I’m still trying to figure this out. From Fortune via Yahoo Finance Nick Lichtenberg reports:

One of Wall Street’s most closely watched voices delivered a blunt message to peers and policymakers: The U.S. economy is not faltering—it is accelerating. Torsten Sløk, chief economist at Apollo Global Management, said forecasts of an imminent slowdown have been repeatedly wrong, and the economics profession should start grappling with its track record of misjudgments.

“The consensus has been wrong since January,” Sløk said in a note circulated to clients Wednesday morning, adding that the average of economists’ forecasts has said the U.S. economy would slow down for nine months running. “But the reality is that it has simply not happened … We in the economics profession need to look ourselves in the mirror.”

Second-quarter GDP expanded at a 3.8% annualized rate, a strikingly strong pace given the Federal Reserve’s ongoing effort to tamp down inflation. The Atlanta Fed’s GDPNow model suggests growth may be even stronger in the third quarter, forecasting 3.9% gains. Many economists had expected the lagging impact of high interest rates, tighter credit conditions, and April’s “Liberation Day” market shock to drag growth meaningfully lower by now.

Instead, the data tells a different story. Consumer spending has continued to prove resilient, and business investment, far from retreating, has strengthened in sectors tied to artificial intelligence, energy infrastructure, and manufacturing reshoring. Housing, often sensitive to interest rates, has shown surprising stability in key regional markets. Sløk did not dive into these particulars in Wednesday’s edition of his Daily Spark, except to address slowing job growth. “This is the result of slowing immigration,” he wrote, not economic weakness.

“The bottom line is that the U.S. economy remains remarkably resilient,” Sløk emphasized. “It is becoming increasingly difficult to argue that we are still waiting for the delayed negative effects of what happened six months ago,” referring to President Trump’s Liberation Day and the imposition of sweeping reciprocal tariffs. One top analyst has been arguing for years that most of Wall Street was wrong, and that Liberation Day represented the end of the beginning, rather than the beginning of the end.

Hiring is basically stalled. Consumer credit is rising but not extraordinarily so. Possible explanations that occur to me are:

• We’re still feeling the residual effects of the Biden Administration’s appropriations. A lot of that is just being spent now.
• We’re still feeling the effects of the spending spree that the Trump Administration, the Biden Administration, and the second Trump Administration have been on.
• No matter what’s happening here they’re worse everywhere else.
• Animal spirits
• There’s a lot of investment in the U. S., both by domestic companies and overseas
• Neoliberals have been wrong about globalization all along.
• The Chinese are dealing with their own economic issues by increasing production and exports.
• There are basic flaws with how we measure GDP, unemployment, etc.
• The effects of intergenerational wealth transfer

and those are just off the top of my head. I’m open to other ideas.

I found this critique of the Bureau of Labor Statistics’s monthly Labor Situation at Kitco News by Ernest Hoffman interesting. The bottom line is that it’s neither accurate nor timely enough to be of use to investors, the Federal Reserve, or policymakers. Particular issues he takes note of include loss of confidence due to large revisions, decline in participation by employers from 60% to 40%, failure of the probabilistic model, and the complexity of dealing with immigrant labor. I would add the issue of outsourcing.

The piece has a number of salient quotes.

Grady said the Trump administration’s criticisms on this front are well-founded. “They’re using 1970s metrics to get this data,” he said. “You can’t run an economy based on that. It just doesn’t work.”

I don’t think that’s quite right. They’re 1990s metrics devised by people who went to school in the 1970s.

“They have to be perfect, all the data that goes into the system, because the markets are trading on it,” Grady said. “But when it comes to the government, they don’t have the same criteria. It’s just wrong.”

Grady said he’s certain that if the Federal Reserve had had the correct data, if they had known about the 911,000 decrease in net jobs, they would have cut rates earlier.

I don’t think he quite captures the difference in incentives between investors and analysts working for the BLS.

“It’s based on a voluntary survey, voluntary participation,” he said. “It used to be 60% [participation rate] and now it’s 40%. The trading is with algorithms; they’re trading numbers in the milliseconds, but you’re trading based off year-old data. Who does that like this? It’s just wrong. There has to be a better way to calculate this data, because it’s too important. You can’t run an economy on it.”

That’s a point that I have made on more than one occasion. Perhaps the question that should be considered is whether the Labor Situation report is performing a useful function at this point. Or the BLS for that matter. There’s an old expression they might consider: “a miss is as good as a mile.”

