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Elliot Eisenberg Economic & Policy Blog
Powerless Pricing September CPI came in relatively tame at 0.3 % M-o-M, while allimportant core inflation was just 0.2 % M-o-M, its lowest reading since June. Both were up 3 % Y-o- Y. Shelter inflation is finally falling, tariffs remain hard to discern, and services( think immigration crackdown) rose just 0.2 % M-o-M, good news. Critically, there is no sign of an inflationary breakout. A 25bps Fed rate cut on 10 / 29 / 25 at 2pm ET is assured.
Passport Power The Friday File: The nation with the passport that allows entry into the most destinations visa-free is Singapore at 193 out of a possible 227. South Korea follows at 190, then Japan at 189. The US is tied for 37th spot with Malaysia at 180. By comparison, Canada is in 32nd spot, and the UK is in 26th with visa-free entry into 184 destinations. Afghanistan is last at 24.
States ' Status A recent study trying to mimic what the Business Cycle Dating Committee looks at when determining if the economy is in recession finds 22 states, representing 33 % of GDP, in or at high risk of recession. Their
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problems are due to weak immigration, rising tariffs and federal job cuts, and are more generally exposed to agriculture / manufacturing. 12 states including CA / NY are neither growing or contracting, and 16 including FL / TX are growing.
Job Jeopardy While we haven’ t seen large numbers of layoffs, monthly hiring is at its lowest level since 6 / 15, and at the lowest percentage since 3 / 13. Similarly, job postings on Indeed. com are at their lowest since 2 / 21. When workers are asked if jobs are“ plentiful” or if they’ re“ hard to get”, the Plentiful- Hard to Get gap was + 8 points. Pre-Covid it was + 40. American workers are rightfully nervous about losing their jobs.
Beijing Battles While Chinese exports to the US slid 17 % during Jan-Sept, they increased 6.1 % elsewhere. However, China still faces serious economic issues amid hardball US trade talks. Q-o-Q 25Q3 GDP growth was 4.8 %, but was 5.2 % in 25Q2, and 5.4 % in 24Q4 and 25Q1. And on a Q-o-Q sequential basis, growth decelerated to 3.5 % in 25Q3 from 4.3 % in 25Q2, 5.6 % in 25Q1 and 6 % in 24Q4. China’ s slowing and decoupling.
Smartphone Story The Friday File: Kids are now growing up fast and are probably already asking ChatGPT to tell them a bedtime story. As for old
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fashioned smartphones, 8 % of parents report that their children under five have their own smartphone. That percentage rises to 12 % for kids ages 5-7, 29 % for offspring 8-10, and 57 % for progeny 11-12. I didn’ t get my own cell phone until age 35. Very protective parents! Troubled Tourism If there was a common thread in last week’ s Fed Beige Book, a purely anecdotal and quantitative report put out eight times / year, it was the declining fortunes of the formerly hot US travel / leisure / hospitality sector. To wit, the decline in international( read Canadian) tourism was cited on several occasions. Mention was also made of the increasing reluctance to spend on the part of low- and middle-income consumers who are increasingly stretched.
Policy Puzzle The US economy has, to date, performed substantially better than many expected despite tariffs and many other unorthodox policies and interventions coming from DC. There are numerous reasons why. They include falling interest rates, strong corporate earnings, a belief that sharp market swings will reverse some policies, optimism about technology and AI, and the fact that populist policies when enacted( particularly in LatAm) have relatively good short-term outcomes.
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Bank Bonanza 25Q3 bank earnings were a stunning $ 50 billion, up 20 % Y-o- Y! All divisions did well, including wealth management, lending, trading and M & A / investment banking, suggesting a healthy economy. But not so fast. The drivers were big firm borrowing for M & A, and affluent households borrowing against booming equity values. Middle-class deposits grew, but Main Street borrowing and household credit card growth were minimal. The wealthiest households and biggest firms are driving results.
Odd Outcome While some forecast 25Q3 growth as high as 3.8 %, this is undoubtedly due to booming EV sales ahead of the $ 7,500 tax credit that ended 9 / 30 and probably a sizable decline in net imports due to tariffs. The negative ADP and LinkedIn employment reports, the seventh straight month of declining manufacturing activity, a stalling service sector, and probably very weak future car sales hardly scream strong growth.
Elliot Eisenberg, Ph. D. is an internationally acclaimed economist and public speaker specializing in making economics fun, relevant and educational. Dr. Eisenberg earned a B. A. in economics with first class honors from McGill University in Montreal, as well as a Master and Ph. D. in public administration from Syracuse University. Eisenberg is the Chief Economist for GraphsandLaughs, LLC, a Miami-based economic consultancy that serves a variety of clients across the United States. He writes a syndicated column and authors a daily 70-word commentary on the economy that is available at www. econ70. com.
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