I couldn’t help but laugh as I read the Chicago Tribune editorial on the prospect of the State of Illinois assuming control of the Chicago Public Schools:

Chicagoans with long memories can hear echoes of the past in the growing crisis around finances at Chicago Public Schools.

It was just before Christmas in 1979 when CPS, frozen out of debt markets and with state government unwilling to bail the district out after several such rescues in the 1970s, couldn’t pay its workers. Vendors wouldn’t provide services for fear of going unpaid.

In January 1980, Gov. Jim Thompson hammered out a deal with the city, Chicago Teachers Union and CPS to have the state essentially take over financial decision-making for Chicago’s public schools. The state was able to borrow on the schools’ behalf and collected new property taxes to finance the debt. The School Finance Authority, created to oversee CPS’ finances, assumed control of CPS budgets and contracting.

Here’s their bottom line:

A school board and a mayor that jack up teacher salaries and openly talk of taking on more junk-rated debt during a period of deficits well into the hundreds of millions have relinquished their right to determine CPS’ future. There assuredly will be painful conditions attached to whatever assistance the state provides — if indeed a cash-strapped Springfield even summons the will and the means to help. A meaningful, enforceable school consolidation plan, perhaps? Limits on contracting authority maybe, including future negotiations with CTU?

The bottom line: If you can’t manage your own business, you’re in no position to complain when others force concessions from you in return for fixing what you’ve broken.

So much has changed over the last 45 years it’s hard to know where to start. Illinois’s population has grown by 8% even as the U. S. population has grown 45%. Chicago’s population has declined by about 300,000. It’s now lower than it has been in a century.

Jim Thompson was the powerful Republican governor; Jane Byrne was mayor. Now the governor is a Democrat who has been unable to get any of his key proposals enacted into law and the mayor is Brandon Johnson, a former CTU labor organizer. That state’s credit rating was AAA; the city’s A. Now the state’s is A and the city’s roughly junk status. Illinois was considered a highish tax state; now it’s tax burden is arguably the highest in the nation.

Among the things that haven’t changed is that Illinois was considered one of the stingiest states with respect to K-12 funding then and it still is.

What really needs to happen are major changes education and its funding in the State of Illinois, something for which there is little if any prospect for happening.

I thought that Julien Berman’s Washington Post column on the “bleak economic picture emerging from the jobs numbers” was pretty good:

Despite constantly shifting tariff rates that have created enormous uncertainty for businesses, initial readings of the labor market’s health showed it holding strong. Throughout the first half of the year, unemployment remained relatively low and the economy kept adding jobs.

Turns out, this was an illusion.

On Friday, the Labor Department reported that employers added only 73,000 jobs in July — far fewer than the 115,000 forecasters had expected.

More important, the department published sweeping revisions to earlier reports that had made the job market look strong all spring. The estimated number of new jobs in May was lowered to 19,000, from the initial 144,000. June’s numbers fell to just 14,000, from 147,000. Together, these changes amount to an overall decrease in new jobs of almost 90 percent.

What’s worse, three-quarters of the added jobs were in just one sector: health care. Along with the lower numbers, this suggests that America is starting to see the effects of Trump’s tariffs ripple through the economy.

Basically, I think those results were obvious to anyone who had his ear to the ground while the previous results were counterintuitive to say the least. The post includes some nice graphs and charts including one of the number of jobs added monthly since January 2024 and one of the number of jobs added by sector. I had actually started drafting this post before reading this passage which surprised me:

A deeper problem here is that the monthly jobs reports might be getting less reliable. The Labor Department always modifies its estimates as new data comes in, but revisions as large as the one for the spring numbers raise concerns that the government’s statistical infrastructure is starting to buckle. Note that the Bureau of Economic Analysis has lost about 20 percent of its employees since the beginning of the year.

I don’t believe that the explanation he proffers is quite as good as he does. Between 1960 and 1970 the number of employees at the Bureau of Labor Statistics grew by just about 50%, roughly where it’s remained ever since. There is no obvious relationship between the number of BLS staff and BLS data or, indeed, U. S. population since the BLS contracts the actual conducting of surveys out to the Census Bureau which makes sense.