Adam Button, head of currency strategy at Forexlive.com, also believes traders and Fed officials are being led astray by the monthly jobs report, but he thinks it’s the Trump administration’s immigration policies that have rendered it all but useless.

“We may have entered the post-payrolls era,” he said.

In a Sept. 26 interview with Kitco News, Button said the fundamental assumptions on which the health of the jobs market is built no longer apply.

“I think the market has realized, or will soon realize, that low employment growth in the headline non-farm payrolls number in the United States is no longer really indicative of anything, because of immigration changes,” he said. “Ken Griffin was talking about it this week, and [Richmond Fed president Thomas] Barkin today mentioned it, that flat U.S. jobs growth may be enough to keep the unemployment rate low.”

I don’t think it’s just immigration. I think that offshore outsourcing is considerably greater than they recognize. When even mom and pop shops are offshoring some of their functions (they are), it adds up.

Button said all the models currently in use – whether by the government, the Federal Reserve, or the private sector banks and hedge funds – are built around a set of parameters about demographics and population growth that can’t account for mass immigration OUT of the United States.

“So much is model-driven in markets right now,” he said, “and the models get all out of whack. Whatever rule they have around jobs, or correlation, or anything else like that, it looks like a recession. And [the impact of net migration] might not come all at once; this might unfold over a number of years.”

Button said all this adds up to a very challenging situation for the Fed and other policymakers – and a very risky situation for investors and traders. “I just think you need to be really cautious with the headline jobs number right now.”

I saw several article the other day claiming that LLM AI wasn’t claiming many jobs in the U. S. Clearly, they hadn’t looked at the numbers coming out of India, where the unemployment rate among information technology workers has become quite severe, becoming worse over each of the last three years and much attributed to AI.

Last year Cook County voters replaced Cook County States Attorney Kim Foxx (who declined to run for re-election) and her handpicked successor with Eileen O’Neill Burke, a former judge. What a difference changing the Cook County States Attorney makes! At CBS News Carol Thompson and Megan De Mar report:

Former Cook County State’s Attorney Kim Foxx pushed for bail reform and the SAFE-T Act. It took effect in September 2023, the year before she left office.

The goal of the new law: to take money out of decisions regarding which defendants remain in custody while awaiting trial and which can go home, possibly being put on electronic monitoring.

“Mothers, grandmothers, sisters, partners, should not be making decisions about whether I should pay for my loved one’s freedom or pay the rent,” said Sharone Mitchell, Jr. He is the Cook County Public Defender and believes in the benefits of the two-year-old no cash bail system.

When Eileen O’Neill Burke took over the top prosecutor’s office in December 2024, she vowed to be tougher on violent criminals.

A new CBS News Chicago Investigators analysis of State’s Attorney detention dashboard data shows key differences in the way some defendants were handled under the two administrations.

continuing:

Under Foxx last year, prosecutors requested detention in 38% of first appearances. Under O’Neill Burke this year, the request was made in 39% of cases.

But, when it comes to the court granting those requests, there’s a bigger gap. 70% granted under Foxx and 80% under O’Neill Burke.

“I think our higher detention numbers are reflective of the additional work that we have put into first appearance court to make sure that we have access to every bit of information, which indicates whether someone is a danger, and we present that information to judges,” said O’Neill Burke.

and

Foxx championed her high domestic violence conviction rate in her administration’s Final Report. She claimed a conviction rate in the mid to high 80% range over her 8 years in office.

But, when it comes to asking for detention to keep the alleged abuser away from the victim, the data shows a different story.

Prosecutors under Foxx asked for detention in 84% of cases in the first 6 months of 2024. But, prosecutors under O’Neill Burke requested it 96% of the time over the same time period in 2025.

And, like with violent crimes, detention was granted more often under O’Neill Burke than Foxx. 85% compared to 61% respectively.

I’m going to admit to being somewhat perplexed by this. If you’re requesting detention in 84% or 96% of cases what’s the point of including cases that fit that description under the SafeT Act? Sounds like a defect in the law to me, one that adds to the workload of prosecutors.

I also concur with Matt Yglesias’s conclusion about the present federal shutdown:

It genuinely does not make sense to ask for 60 votes for an appropriation that you can claw back with just 50. There are so many profound issues being fought over in American politics right now, but the proximate cause of the shutdown is a dumb and illogical aspect of congressional procedure.

