. Harvest season is approaching, and diesel prices are currently above $7.00/gallon in California, the largest agriculture-producing state.

A few thoughts:

1. There’s no end in sight for the Iran conflict, which is squeezing supply. This week we learned that various parties aren’t even talking.

2. Ukraine continues to attack Russian energy infrastructure, including refineries. That’s putting downward pressure on global supply.

3. We’ve largely exhausted the geopolitical shock absorbers (like the Strategic Petroleum Reserve) that were in place to soften the blow. Good news here though – China has plenty of oil in reserve. They hold the world’s largest reserves.

4. U.S. refineries have been running at >97% utilization rate. That makes sense; the crack spread is essentially the refiner’s margin.

5. With refiners essentially running at capacity, any disruption will push prices even higher.

6. Weather is the most typical cause of disruptions, and we’re heading into the heart of hurricane season.

7. There’s a super El Niño this year. Without going into the meteorological details, that makes hurricanes less likely to form in the Atlantic, so at least there’s that.

Big picture, it’s a nervy time for diesel prices, and that could be a big problem for the broader economy, including for contractors.

Tuesday

New Residential Construction

July was the best month for new housing permits since February. The increase was spread across all housing types. At the same time, housing starts plunged, down about 12% on both a monthly and yearly basis.

Housing completions also plunged to their lowest level since May 2020. We’re still finishing more units each month than before the pandemic, but that might not last too long given rising financing costs.

Pending Home Sales

Pending home sales, which are supposed to show us what actual home sales will look like in a month or two, fell in July. No surprise there. It’s a bad housing market that’s only going to get worse in coming weeks.

Industrial Production

U.S. manufacturing, mining, and utility production continues to increase, albeit at a pretty sluggish pace. Still, this is one of the indicators used to diagnose recession, so slow growth is still good.

Wednesday

The Bond Market Pops Off

Read more

The bad news is the reason why lettuce prices fell, and also most of the other economic data that came out this week.

Monday

TSA Checkpoint Travel Numbers

Air travel remained 2-3% below year-ago levels over the past week, according to TSA gate check numbers. This, like a few other indicators in today’s review, is a downbeat sign for the U.S. consumer.

Oil Stuff

Both gas and diesel prices fell this week, but they’re still pretty ugly. It’s particularly unusual for gas prices, which averaged $4.14/gallon over the past week, to be this high this late in the year.

Tuesday

NFIB Small Business Optimism Index

Small business owner confidence improved in July, rising to the highest level in almost a year. There was a large improvement in hiring plans, which may or may not translate into an actual bump in hiring.

Existing Home Sales

Sales of existing homes (i.e., not newly built) slowed in July and are just barely higher than one year ago. As the NAR chief economist put it in the release, “there’s no doubt that the housing market would be thriving if average mortgage rates were to return near 6%.” Unfortunately, it could be a while until that happens.

Wednesday

Consumer Price Index (Inflation)

Consumer prices, as expected, inched just barely higher in July, rising 0.1% for the month.

Read more

The Federal Government isn’t quite seizing the means of production, but it’s being handsier than at any point in recent history.

This week was loaded with economic data releases including construction spending, jobs, job openings, several industry surveys, and more.

Monday

Construction Spending

Construction spending inched lower in June and is down more than 3% over the past year. This is particularly bad because data center construction spending surged an almost unthinkable 7% for the month. Put another way, data center spending rose by $4.5 billion (seasonally adjusted annual rate) in June, and total construction spending still fell by $2.0 billion.

The only other real bright spot is the power category, which as of April surpassed manufacturing as the largest nonresidential subsegment. Even that momentum is a function of the data center boom, though.

There are lots of dark spots. Warehouse investment, which looked to be stabilizing at the start of 2026, is back in freefall. Manufacturing construction spending continues to fall like an anvil.

The residential segment continues to soften. No surprise there, given mortgage rates.

Big picture, this is a discouraging release.

ISM Manufacturing PMI

Manufacturing activity expanded again in July, according to this survey of the industry’s purchasing managers. That’s good news, though the manufacturing side of the economy is still far from strong. This comment from a paper product manufacturer stands out:

“Our customers in Asia continue to procure elsewhere to avoid paying a tariff. While the Iran war was paused, it was terrific to see fuel prices (and delivery costs) falling steadily. Now that skirmishes have resumed, we expect fuel to rise again.”

