Too Much Red Tape Hurt Western Economies

The west is buried under red tape
https://www.ft.com/content/484d8c2a-b61d-42f1-9d57-5d2d8c83c6d3
A regulatory ratchet is smothering business, households and government. 

Coffee Price Spike

Coffee prices haven’t surged this much in decades
https://www.cnn.com/2025/09/12/food/coffee-prices 

How the Superrich Reduce their Tax Burdens

Buy, borrow, die: could this American strategy of the super-rich save you tax?
https://www.telegraph.co.uk/business/2025/09/13/buy-borrow-die-super-rich-strategy-save-you-tax/
US families stay rich, generation after generation, by using this three-step strategy. 

Current State of the US Economy

A potentially K-shaped economy creates dilemmas for the Fed by Vivekanand Jayakumar, The Hill - September 12, 2025
https://thehill.com/opinion/finance/5499218-ai-revolution-job-market/ 

Americans are feeling a lot worse about the state of the economy
https://www.cnn.com/2025/09/12/economy/september-consumer-sentiment

Sorry, Inflation Still Lives
https://www.wsj.com/opinion/inflation-consumer-price-index-u-s-economy-tariffs-federal-reserve-rate-cuts-8289d9b5
Consumer prices in August show a Fed rate cut isn’t an easy call.

The Job Market Is Hell
https://www.yahoo.com/news/articles/job-market-hell-115900392.html
Young people are using ChatGPT to write their applications; HR is using AI to read them; no one is getting hired. 

What Will Happen When the AI Bubble Bursts?

What if the $3trn AI investment boom goes wrong?
https://www.economist.com/leaders/2025/09/11/what-if-the-3trn-ai-investment-boom-goes-wrong
Even if the technology achieves its potential, plenty of people will lose their shirts.
 
What if the AI stock market blows up?
https://www.economist.com/finance-and-economics/2025/09/07/what-if-the-ai-stockmarket-blows-up 

Oracle surge pours fuel on fiery AI bubble debate
https://www.reuters.com/technology/oracle-surge-pours-fuel-fiery-ai-bubble-debate-2025-09-11

Elevated Inflation is Still a Problem

This morning’s CPI data release from the Bureau of Labor Statistics (BLS):
https://www.bls.gov/news.release/pdf/cpi.pdf
 
Rise in U.S. Inflation Likely to Keep Fed Cautious on Pace of Rate Cuts
https://www.nytimes.com/2025/09/11/business/cpi-inflation-fed-rate-cuts.html
The central bank is likely to lower borrowing costs at its meeting next week amid budding concerns about the labor market. 

Health Insurance Costs for Businesses to Rise by Most in 15 Years

https://www.wsj.com/health/healthcare/health-insurance-costs-rise-6cc1b934
Insurers say that the rising premiums are driven by growing healthcare costs.

Inflation Erased U.S. Income Gains Last Year
https://www.wsj.com/economy/consumers/census-income-insurance-poverty-2024-31d82ad0
High-income households fared better than others, while women lost ground to men, Census Bureau says. 

Trump's Tariffs - Unpopular Globally

The Twilight of Pax Americana
https://www.project-syndicate.org/commentary/trump-tariffs-ignore-economic-realities-and-destroy-us-global-leadership-by-koichi-hamada-2025-09
If Donald Trump continues to wield the threat of higher tariffs, he might be able to claim a few more “victories,” in the form of exploitative trade deals with longtime US allies and partners. But the costs of ignoring basic economic realities will be high, and US global leadership may never recover.

The Era of Step-on-a-Rake Capitalism
https://www.yahoo.com/news/articles/trump-formula-conquer-economy-everything-120000667.html
Trumponomics isn’t about economics. It’s about creating pain and demanding tribute.

Global Trade Is Winning Trump’s War On It
https://www.project-syndicate.org/commentary/trump-tariffs-will-have-only-a-moderate-impact-on-trade-by-daniel-gros-2025-09
Since returning to the White House, Donald Trump has repeatedly introduced, paused, reversed, and hiked tariffs, often to unprecedented levels, raising fears about the future of the global trading system. But the average effective tariff rate that the US has applied remains much lower than Trump's pronouncements would suggest.
 
In South Korea and Japan, Fury at U.S. Fuels Backlash Over Trade Deals
https://www.nytimes.com/2025/09/11/business/south-korea-japan-trump-trade.html
Officials and business leaders in both countries are questioning commitments their governments made to invest hundreds of billions in American manufacturing.

Japan confronts the increased price of US friendship
https://www.ft.com/content/678dae36-003f-4df8-ad3f-cff7eeb598d6
The Japanese government cannot spin its one-sided $550bn investment commitment to Trump’s America as a win.