I concur with the editors of the Chicago Tribune:

What we haven’t seen until now is Donald Trump appearing before a gathering gathering of the nation’s military commanders — summoned to Quantico, Virginia, from all over the globe for what turned out to be a bizarre made-for-TV rally of sorts — and describing our fellow citizens as “the enemy within” and who and adding our city to his list of potential “training grounds” for troops who enlist enlist to defend America from foreign adversaries.

Trump speaks illiberally as a matter of habit. It’s sad to say that many Americans, whether supporters or opponents, at this point are inured to the schoolyard taunts and cartoonish bravado from our nation’s commander in chief.

But context in this case makes all the difference. It made these words — as Chicago braces for an incursion of federal troops over the objections of Gov. JB Pritzker — disturbing.

I urge Chicago’s elected leaders not to sink to Trump’s level. I also urge them to think twice before defending conduct including throwing things at law enforcement officers or assaulting them as “protected speech”.

Update

And I agree with the editors of the Washington Post:

America’s cities ought not to be training grounds for preparing troops for future conflicts. That’s not why soldiers serve. Defending the homeland is different from policing it.

There are ways of blurring the difference and we should avoid them.

I have no opinion on Secretary of War Hegseth’s and President Trump’s addresses to the generals and flag officers yesterday other than to observe that I have long held that there are too many of the latter. At the Washington Post David Ignatius remarks:

The implicit message of Tuesday’s “key leaders all-call,” as it was officially termed, was to get on board with Team Trump or get out. “If the words I’m speaking today are making your heart sink, then you should do the honorable thing and resign,” said Hegseth. Hopefully, those gathered at Marine Corps Base Quantico will ignore that guidance. It would be a national disaster to lose the battle-tested leaders who understand the military’s true challenges in the decades ahead.

For Trump and Hegseth, the issues facing the military seem more symbol than substance. Thus, their emphasis on rebranding the enterprise as the Department of War. And their endless rehashing of culture-war issues: “No more identity months, DEI offices, dudes in dresses. No more climate change worship. No more division, distraction or gender delusions,” said Hegseth.

Okay, got it. Clear away the modest elements of “woke” culture that developed in the Pentagon. But what are you building for the future?

Hegseth is so intent on creating a tough military that having a smart one appears secondary. He wants to restore the old-time, gung ho imagery. Basic training that’s “scary, tough and disciplined.” Drill sergeants who can “instill healthy fear” and “put their hands on recruits.” Hegseth seems convinced that how soldiers fight depends on how they look. “The era of unprofessional appearance is over,” he said. “No more beardos.” Maybe he doesn’t remember the unshaven “dogfaces” of Bill Mauldin’s cartoons during World War II.

Hegseth wants to overturn more than grooming standards. Among the 10 directives he issued Tuesday is a review of standards for bullying and hazing, so that leaders can “enforce high standards without fear of reprisal.” Yikes. That sounds like a blank check for behavior that could drive away, say, the math-and-science whiz who could design and operate future combat systems.

Another unpinned grenade is Hegseth’s directive to revise an inspector general process that he claimed has been “weaponized, putting complainers, ideologues and poor performers in the driver’s seat.” If a commander makes “honest mistakes,” those can be expunged from their record. For the military, Tuesday was “liberation day,” he said. “We are attacking and ending the walking on eggshells and zero-defect command culture.”

Hegseth’s vision of a hard-ass military might be compelling if you believed that future combat would be a reprise of landing on Omaha Beach or Iwo Jima. But the nature of military conflict is changing — on the drone-saturated battlefields of Ukraine and in the scenarios for deterring a tech-savvy China in the future. Beijing would be delighted if America focused on how many push-ups a soldier can do rather than how many computer tools he or she can use.

Based on what I’ve heard all of the generals and admirals can probably use PowerPoint. I don’t think that asking them to be able to do some push-ups is too much to ask.

Actually, I’m a bit confused about Mr. Ignatius’s observations. Based on my review of the biographies of generals and admirals (a tedious and time-consuming exercise) 20-30% of them are “battle-tested”. Relatively few in the Navy, Space Force, Air Force, or Coast Guard are “battle-tested” in the sense that I would use the term (came under fire and commanded troops in combat). Is Mr. Ignatius implying that they should be? I don’t oppose that. What does he mean?