Senior Loan Officer Opinion Survey

Lending standards are still very tight, though banks noted that standards are looser than one year ago for all categories except consumer loans.

TSA Checkpoint Travel Numbers

Nothing good to report with air travel, with passenger counts remaining 2-3% below year-ago levels, according to TSA gate check numbers data.

Tuesday

The Trade Deficit

Read more

U.S. employment dropped by 23,000 in July. That decline, the first since February, fell comically short of the consensus expectation of about 80,000 new jobs (“comically” only in a dark, maybe-we-shouldn’t-laugh way). Even worse, downward revisions knocked about 100,000 jobs off the prior two months of growth.

You’re probably thinking this sounds bad. And it is. Losing jobs is never a good thing.

For context, employers added jobs in 113 straight months from late-2010 to the start of the pandemic. We’ve now lost jobs in 6 of the past 14 months. Three-month average job growth has slowed to an anemic 20,000.

But (unlike most cases, what came before the “but” actually does matter here), there are a few reasons that today’s report is ever-so-slightly less bad than it looks at a glance.

One: the unemployment rate fell to 4.1% in July, the lowest level in over a year. Part of the drop was due to a slight decline in labor force participation. Still, layoffs remain exceedingly low. There’s no reason to worry about unemployment at the moment.

Two: local government education employment fell by almost 50,000 jobs in July, and that’s likely a seasonal adjustment quirk. An upward revision is possible, even probable, next month.

Three: wage growth was weak. Average hourly earnings rose just $0.02 for the month and are now up a mere 3.2% year over year. That’s that smallest annual increase since 2018.

Three and a half: yes, this has bad implications for workers, but it’s good news on the inflation front.

Four: the prime age (25-54) employment-to-population ratio—a very important indicator—ticked back up in July after falling sharply in June.

Five: cyclical industries, like manufacturing and construction, added jobs for the month.

Six: a softening labor market is potentially good news on the borrowing cost front because it stops the Fed from raising rates. 10-year treasury yields fell this morning.

The Big Picture

If you really squint, you could maybe justify calling today’s report “mediocre.” Even that’s overselling it, in my opinion.

The labor market is weaker than we thought. Layoffs aren’t a problem, but job growth is. Even if this is a good sign for borrowing costs, it’s a bad sign for economic health.

What’s Next

This week was packed with data releases, and we’ll cover all of them in Week in Review, our every-Friday post that gives you everything you need to know about the economy in a breezy, five-minute read.

Subscribe now

That will be out later today and is just for paying subscribers. If that’s not you and you want it to be, just click the subscribe button.

This week’s 100% human-written review covers a Fed interest rate decision, bond market turbulence, scary mortgage rate data, and a lot more.

Be sure to submit any questions you have for our upcoming Q&A.

Monday

Durable Goods Orders

New orders for durable goods (things that typically last at least 3 years) increased 0.3% in June after falling 4.0% in May. That has a lot do with the very volatile transportation category, though, and durables excluding transportation remain in pretty good shape.

TSA Checkpoint Travel Numbers

Air travel fell even further behind year-ago levels this past week, according to TSA gate check numbers data. Fair to officially declare this a disappointing summer travel season.

Tuesday

Oil Stuff

The oil market remains choppy, with futures prices climbing back above $90/barrel this morning after spending most of the week in the mid-$80s.

No surprise: gas and diesel prices rose a lot over the past week.

Conference Board Consumer Confidence Index

This measure of consumer sentiment worsened in July and has been on a downward trajectory since 2021. The breakdown by generation continues to be the most interesting part of this survey.

Wednesday

Fed Interest Rate Decision & Treasury Market Reaction

Read more

Leave a comment

We usually type out our answers—and likely will this time too—but want to gauge interest in a video/podcast version of the Q&A (with a text transcript). If you have strong feelings about that, be sure to vote in this poll.

What’s Next?

Next up is Week in Review, our every-Friday post that covers everything you need to know about the economy in a breezy, five-minute read. This week’s review will cover yesterday’s Fed decision, the resulting and not-so-great rise in treasury yields, and a lot more.

