Don't Raise Rates Based On A PCE That Will Be Re-Written September 30th

Authored by Richard Roberts via RealClearMarkets,

The Federal Open Market Committee votes on interest rates September 16.

Two weeks later, on September 30, the Bureau of Economic Analysis will revise the PCE price index, the inflation measure the Fed targets, back to 2021 and publish the August reading in the same release.

Governor Christopher Waller has already said which way one of the changes is expected to go. On September 3 he said the change in the way the Commerce Department measures fees paid to stock-market traders and related professionals could lower 12-month PCE inflation by a few tenths of a percentage point. He called it "a welcome measurement correction."

Three FOMC voters -- Beth Hammack, Neel Kashkari and Lorie Logan -- dissented in July in favor of a quarter-point increase. The Committee held 9 to 3.

So the inflation number being used to argue for higher rates is the number about to be rewritten.

Two Ways To Be Wrong

There are two possible mistakes here, and they do not cost the same.

Raise on the 16th and be wrong, and the Fed has tightened on a reading the government changes 14 days later. It is a credibility problem that would be hard to explain.

Wait, and be wrong, and the Fed can raise rates at its next meeting, on October 28.

That is six weeks.

If the revision confirms the hawks' case, their argument will be stronger in October than it is today, and it will rest on a number the government has just updated and is prepared to defend.

One mistake is hard to explain. The other costs six weeks.

Nothing This Month Forces The Choice

The case for urgency is being assumed more than demonstrated.

Core PCE inflation is too high at 3.3 percent. But it is not accelerating.

On Waller's own figures, three-month annualized core PCE inflation has fallen steadily, from 4.76 percent in February to 3.05 percent through July. He acknowledged that the level remains above the Fed's 2 percent goal, and called the fall "a considerable improvement."

The Dallas Fed's trimmed-mean measure, which removes the largest price changes in both directions, was running at roughly 2.3 percent over the same 12 months.

That is not proof that inflation is already at target. It is evidence that the underlying trend is less alarming than the headline core number suggests.

And some of the difference comes from categories whose measurement is unusually difficult.

Waller has singled out nonmarket services prices because they are imputed rather than drawn from actual transactions. He said those prices have long been a problem for him, and that excluding this one factor, underlying inflation is doing better than the core numbers suggest.

The pending BEA change goes directly at one of these problems. Legal services is priced today with a consumer index the Bureau itself says has produced "erratic changes that cannot be corroborated."

That matters because this is not a case in which the Fed is choosing between today's number and the possibility that the number might someday change.

The government has already scheduled the change.

Sit Tight

By October 28 the Committee will have something it does not have on September 16: the revised historical series and the August reading together.

The case for a quarter-point increase will be stronger or weaker on a number somebody is willing to defend.

None of this says rates are too high.

It says something narrower. When the government is about to rewrite the inflation series on which the decision rests, waiting one meeting is not indecision. It is the more defensible policy choice.

The 30th comes first. Then vote.

Tyler Durden Sun, 09/13/2026 - 12:50

Trump Admin Weighs Emergency Powers To Boost Refining As Diesel Tops $6

With national average diesel prices above $6 a gallon and regular gasoline firmly above $4.20, the Trump administration faces mounting pressure to deploy every available policy tool to contain fuel costs ahead of the midterm elections. Disruptions tied to the Russia-Ukraine war and turmoil in the Gulf are intensifying the global refining super squeeze.

Reuters reports late Friday afternoon that the Trump administration is considering whether to use the Defense Production Act to expand U.S. oil refining capacity as the Iran conflict drives up fuel prices.

According to the report:

The proposal to use the act came up during a recent meeting between President Donald Trump and nearly a dozen U.S. refiners, where White House officials sought to determine how federal support could best be used to add capacity, the sources said. No final decisions were made, and participants left the meeting with the expectation that the conversations would continue, according to the sources.

However, expanding refining capacity comes as U.S. refineries are already operating near their limits. The latest data shows that utilization has topped 98%. 

The discussions follow Trump's April decision authorizing support for domestic petroleum production, refining and logistics under the Defense Production Act. That directive identified financing constraints, long construction timelines, permitting delays and supply-chain limitations as obstacles to expanding capacity.

"America's refining capacity is essential to ensuring the United States has continuous access to secure, affordable, and reliable energy. Expanding that capacity is a top priority for the President and his energy team, who are evaluating concrete options to increase our refining capacity through regulatory reform, faster permitting, and additional investment," Taylor Rogers, a White House spokeswoman, told the outlet.

Reuters pointed out: 

A proposed new refinery in Brownsville, Texas, has emerged as a test case for Trump's call to expand U.S. refining capacity. It was unclear whether the project would receive any Defense Production Act funding. 