I also agree with him that President Trump acted impetuously in firing the chief of the Bureau:

Even more troubling is that in response to the weak numbers, Trump fired Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, baselessly accusing her of manipulating the jobs report for political ends. His action undermines the independence and credibility of one of the government’s most important statistical agencies, and will cast doubt on the credibility of future data releases on employment, inflation, productivity and other key indicators.

“Partisan” and “political” are not synonymous and I don’t believe the BLS is partisan. The challenge doesn’t reside in finding management who’ll ensure that the BLS produces results the president likes more but in ensuring the the BLS produces better, more reliable data over time and being better suited the task of providing information needed to formulate good, timely policy.

The editors of the Washington Post encourage the president to continue his imposition of tariffs on countries buying Russian oil:

President Donald Trump called Russia’s bluff on Friday. In response to nuclear saber-rattling from a close ally of Vladimir Putin, Trump announced he will deploy two nuclear submarines to the region. The president’s previously conciliatory posture toward the Kremlin gives such counterpunches real credibility: Mess around, find out.

After Putin strung him along for months as he sought an end to fighting in Ukraine, Trump took steps this past week against India that Presidents Joe Biden and Barack Obama were reluctant to take, for fear of escalation and economic fallout, in the face of Russian revanchism. They already show signs of working. The president now has an opportunity to press his advantage by doing the same with China.

The inability of Western sanctions to cripple Russia’s economy has been one of the most persistent frustrations since Putin’s full-scale invasion of Ukraine 3½ years ago. Russia’s economy actually grew by more than 4 percent last year and has been estimated to grow again this year, albeit more slowly. Putin has weathered sanctions by shifting to a wartime footing and developing a network of new trading partners for oil and energy exports, relying on a shadow shipping fleet. Its principal customers are China and India.

Oil is the lifeblood of Putin’s war machine. Sen. John McCain often observed that Russia is a gas station masquerading as a country. But Biden worried that pushing China or India too hard to stop buying Russian crude would lead to a surge in gas prices that hobbled the U.S. economy and therefore ruined his reelection hopes. (Biden managed that last part without any help.)

India’s goods exports to the United States are a relative drop in the bucket. We don’t actually know the volume of services outsourced to India by U. S. companies because we don’t keep track of them. I suspect if we really intend to influence India’s policy with respect to Russia we’ll need to start doing that and find a way to influence that as well.

I don’t believe that the risks of India allying with Russia and China against us are as great as some claim. The Indians are well aware that China poses a greater threat to them than we do.

I just finished listening to Lawrence Summers on ABC’s This Week. He concurred with many of the things I’ve been saying around here, particularly in my recent post, “It’s the Uncertainty, Stupid”. Those included:

• We shouldn’t have tariffs on goods imported from Canada, Mexico, and the EU.
• Tariffs are one among many factors affecting the low job growth of the last three months.
• Uncertainty is the broad umbrella description of those factors.
• Trump was wrong in firing the head of the BLS.

He characterized the president’s actions as “needless risks”, risking not just slow job growth but inflation.

He was silent on China which was quite discreet of him. I don’t think we have a choice but to reduce our imports from China. Our industrial base is already incapable of producing arms at the rates needed and that will only get worse.

There’s quite a bit of chatter about the Bureau of Labor Statistics’s (BLS) most recent Labor Situation Report yesterday, President Trump’s remarks, and the attendant firing of the BLS’s chief. Fairly representative is Sylvan Lane’s and Tobias Burns’s report at The Hill:

The U.S. added only 73,000 jobs in July and the unemployment rate ticked slightly higher to 4.2 percent, according to data released Friday by the Labor Department.

The July jobs report showed the labor market stalling out as consumers and businesses navigated President Trump’s ever-evolving trade policies and steep new tariffs.

The report came in well below the expectations of economists, most of whom projected job gains of at least 100,000 in July, according to consensus estimates.

Job growth in May and June was also far lower than first reported, according to the Labor Department, which shaved 258,000 jobs off of its past two reports.