Europe Must Use Its Economic “Bazooka” Against the US
https://www.project-syndicate.org/commentary/eu-must-use-trade-bazooka-anti-coercion-instrument-against-trump-by-moreno-bertoldi-and-marco-buti-2025-09

Trump’s Tariffs Will Widen the North-South Divide
https://www.project-syndicate.org/commentary/trump-reciprocal-tariffs-disproportionately-hurt-developing-economies-by-qiyuan-xu-and-yutao-huang-2025-09
An analysis of US President Donald Trump's "reciprocal" tariffs reveals a stark conclusion: the lower a country’s income, the higher the tariff burden it is likely to bear. In this sense, the tariffs almost seem to be deliberately designed to impede development and exacerbate global inequalities. 

US Labor Market - Far Less Robust than Previously Thought

It looks like a lot of Wall Street trades between March 2024 and March 2025 were based on a false impression of the underlying strength of the U.S. economy:

U.S. Added 911,000 Fewer Jobs in the Year Ended in March
https://www.wsj.com/economy/jobs/us-job-growth-revision-a9777d98
Revised job numbers show significantly weaker labor picture than earlier reports indicated

Employers Added Nearly a Million Fewer Jobs Than Believed, Data Shows
https://www.nytimes.com/2025/09/09/business/jobs-revisions-economy-fed.html
Preliminary annual revisions could add to political pressure on the agency that produces the data.
 
Job Revisions and the Trump Economy
https://www.wsj.com/opinion/donald-trump-economy-job-revisions-bls-joe-biden-tariffs-8145ed52
Blaming Biden and the Federal Reserve for slow growth won’t work forever.

 
Current Employment Statistics Preliminary Benchmark (National) Summary
https://www.bls.gov/news.release/prebmk.nr0.htm

The Power of Big Business

Trump Administration Halts I.R.S. Crackdown on Major Tax Shelters
https://www.nytimes.com/2025/09/09/business/trump-irs-tax-shelters.html
The Treasury Department is rolling back efforts to shut down aggressive strategies used by America’s biggest multinational companies and wealthiest people. 

Oblivious Markets

Why Are Markets Ignoring the Obvious About America?
https://www.project-syndicate.org/commentary/why-markets-remain-calm-despite-trump-turmoil-by-erin-lockwood-2025-09
Given that Donald Trump’s agenda should concern those who hold capital, many are wondering why there has been so little resistance to his administration from markets and Big Business. Six possible explanations stand out – and none of them bodes well for the long term. 

Why Are Financial Markets Shrugging at Trump’s War on the Fed?
https://www.project-syndicate.org/commentary/disconnect-between-threat-to-fed-and-investors-reaction-by-barry-eichengreen-2025-09

Dollar's Haven Status

Dollar's haven status may have always been a mirage
https://www.reuters.com/markets/currencies/dollars-haven-status-may-have-always-been-mirage-2025-09-08 

China is ditching the dollar, fast
https://www.economist.com/china/2025/09/10/china-is-ditching-the-dollar-fast
Officials believe that the yuan has finally come of age.

Related:

Dollar collapse: The crisis is no longer just theoretical by Vivekanand Jayakumar, The Hill - 04/28/25
https://thehill.com/opinion/5270094-trump-tariffs-dollar-decline/ 

Central Bank Credibility - The Case of the Fed

Time to Imagine a Federal Reserve That Actually Works for the People
https://www.nytimes.com/2025/09/14/opinion/reinvent-fed-central-bank.html

The Assault on the Fed’s Independence Should Concern Everyone
https://www.wsj.com/opinion/the-assault-on-the-feds-independence-should-concern-everyone-6720d146
Almost all U.S. presidents want lower interest rates; Trump’s ideas are removed from economic reality.

Trump’s Risky Game with the Fed
https://www.wsj.com/opinion/trumps-risky-game-with-the-fed-1d727c53
The U.S. built its economic credibility slowly over a long time. Once lost, it won’t be easy to regain. 

Why the Fed should not cut rates now
https://www.ft.com/content/ecd1c563-08c9-4177-ad6f-652f06beb6fc
Amid loose financial conditions and a bubbly market, it’s exactly the wrong time.

UK's Economic Woes - A Harbinger for Rest of G-7

Is the U.K. a Canary in the Coal Mine for a Heavily Indebted World?
https://www.wsj.com/world/uk/is-the-u-k-a-canary-in-the-coal-mine-for-a-heavily-indebted-world-a1d904f0
Borrowing costs are surging for many industrialized countries, causing talk of a possible crisis.

Who will go bust first: Britain or France?
https://www.telegraph.co.uk/business/2025/08/28/who-will-go-bust-first-britain-or-france/
The countries are in a slow-motion race towards a financial crisis. 

Britain’s economic woes are sadly home-grown
https://www.reuters.com/commentary/breakingviews/britains-economic-woes-are-sadly-home-grown-2025-09-05 

The bond vigilantes will keep on circling
https://www.ft.com/content/90f22ca9-6992-4ea0-bd5b-da6f7d279cbe
Investors are losing faith in the ability of western governments to rein in spending.

Why American bondholders are jumpy about inflation
https://www.economist.com/finance-and-economics/2025/09/10/why-american-bondholders-are-jumpy-about-inflation
The Federal Reserve prepares to cut interest rates in tricky circumstances.