America First Refining plans to build a 168,000-barrel-per-day facility at the Port of Brownsville, which Trump announced in March as the first new U.S. refinery in nearly 50 years. ⁠The project is backed by India's Reliance Industries, which has agreed to a 20-year deal to buy the refinery's output.

In March, JPMorgan's head of commodity research, Natasha Kaneva, outlined six policy levers the Trump administration could pull to contain oil prices. Some, including Jones Act waivers and Strategic Petroleum Reserve releases, have already been used. Other options include export restrictions and waiving federal fuel taxes. 

* * *

Tyler Durden Sun, 09/13/2026 - 12:15

"Not Entirely Satisfied": German Foreign Minister Grumbles That Ukraine Isn't Buying Enough German Guns

Authored by Andrew Korybko via Substack,

The more upset that his taxpayers become with their country's lack of tangible returns from the billions of euros that it's given to Ukraine, the more that support for the AfD is expected to surge...

German Foreign Minister Johann Wadephul complained that Ukraine isn't buying enough German guns. He told Bild, "We are now Ukraine's strongest supporter in terms of financial and military assistance. And naturally, the German defense industry should benefit from this. I told President Zelenskyy this during my last visit. We stand by you, we support you. But I also have to explain this to German taxpayers, and the very least you can do is involve the German defense industry in all procurement projects."

Wadephul then said that "At the moment, we are not entirely satisfied with the number of orders we are receiving in Germany. Therefore, we have asked the Ukrainian government to review the situation and ensure that it improves." For background, Germany and Ukraine agreed to jointly develop their deep-strike capabilities earlier this spring, which coincides with Germany's rapid remilitarization to the tune of at least €800 billion. The regular large-scale sale of arms to Ukraine can accelerate this trend.

There are three primary reasons why Ukraine hasn't met Germany's expectations:

The first of which is that the US remains Ukraine's top security partner due to the indispensable role of its arms, intelligence, and Starlink in perpetuating the conflict. In connection with this role, Trump recently posted that "Hundreds of Billions of Dollars was given to Ukraine and NATO, free of charge, that Europe would have paid for - If they were only asked, but we will be asking for that money, though somewhat belatedly!"

A creative solution for recouping these costs could be for European NATO to continue purchasing American arms at full price for donation to Ukraine, with this arrangement continuing after the large-scale phase of the conflict is over indefinitely or at least till Trump is satisfied with the profits.

In parallel with these sales, as well as after the scenario of them possibly being scaled back, Germany must compete with the UK and others like China (whose drone sales are indispensable to Ukraine's war effort).

Germany doesn't have the political sway over Ukraine that the UK does, nor is domestic drone production anything remotely close to China's, so it's expected to struggle in this arms competition.

Finally, the last point is that drones occupy a grossly disproportionate share of the casualties that Ukraine inflicts on Russia and are widely regarded as one of the reasons why the frontline has barely shifted in recent years, so German arms companies' traditional wares aren't needed as much anymore.

Despite Germany's disappointment at Ukraine's unsatisfactory purchase of its defense products, they still remain close at the political level and are coordinating a regional power play against their shared Polish "frenemy", which was elaborated on here over the summer. This joint effort advances the grand strategic goal of German domination over the post-war European security architecture west of the new "Iron Curtain", which is more important for Berlin than arms sales to Kiev, so no rift is likely over this issue.

The takeaway from Wadephul's complaint is therefore that German taxpayers are becoming increasingly upset with their country's lack of tangible returns from the billions of euros that it's given to Ukraine. It's not just their arms industry that's struggling to leverage aid for future profits but their reconstruction one too since it's expected that American and Chinese companies will dominate this industry too. The more fed up that Germans become with Ukraine, the more that support for the AfD is expected to surge.

Tyler Durden Sun, 09/13/2026 - 09:20

Long-Term US Unemployment Rate Creeps Up To 27% Despite Blockbuster August Hiring

Despite the recent blockbuster August jobs report, the anemic pace of hiring in prior months has been exacerbating challenges for long-term unemployed Americans, new research from the Richmond Federal Reserve finds.

The long-term unemployment rate - those who are out of work for 27 weeks or longer as a share of the total unemployed - has been steadily climbing since early 2023.

Of all unemployed Americans in August, more than one-quarter (27 percent), or 1.93 million, had been out of work for a prolonged period, according to last month's Bureau of Labor Statistics report.

This is up from 25.5 percent, or 1.77 million, in July.

Federal Reserve Chairman Kevin Warsh gave the labor market glowing marks during his keynote address at the Jackson Hole Economic Symposium last month.

With an unemployment rate hovering around 4 percent over the past couple of years, job conditions would suggest that the Fed has achieved its maximum employment mandate.

Last month's nonfarm payrolls also surged by 162,000, blowing past the consensus forecast of 56,000.