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In addition to new waterway knowledge, this week brought us $100/barrel oil prices, surging treasury yields, a flurry of new tariff activity, and more.

Monday

White House Announces Canada Tariffs

The White House vowed to impose tariffs as high as 50% on goods “ranging from wine to hockey sticks to cement.” Energy, potash, certain products tariffed under Section 232 (think metals), and critical minerals will be exempt from these new tariffs.

Just as interesting as the tariffs themselves is the mechanism used to impose them: Section 338 of the 1930 Tariff Act, a provision that’s never been used and could be defunct because it was superseded by a more recent law.

These tariffs don’t go into effect for 30 days. It will surprise no one if they don’t materialize. If they do, expect legal challenges.

The bigger takeaway here is that tariff activity is picking back up (see below and then again under Thursday).

White House Slashes Aluminum Tariffs

The White House reduced aluminum tariffs from 50% to 25% for companies committed to investing in U.S. production capacity. The defense industry pushed for this move, and the White House itself acknowledges that “US demand for primary aluminum currently outpaces the primary aluminum production capacity of US smelting facilities.”

Notably, prices received by U.S. aluminum producers are up 58% since the start of 2025 (the first aluminum tariffs went into effect in Feb-25). For context, that’s more than they increased over the whole 20 years before that (46%).

This follows an early-June reduction in tariffs on certain metal products.

TSA Checkpoint Travel Numbers

The summer travel season continues to disappoint, according to TSA gate check numbers. About 3.0% fewer people flew over the past week compared to one year ago.

A Cyclospora Update

Last week, we told you that the explosive-diarrhea-causing cyclospora outbreak had been linked to Taco Bell’s lettuce supplier, Taylor Farms. The FDA has since announced that it was a false positive that linked the outbreak to them but maintains that there’s “overwhelming epidemiological data” suggesting Taylor Farm’s lettuce is at fault.

North Carolina has since identified parsley and cilantro as potential sources.

Cyclospora is, apparently, very difficult to trace. If you’re interested in some of the nitty gritty details on that, Scott Gottlieb has a good and brief rundown here.

Stay safe out there, people!

Tuesday

State Employment & Unemployment Rates

South Dakota had the lowest unemployment rate of any state in June at a truly absurd and frankly unhealthy 2.0%. You’d think frictional unemployment, the period of joblessness when a worker is between jobs, alone would boost it above that level but hey, maybe South Dakotans are happy with the jobs they have.

No surprise: the highest unemployment rate belonged to D.C. at 6.0% as DOGE funding and federal employment cuts take their toll. Despite the nation’s highest rate of joblessness, unemployment in the District has actually fallen 0.2 percentage points over the past year.

Wednesday

The Congressional Trade Powers Reform Act of 2026 (Good tariff news?)

Read more

If it seems like it took longer than usual to pinpoint the source of this outbreak, that could be because last year’s workforce reductions caused the CDC to reduce the number of foodborne pathogens they track from eight to two.

Unlike cyclospora-caused diarrhea, this week’s economic data releases weren’t particularly explosive, though we still got a cool inflation report, a slew of downbeat housing data, and more.

Monday

Oil Stuff

Well, oil prices are rising again, back above $80/barrel as the on-again, off-again, blocked-again, opened-again Strait situation in Iran resumes. No surprise that gas and diesel prices are once again rising too.

The takeaway here is that a lot of data from June (when oil prices were back below $70/barrel) that came out this week is now largely irrelevant, so, that’s fun.

TSA Checkpoint Travel Numbers

Air travel slipped even farther behind year-ago levels this past week, according to TSA gate check numbers data. It continues to be a disappointing summer travel season.

Tuesday

Consumer Price Index (Inflation)

Consumer prices fell for the first time in two years in June. A decline was expected—oil and gas prices dropped sharply during the second half of the month—but the fall was even larger than expected.

That has a lot to do with core (not food or energy) goods prices, which have now fallen in two consecutive months. Prices for apparel, vehicles, medicine, and computers (more on that below) all fell for the month. What do those categories have in common? They were broadly exposed to tariffs, which have since diminished since the Supreme Court IEEPA ruling back in February.