Related:
https://vivekjayakumar.blogspot.com/2025/09/the-west-is-heading-towards-fiscal-cliff.html

Healthcare: America’s Growth Sector

Healthcare Jobs Are Propping Up Stalling Labor Market
https://www.wsj.com/economy/jobs/healthcare-job-creation-charts-us-economy-adf2ff89
One danger: Coming Medicaid cuts pose a threat to health services. 

Are We Underestimating the Risk of a Recession?

Is the US already in a recession? By Tej Parikh
https://www.ft.com/content/e9be3e3f-2efe-42f7-b2d2-8ab3efea27a8 

For vast segments of the American economy it certainly feels that way.

America’s ‘Buy Now, Pay Later’ Economy
https://www.wsj.com/opinion/americas-buy-now-pay-later-economy-3dae0902
Signs of an emerging debt crisis are everywhere—from credit cards and mortgages to government budgets.

Lessons from Argentina

America’s Perón
https://www.theatlantic.com/economy/archive/2025/09/trump-peron-argentina-economy/684117/
Decades of personalist rule turned Argentina into a global economic laughingstock. Donald Trump seems to have misunderstood the lesson. 

AI Impact - Deeper Issues

Just How Bad Would an AI Bubble Be?
https://www.theatlantic.com/economy/archive/2025/09/ai-bubble-us-economy/684128/
 
Will AI Choke Off the Supply of Knowledge?
https://www.wsj.com/tech/ai/will-ai-choke-off-the-supply-of-knowledge-8a71cbcd 

Bond Market Developments

Tariffs? Dutch Pensions? What’s Giving Bond Markets the Jitters?
https://www.wsj.com/finance/investing/tariffs-dutch-pensions-whats-giving-bond-markets-the-jitters-a0f3cf08
It’s hard to pin down the cause of the latest swings, but the list of culprits suggests weaker demand for the longest bonds could last.

The bond doom-mongers have got at least one thing right
https://www.ft.com/content/4edbbd55-a5da-4b7c-9158-0fa397501513
The big global bond market crisis is just around the corner and always will be. In the end, what tends to happen is that governments pony up the higher borrowing costs, investors agree to buy without a gun to their head, and peace is restored, at a cost to future generations. But be in no doubt: the pressure is building.

Companies Kick Off September with Deluge of Bond Sales
https://www.wsj.com/finance/investing/companies-kick-off-september-with-deluge-of-bond-sales-4bae88ea
The prospect of falling rates has boosted the demand investors have for corporate debt, with companies including Merck joining in a wave of borrowing.

Labor Market - Mismatch of Skills

America's job market is cooling, and the youngest workers are feeling it most
https://finance.yahoo.com/news/americas-job-market-is-cooling-and-the-youngest-workers-are-feeling-it-most-120003303.html/
Sluggish hiring doesn't get quite as much attention as a layoff, but it has a very broad-based impact," Daniel Zhao, Glassdoor chief economist, told Yahoo Finance on Wednesday. "It means folks can't get onto the career ladder in the first place, and it also means that workers who are employed can’t make progress up the career ladder."
Concerns about artificial intelligence replacing entry-level jobs are also playing a role.
That risk was underscored by a recent New York Fed survey, which found that 12% of service firms already using AI reported hiring fewer workers in the past six months, while nearly a quarter of firms planning to adopt AI expect to scale back hiring in the months ahead.
 
Thanks to the AI data center boom, it’s a good time to be an electrician
https://finance.yahoo.com/news/thanks-to-the-ai-data-center-boom-its-a-good-time-to-be-an-electrician-133026522.html
The US needs more electricians to service data centers. Unions say the workers can make a great living.

Example from UK:

Gen Z ‘don’t know what a day’s work is’, says sausage maker

https://www.telegraph.co.uk/business/2025/09/05/gen-z-cant-handle-sausage-jobs-says-pork-boss/

While food producers are desperate to recruit new employees, traditional white collar graduate jobs are becoming harder to come by – as employers look to automate functions with AI and cut back on hiring as tax rises drive up the cost of labor. 

Bessent’s Take on the Fed

The central bank put its own independence at risk by straying from its narrow statutory mandate. By Scott Bessent (U.S. Treasury Secretary), Sept 5, 2025.
https://www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a
Successive interventions during and after the financial crisis of 2008 created what amounted to a de facto backstop for asset owners. This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. Homeowners saw their property values soar, largely insulated by fixed-rate mortgages. Meanwhile, younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation.
By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired.
 

I wrote two pieces way back in Feb 2021 that made similar arguments:
Have misguided policies led to recent asset bubbles and boom-bust cycles? BY VIVEKANAND JAYAKUMAR, The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
The pros and cons of running the economy hot BY VIVEKANAND JAYAKUMAR, The Hill -  02/01/21
https://thehill.com/opinion/finance/536691-the-pros-and-cons-of-running-the-economy-hot