A job seeker waits to talk to a recruiter at a job fair in Sunrise, Fla., on Aug. 28, 2025. Marta Lavandier/AP Photo

But, as Andrew Moran reports for The Epoch Times, the situation might not be optimistic for Americans who have been out of the job market for many months.

This year's sluggish growth in U.S. payrolls is likely to present fresh hurdles for job hunters, regional central bank researchers warn.

"In the current 'low-hire, low-fire' labor market - which features both slower job creation and less job separation activity (including firings and layoffs) - becoming unemployed can be particularly challenging as finding a new job can be more difficult," the Richmond Fed economists wrote in a Sept. 1 paper.

America's labor market has been entrenched in an environment in which employers are neither increasing headcount nor laying off workers.

Weekly unemployment claims have been stuck in a historically low range of 189,000 to 230,000 - near 57-year lows. The number and layoff rate are near record lows. The jobless rate has been down in 241 of 387 metro areas over the past year.

Continuing jobless claims have also been on a downward trajectory since late 2025, a measurement that could signal two trends in the U.S. economy.

First, workers are finding it easier to locate job opportunities. Second, Americans have exhausted their benefits since many states cap eligibility at 26 weeks.

For a growing chorus of workers who have been searching for several months, the search may no longer be worth it, which could help explain the drop in workforce participation.

"The data have yet to show that job-finding prospects are improving meaningfully for those who have been jobless for an extended duration," the Richmond Fed said.

"In particular, those who have been out of work for a year or more are experiencing more challenges seeking reemployment relative to the 'standard' long-term unemployed."

The U.S. labor force participation rate ticked up to 61.6 percent in August - from 61.4 percent in July - hovering close to its lowest level since the 1970s (excluding the pandemic).

While part of this can be explained by older workers exiting the labor market, young men are not pursuing employment opportunities.

The participation rate for males aged 16 to 24 plummeted to around 56 percent last month, from 69 percent in 2000.

Skills Shortage

But while job growth has been choppy this year, labor demand has been robust.

Job vacancies are close to 7.3 million, and small businesses have indicated they plan to bolster their hiring plans in the coming months.

The challenge for employers is finding qualified workers to fill these openings.

According to the Federal Reserve's Beige Book - a periodic report summarizing economic conditions across the central bank's 12 districts - employment demand in the construction and manufacturing sectors was "healthy" this summer.

"Labor availability was mixed. Skilled trades and technical workers were difficult to find," the report stated.

It is estimated that employers face a talent gap of approximately 1.3 million workers, according to an Aug. 25 report by labor market intelligence firm Lightcast.

Additionally, seven of the 10 most in-demand skilled-trade occupations - construction, electricians, and technicians, for example - already face significant labor shortages.

"The impending lack of skilled trades workers has been a resounding issue in our economy for years," Ron Hetrick, principal economist at Lightcast, said in a statement.

The skills shortage comes at a time when the United States is witnessing a rebirth of manufacturing amid the artificial intelligence (AI) boom.

The data-center expansion has already brought on about 315,000 additional skilled-trade workers in the past five years, the report found.

Tyler Durden Sun, 09/13/2026 - 08:45

Hey, Germany... It's Legitimate To Limit Immigration

Authored by Michael Barone via The Epoch Times,

Just weeks after far-left candidates have won surprising victories in Democratic primaries in Pennsylvania, Florida, Michigan, Colorado, and New York City for the Senate and House in the United States, the Alternative for Germany (AfD) party has won a widely predicted victory in the election last Sunday for the legislature of Sachsen-Anhalt, one of Germany's 16 federal states.

Most Democratic officeholders have rallied around their far-left nominees even as the Democratic Socialists of America national platform calls for abolishing police, prisons, and immigration enforcement agencies. In contrast, Germany's long-established parties - Christian Democrats, Social Democrats, Free Democrats, and Greens - have promised to continue to regard AfD as a "right-wing extremist" group and not to support any coalition with it.

Germany, in its commendable efforts to prevent any recurrence of or sympathy for its Nazi past, imposes limits on political activity Americans would find appalling. And the AfD in its beginnings in the 2000s, as Christopher Caldwell explains in First Things, had members and leaders with disturbing views.

Currently, some of its leaders have views many may consider odious, like supporting Russia over Ukraine, but it appears less likely than some leftist European parties to transgress the boundary between criticism of Israel and incitement against Jews.

The traditional parties' case for isolating the AfD today is based on one issue, the same issue that has enabled the AfD to sprint ahead of the traditional parties in national polls: immigration. As Caldwell explains, "The Sachsen-Anhalt AfD was classified as 'proven right-wing extremist' for its ethnic conception of German citizenship."

The AfD is not the only European party characterized as "far right" for its advocacy of limiting immigration by establishment organs like the London-based Economist and most dominant news organizations on the continent.