Which is to say, it looks like tariff pass-through on core goods may be waning.

This is all great, with the enormous caveat that oil prices have rebounded in July. If that increase hangs around, expect a similar rebound in the next CPI data release.

NOTE ON THE CPI FOR COMPUTERS: Actual computer prices have blasted off, but the BLS makes quality adjustments to changes in computer prices differently than it does for most items. The short of it is that while the CPI for computers shows prices down 0.8% year over year, that’s an abnormally small decrease and actual computer prices are rising quickly.

Sunshine Protection Act

The House overwhelmingly passed a White House-backed bill to make daylight saving time permanent.

On the one hand, this is what the people want. Only 12% of people favor the current system of changing the clocks, according to this 2025 survey.

On the other hand, we tried this in the 1970s, and people hated it so much that we reverted back to changing the clocks. Under permanent DST, some parts of the country will get post-9AM sunrises.

It remains to be seen if the Senate will pass this.

NFIB Small Business Optimism Index

Small business optimism improved in June, but that was—you guessed it—largely due to lower oil prices. We’ll see how optimism holds up if oil prices hold on to the recent rebound throughout July.

Wednesday

Producer Price Index

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First, it’s nice that our legislators put so much effort into solving a problem that is pressing but not the least bit politically charged.

Second, they tried to solve it the right way: with several small but meaningful changes that should add up to a significant increase in housing construction rather than a one-simple-trick, silver-bullet approach.

Third, there’s a ton of good stuff in here, and even the bad stuff (like limits on institutional investor home purchasing) was mostly defanged by the time it passed.

Here’s ten things to know, plus a bonus rant about front yards:

An Excellent Housing Supply Framework

Within the next 3 years, HUD has to issue guidelines and best practices for housing policy that include:

• Reducing or eliminating parking minimums

• Increasing max floor area and building height ratios

• Reducing minimum lot sizes and set-back requirements (a rant on this below)

• Eliminating restrictions against accessory dwelling units

• Increasing by-right uses like duplex, triplex, and quadplex buildings

• Streamlining review processes

• Reducing barriers to modular housing

• Standardizing, reducing, or eliminating impact fees

• Mechanisms for states to encourage local adoption of State zoning frameworks

• Streamlining environmental review

• Imposing maximum review timelines

This guidance will make it easier for states to adopt these recommendations—hey, we’re just doing what HUD said was right—but at the end of the day, they’re just recommendations. In fact, the ROAD Act specifically bans HUD from taking adverse action against any state or locality that declines to adopt a guideline.

Single Stair!

Point-access block buildings—commonly called “single stair”—are apartments organized around a single vertical core (one stairway or elevator). These are not allowed in most parts of the U.S. because building codes tend to require two exit stairways, ostensibly for safety reasons.

The ROAD Act requires HUD to issue guidelines for “model code language, best practices, and technical guidance that could be used to facilitate the permitting of point-access block residential buildings” within the next 18 months.

I love single-stair buildings. They have more interesting designs, more varied floor plans, more natural light, and better cross ventilation than double-loaded buildings, and they allow for more units on smaller lots.

Point-access buildings are widespread in places like Japan and Scandinavia, and it’s no coincidence that those places are known for good looking apartments.

Getting single-stair into the building code sometimes requires a battle against local fire departments, despite the fact that single-stair buildings have strong safety records, and having federal guidance should help with those efforts.

Optimistically, this will add momentum to the already-rolling single-stair movement. Cities like Baltimore and Austin have recently adopted single-stair, joining long-standing single-stair cities like Seattle and Honolulu.

Streamlines Environmental Review

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Monday

ISM Services PMI

The services side of the economy grew in June, same as it has every month for the past two years, according to this survey of the segment’s purchasing managers. The prices component of this measure increased at the slowest pace since February, which is nice, but it still suggests rapid price increases. That’s a bad sign for inflation.

Oil Stuff

Both gas and diesel prices fell again during the week ending July 6^th, but given that the ceasefire in Iran is over, we’ll see if that continues. Oil prices haven’t been particularly bothered by the resumption of hostilities, hovering in the low $70/barrel range.

