Elliot Eisenberg Economic & Policy Blog |
VANILLA VICTORY The Friday File: Across all 50 states, vanilla is the signature ice cream flavor in 19. Coffee’ s second at 7, rocky road follows at 5, then peanut butter at 4; mint chocolate chip and butter pecan are at 3. Tied for seventh are cherry and cookie dough at 2. Tied for ninth with one state each are chocolate, raspberry, cheesecake, chocolate fudge / brownie, and moose tracks.
REVENUE RECKONING A recent paper puts AI spending between 2025-2032 at $ 10.3T, an average of 3.63 % of GDP / year, bigger than any prior US investment boom; bigger than the railroads( 2.2 %/ year), canals( 0.66 %/ year), electrification( 0.5 %/ year), or interstate highways or dotcom( 1.1 %/ year). The problem: AI revenue in 2032 needs to be $ 3.5T or 8.8 % of 2032 GDP to justify the sums being currently committed. For perspective, food spending is 9.1 %. Investor disappointment seems likely.
BUILDER BLUES The NAHB Homebuilder Confidence Index fell to a dismal 29 this month( neutral is 50), the lowest reading since 6 / 12. This is the result of a market challenged by rising prices,
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rates, and input costs, and labor shortages. To attract buyers and boost affordability, builders are shrinking new homes and buying down mortgage rates which is battering margins. 43 % of builders cut prices in September, the highest rate since 2020.
DEFICIT DETERIORATION The FY26 US budget deficit is $ 1.992 trillion, up 12 % vs. FY25. Spending totaled $ 7.4T, and was up 6 %, revenues were $ 5.4T but up only 3 %, half as much as revenues. The deficit exceeds 6 % of GDP, up from 5.8 % last year. Forget about growing our way out. SS outlays grew 5 % to $ 1.654T, Medicare and Medicaid spending each grew 8 % to collectively $ 1.792T. Interest expenses rose 11 % to $ 1.243T.
TIGHTENING TOLL Dating back to 1966, on 12 occasions the Fed raised rates and, in the process, reduced CPI inflation by at least 100bps, or one percentage point. On average, the increase in rates needed from the start of the cycle until inflation fell 100bps was 200bps. In 2016 / 17 rates rose the least, 60bps, in 1979 / 80 they rose the most, 640bps. This suggests the Fed has a lot more work to do.
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LIVER LOATHING The Friday File: With 40 % of US adults claiming it’ s the food they most hate, liver is the champion of reviled food. Second are anchovies, with 36 % of adults detesting them. Perhaps unsurprisingly, sardines are third with a hate quotient of 35 %, followed by squid and tofu, both at 29 %. Oysters and chitterlings are next at 28 %, and caviar and sushi follow at 27 %. Americans have issues with ocean food.
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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