The establishment has looked benignly on immigration, including from Muslim countries in the Middle East, North Africa, sub-Saharan Africa, and South Asia, as an economic boost for a Europe whose low native birth rates have reduced economic growth down toward zero and jeopardized the financing of its generous old-age pension and medical care systems.

Voters have not been persuaded.

In Germany, the AfD, though its strength is concentrated in the former East Germany, leads in national polls over the Christian Democrats, who have led the government most of the time since 1949, and the Social Democrats, whose roots go back to the 1880s.

In France, the National Front's Marine Le Pen, though sidelined by an establishment-rigged court ruling for months, leads by wide margins in polls for the first round and runoff in the 2027 presidential election. One issue that may help her: aid for air conditioning, scorned during this hot summer by intellectuals as an American abomination.

In Britain, the newly installed Prime Minister Andy Burnham, boosted by his popularity in Manchester, has seen his party leap ahead of Nigel Farage's Reform Party. But his party, despite its name and history, is still losing many working-class areas and is reliant on support from high-income, high-education, high-immigration metro London.

As for Italy, the fourth most populous European democracy, its Prime Minister Giorgia Meloni, initially labeled a far-right fringe candidate, celebrated early this month her achievement of the longest-serving head of government in the republic.

What do Le Pen, Farage, and Meloni have in common? Their objections to immigration, and especially Muslim immigration. For which they have some reasonable basis.

In Germany, former Christian Democrat Chancellor Angela Merkel unilaterally opened the doors to more than a million migrants, most of them young men, in 2015, and, to protests, insisted "Wir schaffen das" - "we can handle this." But as Germany's foreign-born population has increased from 8.1 million in 2014 to 13.4 million in 2022, violent crime has soared (despite news media attempts to hide it), and immigrants have dragged down high school student test scores.

Nor has the influx of Muslim immigrants spurred economic growth, as Germany's economy suffers from self-imposed high energy costs, and Chinese competitors threaten its auto industry. The establishment's economic arguments for high immigration are in shambles.

What I find most puzzling here is the evident feeling of the European establishment - and one might add that of their American counterparts as well - that opposition to mass immigration from culturally dissimilar sources is somehow morally equivalent to the Holocaust. Why is excluding arguably unassimilable people from your country morally equivalent to murdering millions and millions of people?

Yes, both policies may be sparked by a dislike of characteristics that those excluded and those slaughtered are presumed to share - call it bigotry if you want, and make your valid point that not all members of any group share the characteristics of the group's average. But when those characteristics tend to undermine the generally and increasingly improving ways in which the peoples of Europe and America have lived together over the lifetime of those of us born during World War II, is there not some reason people might want to exercise caution in changing the cultural mix?

Especially in Europe, where populations haven't had the success in assimilating newcomers that Americans have had. And perhaps in America as well, where we have been in danger of forgetting or denigrating our forebears' accomplishments along those lines.

Good counsel, in my view, comes from the liberal San Francisco-based economist Noah Smith. "Liberalism," he writes in his Substack, "needs a new philosophy of immigration."

AfD voters, he argues, with American Trump voters clearly in mind, are not just protesting COVID-19 restrictions or responding to "economic despair," as some of his liberal confreres have argued. It's "anger over immigration."

But liberals need to recognize certain principles, Smith argues. That "migration is not a human right." That "immigration law is legitimate." That "immigration to America must be for the benefit of Americans."

The European establishment lost sight of these principles when it cheered Merkel's admission of more than 1 million, including tens of thousands of young men who consider it morally permissible to rape women not clad in hijabs. The American establishment lost sight of these principles when the Biden administration's open-borders policy allowed the nation's foreign-born population to increase (as the Census Bureau has reported) by 8.3 million in four years, compared to 6.3 million in former President Barack Obama's eight years and 1.6 million in President Donald Trump's first four.

That leaves an uncomfortably large number of people illegally here. I've often said, while advocating legalization of many, though not all, illegal immigrants, that it's a bad thing for a country and for the individuals involved to have a large number of people living here illegally. I continue to think that's a valid argument today.

And perhaps that view is having some effect. In the first 20 months of the second Trump administration, the Census Bureau reports, the U.S.'s foreign-born population has been reduced by 2.8 million. Immigration and Customs Enforcement doesn't account for half that; obviously, some illegal immigrants are choosing to leave before they're forced to.

Plus, as Smith informs his fellow liberals, Germany is making it harder to get citizenship, France and Italy are tightening border controls, the European Union is toughening asylum rules, Canada is cutting back immigration, and Sweden is paying money to migrants who leave. It no longer makes sense for Germany to cordon off the AfD, as if it were bent on sending migrants to the gas chambers. And if anti-immigration parties have unsavory members, well, that's a problem with other (all?) political parties as well.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.

Tyler Durden Sun, 09/13/2026 - 07:00