TSA Checkpoint Travel Numbers

It’s been a disappointing summer travel season so far, with TSA gate check numbers modestly below year-ago levels around the July 4^th holiday.

The optimistic take is that 2025 was a record year for summer travel and, given high prices, a modest decline isn’t so bad.

The pessimistic take is that travel volumes are below expectations, especially given the World Cup, and this is a pretty clear sign that consumers are pulling back in the face of high prices.

Tuesday

The Trade Deficit

The trade deficit surged in May 2026 due to record high imports. What drove the increase? Data centers, of course. Data center equipment is really expensive and we’re buying a ton of it. Computer accessory and semiconductor imports accounted for 18% of the monthly increase.

It wasn’t all data centers, though. Imports of pharmaceuticals and consumer goods also made a sizable impact. A sharp drop in gold exports—precious metal trading has been volatile over the past several months—also contributed to the widening trade deficit.

The big takeaway here is that however much the White House wants to close the trade deficit, that priority is taking a back seat to the AI build out.

Wednesday

More Tariff Pass‑Through Is in the Pipeline

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Way back in October 2025, we wrote about how data center construction wasn’t that large compared to other boom segments. Specifically, it had yet to reach the lofty heights of warehouse construction and the even loftier heights of computer/electronic manufacturing construction.

It was a fun little narrative, and one that came with an elegant explanation: despite the gaudy overall data center cap ex numbers, only a small portion—maybe 20-30%—of that total goes toward actual construction. The rest is used for the equipment that goes inside the facility.

A fun little narrative, and one we can safely retire.1 Data center spending has surged another 24% since we wrote that and is now larger than those two aforementioned boom categories.

Data centers now account for 8% of all private nonresidential construction spending. If current trends hold, it will reach 10% by January 2027.

Data centers are sucking up all the oxygen in the room, and by oxygen, we mean capital. This is especially difficult for other segments because, with rates high and lending standards tight, there’s not a lot of oxygen to go around.

Private nonresidential construction spending excluding data centers reached an all-time high in December 2023. Since that time, it’s fallen 11% while spending on data centers is up a staggering 145%.

We fully expect these trends to continue. Back in the 2010s we were hired to estimate economic and fiscal impacts for a wide assortment of development types.2 In the early 2020s, it shifted toward residential, mixed-use, and warehouse/distribution.

Since 2023, we’ve done almost nothing but data center work.

What’s Next

Next up is Week in Review, our every-Friday post that covers all the economic news and data in a breezy, five-minute read.

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Aside from falling oil prices, this week gave us new data on jobs, construction spending, consumer confidence, and more.

[If you missed either of our earlier posts this week, be sure to check out Fireworkonomics and A Weird June Jobs report.]

Monday

Oil Stuff

Oil prices remain below $70/barrel, traffic is improving in the Strait of Hormuz, and both gas and diesel prices have started to fall.

TSA Checkpoint Travel Numbers

Air travel remains just slightly below year-ago levels, at least as of the week ending July 1^st. This is disappointing given the World Cup. We’ll see how the holiday weekend plays out.

Tuesday

Job Opening & Labor Turnover Survey (JOLTS)

Hiring remained historically slow in May, but so did layoffs and quits. Which is to say, it remains an extraordinarily stagnant labor market. That’s great if you have a job and terrible if you need one.

Conference Board Consumer Confidence Index

Consumer confidence improved ever-so-slightly in June, according to this measure. Despite the increase, consumers are pointing in the same direction as the JOLTS data: “the percentage of consumers saying jobs were ‘hard to get’ rose to 22.5%, the highest level since January 2021 (22.8%).”

ISM Manufacturing PMI

Manufacturing activity increased for the sixth straight month in June, according to this survey of the industry’s purchasing managers. Comments from the survey respondents suggest that the conflict in Iran had a huge effect on input costs. That does not bode well for inflation over the next few months even as oil prices fall.

Wednesday

Construction Spending

Here’s what you need to know about the May construction spending data:

1. Data center construction spending rose again and is up 23% over the past year. This has now surpassed the warehouse and computer/electronic manufacturing categories and is the second largest private nonresidential subsegment, trailing only electric power generation projects.