I found his comments about Beijing thought-provoking. I know that Beijing has recently been emphasizing the importance of “informatization” and “intelligization” in the PLA and that recruitment standards have been raised and training adjusted accordingly. Most PLA recruits these days are university students which pretty much guarantees literacy and a reasonable degree of computer literacy. Given their ages I would expect them to be “digital natives”.

I’ll take this opportunity to repeat something I’ve said before: very few PLA generals and admirals are “battle-tested” (as I would use the term). I would say that we have very little idea how Chinese military doctrine would perform in actual combat situations (and neither does Beijing).

Most of Anatol Lieven’s post at The American Conservative is devoted to some clarifications of Russia’s recent provocative air activities but I thought his concluding paragraph was worth taking note of:

Instead of trying to trap the U.S. into a commitment to Ukraine involving the permanent risk of war with Russia—with all the long-term dangers and costs to the U.S. that would follow—European governments should be steadily and sensibly building up the defenses of NATO within its existing borders while at the same time developing a viable peace settlement by which Russia would abandon its impossible demands to Ukraine in return for a new European security architecture guaranteeing Russia’s own legitimate security interests. Of such European thinking, however, there is at present very little sign.

The following graph, courtesy of the World Bank, illustrates Germany’s defense spending over the last 65 years.

In 2024 Germany spent 2% of its GDP on defense for the first time in more than 30 years. The area I’ve shaded illustrates the shortfall in Germany’s spending.

There is such a thing as defense infrastructure. Spending 2% of GDP in one year is not enough. I don’t know that Germany needs to spend 2% every year to make up for more than 30 years of neglect. It might. But it’s surely going to require something.

Now repeat that exercise for all of NATOs members. The sums involved are daunting.

Also, see Wolfgang Munchau’s post at UnHerd:

The Cold War was a period of relative stability not only because of balance-of-power politics, but because politicians who experienced the horrors of the Second World War wanted to secure peace. Most of that generation is no longer with us. Like Weber, today’s European elites have missed out on the opportunity to fight a glorious war. The difference is that they would prefer to let others do the fighting for them.

The likelihood of an escalation into a hot war is big enough to be taken seriously. Apart from a general war-hungry disposition, the biggest risk today is that we, like those Germans in 1914, are misjudging the enemy. Putin, too, misjudged the Western response to his invasion of Ukraine, and the resilience of the Ukrainian army. But the Western misjudgements are more persistent.

The biggest of all was that Russia’s economy was weak and would ultimately buckle under Western pressure. This misjudgement has several layers. It started off with a statistical lie — that Russia was really only a small economy. If you measure the size of the Russian economy by its annual output in US dollars, that would have indeed been the case. At the start of the war, the Russian economy was approximately the size of Spain’s if measured in US dollars. But this is not a good way to judge a country’s capacity in times of war. What matters is the spending power of their money — how many tanks their money can buy. The answer is they can buy a lot more tanks than us.

As I type this I am listening to Illinois Gov. Pritzker’s press conference condemning the ICE raids being conducted in Chicago and the suburbs. I’ll post a transcript of the remarks as soon as one become available.

I agree with some of what he says; disagree with some. I agree that it should not be necessary for armed ICE agents to march the streets of Chicago or, what would be worse, with the U. S. military be used to protect ICE agents.

I agree that people demonstrating peacefully should not be accosted or assaulted by ICE agents. I agree that it should not be necessary to use tear gas to disperse crowds.

I disagree that puncturing tires, assaulting ICE agents, or throwing onesself on or in front of an official vehicle is “demonstrating peacefully”.

Update

Rob Hughes reports on the press conference at ABC 7 Chicago:

CHICAGO (WLS) — The Department of Homeland Security is requesting that 100 military personnel be sent to Illinois, Gov. JB Pritzker said during a press conference on Monday afternoon.

Pritzker called that press conference to bring more attention to recent action by federal agents in Illinois and highlight incidents that happened in Broadview and downtown Chicago over the weekend.

“This is not about fighting crime or about public safety. This is about sowing fear and intimidation and division among Americans. It was about creating a pretext to send armed military troops into our communities. This is about consolidating power in Donald Trump’s hands,” Pritzker said.

I agree with Gov. Pritzker that the deployment is unnecessary and I agree that the reason is political. Immigration policy and its enforcement are the responsibility of the federal government. The federal government cannot dragoon state and local law enforcement into enforcing federal immigration law but there is no barrier to state and local governments cooperating with the federal government in enforcing the law.

When state and local governments decide not to cooperate with the federal government I’m not sure what the federal government’s recourse is. I think they need to send agents into the uncooperative states and localities.