Add the “natural increase” in the labor force and legal immigration and that means that the number of jobs added has fallen below the number of people entering the labor force for the last two quarters. It’s no wonder the labor force participation rate is declining.

Twenty years ago I followed the BLS’s monthly labor situation reports rather breathlessly. The problems I found was that the reports depended less on actual empirical data and increasingly on the several adjustment factors applied, e.g. the birth-death ratio adjustment, the seasonal adjustment, and the population adjustment. I find that methodologically suspect. Each of those adjustment factors depends on certain historical assumptions. If the assumptions no longer hold true, then the reports will be incorrect not just in detail but possibly directionally. That’s true whenever the data that are actually being measured are outweighed by the adjustment factors being applied as has been the case for some time.

I suspect that under present circumstances the population adjustment is particularly suspect.

Furthermore, the data used for the situation report are derived from two distinct surveys, the household survey and the establishment survey. It is an attempted accommodation of the two and they have deviated considerably from each other for some time:

Consequently, while I think that President Trump is correct to be suspicious of the monthly report, he was wrong to discharge the BLS chief over the report because to whatever extent the report was “fudged” it was actually fudged in his favor. And it wasn’t the most recent month that was the main problem. The main problem was the very large adjustments to prior months. These reports are supposed to aid in policy formation. It doesn’t help when the response to prior quarter’s numbers are “nevermind”.

The folks at Zerohedge seem to think that the divergence of the surveys is a good thing and reflects the Trump Administration’s crackdown on illegal immigration and deportation of migrants. That may be a factor but I doubt it’s the only one in the labor situation.

Six of the “Magnificent Seven” have conducted substantial reductions in force over the last two quarter to a total of nearly 50,000 employees. When there’s that might RIF’ing in the technology sector over such a short period and companies, essentially, aren’t hiring, that is bound to create substantial uncertainty. In the latest sitrep only the most highly subsidized sectors (government and healthcare) were hiring.

Add to that the tariff situation which fluctuates nearly on a daily basis and other sources of uncertainty and it’s a lot of uncertainty. Businesses are unlikely to take on new employees under situations of such uncertainty. And as things look now that uncertainty is likely to persist for the next three and a half years at least.

The editors of the Wall Street Journal are perplexed over the 3% growth in GDP in the 2nd quarter of 2025:

If you think President Trump’s tariff ructions don’t affect the economy, take a gander at Wednesday’s report for second quarter gross domestic product. The economy grew 3% on an annual basis, but largely because imports collapsed.

This may be the weirdest GDP report ever. The top line growth number looks good, and the White House naturally touted it. This reverses the 0.5% decline in GDP in the first quarter, which was largely explained by a surge of imports as businesses tried to front-run the anticipated tariff barrage. Growth in the first half was a mediocre 1.2%.

Most striking are the second quarter report’s wild internal details. Net exports (exports minus imports) added a remarkable 4.99% to GDP as imports fell 30.3%. Imports subtract from growth in the national accounts because GDP measures domestic production. Imports are produced overseas. But imports are still crucial to U.S. economic well-being because consumers buy them and businesses use them as inputs for what they produce—and often export.

The crazy swing in imports shows how much Mr. Trump’s up-and-down trade policies have disrupted business decisions and left companies scrambling to adapt. This seems to have had a negative effect on private domestic investment, which fell 15.6% in the second quarter after a surge in the first.

Nonresidential business investment contributed only 0.27% to GDP, as businesses rapidly drew down their inventories. Chalk this up as another result of the uncertainty caused by on-again, off-again, on-again tariffs.

I should note that the decline in business investment is completely consistent with what I have been predicting and one of the reasons I have been skeptical about President Trump’s tax policies. I don’t think they encourage investment as much as he apparently does and it is my conviction that the most compelling American economic problem is that we are not investing enough.

I have long questioned the utility of the “expenditure approach” to calculating gross domestic product (GDP). That is GDP = Personal Consumption + Business Investment + Government Expenditures + Net Exports. I believe it is an artifact of an earlier day when governments did not do as much redistribution as is presently the case.

Using the income approach to GDP calculation arrives at the same result as the expenditures approach for the 2nd quarter of 2025. That is unlike the previous quarter in which the expenditure approach showed a slight decline while the income approach reflected a slight increase.

