- by New Deal democrat
We are well into our data blackout, as no federal economic data whatsoever was released this week. Even sites that functioned in previous shutdowns, such as the Treasury Department’s “Daily Treasury Statement,” have been taken offline. This is simply not the way a functioning country works.
So let me conclude this week by offering the proverbial “30,000 foot view” of the economy, together with some links and graphs to relevant privately sourced data that is partially filling in some of the gaps.
The Big Picture nowcast and forecast are dominated by two different events.
The nowcast is that the economy is currently sharply bifurcated into an AI-related part and the rest. The AI-related part of the economy is booming. Corporate profits in the 3rd quarter are set to make another record, powered by the “magnificent 7” tech companies (Note: many of the below graphs are sourced from Carl Quintanilla’s excellent Bluesky feed. Several are also due to the extremely helpful “Alternative Data” graph pack from Apollo Investments, see https://www.apolloacademy.com/wp-content/uploads/2025/10/AlternativeData100525.pdf ):
Data centers are still being built at a fast pace, creating more demand for energy, and also (as I wrote yesterday) creating a “wealth effect” that is fueling consumer spending by the upper echelons of owners of stocks, as shown in this graph by B of A:
But the rest of the economy probably began a recession several months ago, with real personal income and jobs stagnant or even having begun to decline. The Bank of America published its proprietary employment indicators for September several days ago, and here are the important graphs:
Employment gains hovering just above 0 and the unemployment rate rising is a classic signal at the beginning of recessions.
There are also reports that bankruptcies have been increasing:
And consumers are falling behind on important installment loans such as for motor vehicles:
At least some of this, by the way, may be due to the resumption of the full requirements of repayment of crippling student loans, which may not be discharged in bankruptcy.
So why aren’t I on “Recession Watch” already? Because the size of the AI Boom is so big that for the moment at least it is more than counterbalancing the malaise in the rest of the economy.
The Big PIcture forecast, generally for the rest of the T—-p Administration, is gloomy. That’s because the entire US fiscal and economic policy is being run as a gargantuan mafia-style “bust-out,” or what Darin Acemoglu and James Robinson called “extractive economies” in their book “Why Nations Fail.” In extractive economies, an elite group of cronies around the ruler uses political and economic power to enrich themselves. Part of this paradigm is the mafia-style shakedown: “got a nice company/product/industry there; be a shame if something happened to it.”
T—-p’s entire economic “policy” has been built around this. Want to export to the US? Wet my beak. Want your merger to go through? Wet my beak. Want your State’s biggest industry (agriculture, vehicle production, tourism) to stay intact? Wet my beak:
We’re even seeing the government directly invest in the stocks of companies; viz., Intel. Even the $20 Billion bailout of Argentina, unsurprisingly, looks like it was mainly to rescue the investment portfolios of several Billionaire T—-p cronies.
And of course the “Big Beautiful Budget Bill” amounts to a massive upward transfer of wealth that will so explode deficits in the coming decade that it will leave little if any room for stimulative policies to counteract the next downturn.
Extractive economies grow anemically or even contract, because it is simply not worth it to innovate when the ruler and his clique will muscle in.
Exactly how the US economy will degenerate during the next 3 years (or whatever the duration of T—-p’s time in office) is impossible to know or predict. But it is a virtual certainty that it will degenerate. And in the meantime we are flying blind, because the flow of reliable statistical data has also been mainly shut off.