   

2. Despite momentum from data centers, overall private nonresidential spending continues to shrink.

3. Public nonresidential activity continues to expand, albeit modestly.

4. Residential spending continues to expand, but the growth is concentrated in renovation/repair work. Both new single family and multifamily activity shrank in May.

ADP Employment Change

Private employers added a strong 98,000 jobs in June, according to payroll processing firm ADP. This is less important than the BLS jobs report (see Thursday), but it’s nice to see multiple estimates pointing in the same direction.

Mortgage Applications

Mortgage applications inched higher again this week, but these are still really weak.

Thursday

BLS Jobs Report

Employers added 57,000 jobs in June, which is fewer than expected, and the unemployment rate fell to 4.2%, though it fell for the wrong reasons (a smaller labor force).

Zack chalks most of this up to statistical noise (read his full write up on that here), but Anirban views it as a disappointing release.

Mortgage Rates

Mortgage rates dipped this week, with the 30-year fixed down to an average of 6.43%. That’s the lowest since early May but still way too high.

Jobless Claims

Initial jobless claims stayed at a remarkably low 215,000 this past week. Layoffs are nowhere to be seen.

Friday

Independence Day

Happy 250^th, USA!

Links of the Week

Will tariffs spur innovation? (Economic Forces)

Company Plans to Drop 600,000 Bacteria-Infected Mosquitoes into DC This Summer (Gizmodo)

This guy FOIA’d every San Francisco dog license from the past decade, and it’s fascinating (Twitter Thread)

Measuring the Economic Effects of AI (Agglomerations)

Final Thoughts

After this week, Anirban’s outlook for the economy is: Slightly worse

Inflation everywhere and a soft jobs report. If it weren’t for AI…

After this week, Zack’s outlook for the economy is: Better

I don’t put much weight on the weird June jobs report. The one thing we know for sure is that layoff activity remains historically uncommon. That combined with falling oil prices has me feeling good heading into the Holiday weekend.

Looking Ahead

Next week is a light one for data releases that mostly gives us new housing stats.

Today’s jobs report was, in a word, weird. Also good, but mostly just weird.

U.S. employment rose by a cooler-than-expected but still fine 57,000 jobs in June, and the two previous months’ estimates were revised down by a combined 74,000 jobs.

Even with June’s soft growth and the downward revisions, we’ve still averaged a perfectly acceptable 111,000 jobs per month since April.

Here’s where the weirdness creeps in: leisure and hospitality, the second fastest growing segment over the past year, lost 61,000 jobs in June. This doesn’t check out. The World Cup was supposed to cause a ton of hiring at hotels and restaurants. Instead, those two subsegments lost 21,700 and 32,900 jobs for the month, respectively.

The unemployment rate crept down to 4.2%, the lowest level since June 2025, but there’s something wonky going on with the underlying data. The household survey1 shows a sharp decline in the labor force, employment, and unemployment. Even the survey’s more credible and important ratios2 seem off kilter.

The prime age (25-54) employment-population ratio, for instance, plunged to the lowest level since 2022, ending a 3-year period of remarkable stability. That decline was almost entirely due to a breathtaking employment decline in the 25-34 age range.

I don’t buy it. Other data points like weekly unemployment insurance claims show that layoffs remain really low, and I don’t think a ton of 25-34 year olds quit their jobs en masse in June. Maybe they were too busy watching the World Cup to respond to the survey?

I don’t know, but I expect a rebound next month.

Three Not-So-Weird Things

1. Long term (27 week+) unemployment fell to the lowest level since the early months of 2025.

2. The information industry, which includes news, publishing, and tech, lost jobs again in June, and employment in the category is down to a 10-year low (excluding the pandemic).

3. Federal government employment has inched up in two straight months and appears to have leveled off after the massive cuts of 2025.

The Big Picture

Oddities aside, this was a solid jobs report. There’s nothing to worry about with the unemployment rate, and the fact that job growth slowed a touch may even calm Fed-fears of an overheated economy.

What’s Next

This week was packed with data releases, and we’ll cover all of them in Week in Review, our every-Friday post that gives you everything you need to know about the economy in a breezy, five-minute read.

That will be out tomorrow and is just for paying subscribers. If that’s not you and you want it to be, just click the button below:

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