Who cares? (I hear someone ask.) I care because of the differing effects on policy. The expenditure approach encourages government spending. The income approach does not.

The editors of the Washington Post, condemning the announcement by Secretary of State Marco Rubio that State Department officials “should avoid opining on the fairness or integrity of an electoral process, its legitimacy, or the democratic values of the country in question”, declaim:

Through it all, though, promoting democracy abroad has been seen as a fundamental U.S. interest, especially by Republican Presidents George W. Bush and Ronald Reagan. Calling out election fraud put useful pressure on corrupt regimes to shape up, emboldened democratic opposition movements and strengthened America’s moral stature as the shining city upon a hill.

Under the circumstances it’s ironic that in that editorial they should quote de La Rochefoucauld’s famous Maxim that hypocrisy is the tribute that virtue pays to vice which they are exemplifying here.

The Yanukovych government in Ukraine was elected in 2010 in an election certified as “free and fair” by multiple observing international organizations (one of which included President Jimmy Carter). Yanukovych was ousted in 2014 by what was to become the present Ukrainian government. Present Ukrainian President Zelensky was elected in 2019 in an election certified as “free and fair” by at least one international organization. That is absurd on its face for any number of reasons not the least of which is that areas of Ukraine in which the voters would reasonably have been expected to vote against Zelensky were excluded from the vote. There have been no elections since.

It is an odd sort of democracy in which the government picks the voters who will participate. If you support Ukraine in its war with Russia, better to say nothing about it which is what Sec. Rubio’s announcement advocates.

My own view is that although democracy is one among many American interests it is not a “compelling U. S. interest” as the editors claim but a contingent one.

At Liberal Patriot John Halpin muses about why Democratic favorability polling has declined so far:

The Democratic Party faces a conundrum. While President Trump struggles with voters on both his overall job approval rating and on his handling of specific issues, including immigration, tariffs, and the recently passed “One Big Beautiful Bill Act,” Democrats are doing even worse with Americans.

In fact, Democrats find themselves at a 35-year low in terms of party favorability.

He continues:

What’s more, on every major issue except health care and vaccines, voters prefer congressional Republicans over congressional Democrats even as voters on average rate President Trump negatively on these same issues. For example, President Trump receives net negative job approval from voters on the two biggest priorities in the last election—the economy (-9) and inflation (-11). At the same time, congressional Republicans hold a 12-point advantage over congressional Democrats in terms of which party is best able to handle the economy and a 10-point advantage on inflation.

He presents four hypothetical explanations for why that might be:

1. Democratic leaders are perceived to be old and out of touch, and no new party figurehead has yet emerged.
2. “Anti-Trumpism” hasn’t improved the party’s image.
3. The Democrats’ cultural agenda is still unaltered and too radical.
4. The Democrats’ last economic plan was a dud, and they still have no alternative vision.

I object to his use of the term “figurehead” in the first bullet point. I think that “standard-bearer” would be more appropriate.

Although I think he begins to get the flavor of what’s wrong in his fourth bullet point, I don’t think he’s quite there yet. I don’t believe that the Democratic leadership sees the present circumstances as a “conundrum”. I think it’s a strategy. I think they’re relying on a combination of Trump’s unfavorability, a weakening economy, gerrymandering, and strong turnout among their most motivated voters to prevail in the midterm elections. They may be right.

I asked ChatGPT what the Illinois Congressional district maps would look like without gerrymandering (if the districts were compact and aligned with county/municipal boundaries). Here’s its summary response:

Shifting Illinois maps to strictly compact and municipal/county-aligned boundaries would likely reduce Democratic seat totals from ~14 down to ~12 and correspondingly cut Republican representation from ~3 up to ~5, making almost all districts either safely Democratic or safely Republican—with very few genuinely competitive seats.

The map it drew is at the top of the post. If you’re curious about the impact that would have nationally, there would be 160-170 “safe” Republican seats, 130-140 “safe” Democratic seats, and 125-145 competitive seats. That’s consistent with FiveThirtyEight’s and other analyses I’ve cited here in the past.