And I suspect that Gov. Pritzker’s outspoken opposition to the Trump administration, part of his nascent presidential campaign, as well as Illinois’s “sanctuary state” and Chicago’s “sanctuary city” policies make us a prime target for enforcement.

There has been quite some kerfuffle over Vice President Kamala Harris’s recently published “election memoir”. At the Guardian Nasrine Malik laments VP Harris, the Democrats, and the chronic self-delusion she sees, characterizing it as “high on their own supply”:

This was not the intention, but 107 Days is a hilarious book. The kind of “you have to laugh or else you’ll cry” type of hilarity. As the second Trump administration unfolds in ever-more disastrous ways, Harris and the other timeline that was possible had she won take on a calamitous, mythical quality. Here she comes, alerting us to the fact that her defeat was no fateful tragedy, but a farce. There was no hidden, better version of Harris that was muzzled and limited by circumstance. There was only a woman with a formidable lack of self-awareness and a propensity to self-valorise.

The book reveals a politician who is all about the machinery of politics, rather than one with conviction spurred by a sense of duty, or a coherent and specific set of values that differentiate her. The “not a thing that comes to mind” answer she gave when asked during the campaign if there was anything she would have done differently to Biden was not caution, but the truth. There is no sign here that she would have liked to meaningfully diverge on Gaza, for example, other than to introduce more parity in the rhetoric of compassion. Or any indication that she would have liked to grasp the nettle on economic policy and make more of her accusation that Donald Trump’s economic agenda “works best if it works for those who own the big skyscrapers”.

This dearth of a unique Harris agenda explains why she often seemed so vague, skittish and rambling. How does she receive the news she will be the candidate? By reminding herself (and us) that she had the best “contact book” and “name recognition”, as well as the “strongest case”.

She goes pretty easy on Joe Biden by comparison with what others have written:

Biden pops up often, a self-involved and petty figure, snapping at her heels and distracting her. But she is loyal, she tells us – often. So loyal that she couldn’t disparage him in the way that people needed her to (“People hate Joe Biden!” she is told by a senior adviser). But not so loyal that she doesn’t more artfully disguise that she wants you to know the man was a real drag who mentioned her too late in his speeches, and then called her before her big debate with Trump to unsubtly threaten her if she bad-mouthed him.

From my point of view the saddest aspect is that not a thing she writes about President Biden hasn’t been apparent for 40 years. “Self-involved and petty” encapsulates the way Pat Lang, who was personally acquainted with Mr. Biden, described his interactions. And I believe those are when he was a senator.

In a sort of companion piece Nate Silver muses on the memoir, focusing on VP Harris’s remarks about Pete Buttigieg and gives us a present of a new bit of terminology:

Harris is showing why she was a mediocre candidate

Every excerpt I’ve read from Harris’s book so far and every clip from her media tour seems to reflect either Veep-like clumsiness or that she’s suffering from an acute case of Demthink.

What is Demthink? It’s what you’d end up with if you trained a large language model solely on the inner monologue of people who either work in Democratic politics or watch MSNBC for eight hours a day.

Being fluent in Demthink can be helpful for navigating the internal currents of the party, something Harris is adept at. After all, she managed to become the vice presidential pick in 2020 after what was one of the worst performances relative to “expectations” in the history of the nomination process, dropping out two months before Iowa despite idiots like me having declared her to be one of the frontrunners.

The problem with Demthink is not merely that it tends toward cynical triangulation. No, it’s that it tends toward triangulation that isn’t even politically effective because it’s so finely tuned for the in-group that it comes across as uncannily out-of-tune to everyone else.

Read the whole thing. Some of it is paywalled so I couldn’t read it in full.

One factor on which neither Ms. Malik nor Mr. Silver touch is something I believe cuts to the heart of VP Harris’s failed presidential campaign. She, apparently, continues to believe that her identity (as a black and Asian woman) was sufficient to elect her to the presidency. Her actual accomplishments in the offices to which she had been elected over a period of 30 years were meager if any. She continued to fail upwards. That is a characteristic she shares with Mayor Buttigieg. She was never a particularly skilled campaigner or politician or officeholder and continued to fail upwards. IMO there is no greater indictment of “Demthink”.

I have attempted, repeatedly, to articulate my own views as clearly as I could. I don’t think we need more or less government. We need better government and I don’t believe we can achieve that without measuring and evaluating results.