Tangle - The August economic reports.

Episode Date: September 9, 2026

In the run-up to the November midterm elections, new reports on key economic indicators have shed light on the state of the U.S. economy. The Federal Open Market Committee (FOMC) will meet next week for the third time under Federal Reserve Chairman Kevin Warsh to consider changes to the interest rate in light of a strong jobs report and persistent inflation. Meanwhile, the Iran war and a burgeoning trade dispute with Canada have added new variables to the economic picture. Ad-free podcasts are here!Get 20% off your first year of ad-free episodes, exclusive interviews, and deep dives with Tangle’s podcast membership!What happened to al-Qaeda?This Friday marks 25 years since the 9/11 terrorist attacks. Ahead of the anniversary, The Atlantic’s Graeme Wood published a detailed report on the attack’s impact on the Middle East and the state of al-Qaeda. Senior Editor Will Kaback spoke with Wood about the surprising information we’ve learned about Osama bin Laden’s motivations, why al-Qaeda has faltered, and whether U.S. policy has addressed the threat of future attacks. You can listen to the interview here.You can read today's podcast⁠ ⁠⁠here⁠⁠⁠ and today’s “Have a nice day” story ⁠here⁠.You can subscribe to Tangle by clicking here or drop something in our tip jar by clicking here. Take the survey: What do you think of Ari’s predictions? Let us know. Our Executive Editor and Founder is Isaac Saul. Our Executive Producer is Jon Lall.This podcast written by: Ari Weitzman and audio engineered and edited by Dewey Thomas. Music for the podcast was produced by Diet 75.Our newsletter is edited by Managing Editor Ari Weitzman, Senior Editor Will Kaback, Bailey Saul, Audrey Moorehead, and Carina Pacheco. Hosted on Acast. See acast.com/privacy for more information.

From executive producer Isaac Saul, this is Tangle. Good morning, good afternoon, and good evening, and welcome to the Tangle podcast. This is Tangle's managing editor Ari Weitzman, tagging in for today's edition, with an economic update and adding in some predictions of my own. Our edition today is also bookended by a plug about an interview between our editor, Well, K-back, and the Atlantic's Graham Wood about Al-Qaeda. and then we end with a little bit of a happy story about a noteworthy Appalachian Trail hiker.

Before we get into all that, though, I have an announcement. And I'm going to pass it over to the redoubtable Rainer Maria Rilka to make the call that summer is over and autumn is officially, according to me, here. From the great Rilke, here is the poem Autumn Day to lead in today's edition. Lord, it is time.

The summer, was immense. Now overlap the sundials with your shadows and on the meadows let the winds run free. Allow the fruits on the vine to swell, grant them a few more warm, transparent days, then press their final sweetness into heavy wine. He who has no house now will never have one. He who is alone, will stay alone, will sit, read, write long letters through the night and walk the boulevards up and down, restlessly, while the dry leaves blow. And with that, I give you the economy. Thanks, Ari.

All right, here are today's quick hits. Representative Chris Pappas, a Democrat, and former Senator John Sununu, a Republican, advanced in their respective Senate primaries in New Hampshire in the race to replace retiring Senator Gene Chaheen, a Democrat. Number two, the United Kingdom banned trade with Israeli settlements in the West Bank in response to what the country described as ethnic cleansing of Palestinians by Israeli settlers. France and Canada announced they will implement similar policies. Number three, Houthi rebels in Yemen struck energy and civilian sites in Saudi Arabia,

wounding at least 73 people and halting operations at some energy facilities. Number four, the Trump administration filed an emergency application asking the Supreme Court to lift a block on a federal citizenship database ahead of the midterm elections. And number five, New York City released documents that appear to show that city officials were aware of air quality health risks in the aftermath of the 9-11 attacks, but withheld that information from the public. As we near the midterms, we're hearing two different realities when it comes to the economy. The markets are near record highs. It was another great day today. But there are other troubling realities. Mortgage rates hit a new high for 2026, rising to 6.71 percent. That's the highest. level we've seen since July of 2025. And of course, gas prices remain above $4 a gallon. One year ago, the price was nearly a dollar lower. In the run-up to the November midterm elections, new reports on key economic indicators have shed light on the state of the U.S. economy. The Federal Open

Market Committee, the FOMC, will meet next week for the third time under Federal Reserve Chairman Kevin Warsh to consider changes to the interest rate in light of a strong jobs report and persistent inflation. Meanwhile, the Iran War and a burgeoning trade dispute with Canada have added new variables to the economic picture. On Friday, the Bureau of Labor Statistics reported that the U.S. economy added 162,000 non-farm jobs in August, significantly exceeding economists' projections, and the unemployment rate remained unchanged at 4.1%. Furthermore, the jobs numbers for June. June and July were revised upward by 11,000 and 44,000, respectively. Separately, in August, the Bureau released its latest inflation report, finding that the consumer price index, the CPI, increased 0.1%

from June to July, and 3.4% from the year prior. Energy prices, which surged earlier this year after the start of the Iran War, fell 1.5% on a monthly basis, but have risen 14.7% over the past 12%. months. The August CPI report will be released on Friday. Also in August, the University of Michigan's survey of consumers found that consumer sentiment fell 6.3% between July and August and 11.2% year over year. The next consumer sentiment report will also be released on Friday. President Donald Trump and other administration officials have called on the Fed to lower interest rates ahead of next week's FOMC meeting. On Friday, Trump touted the latest jobs report and said he would halt trade with countries with which the United States has a trade deficit if the FOMC does not cut rates.

However, Federal Reserve Chairman Kevin Warsh has recently suggested that the committee is weighing a rate increase if inflation does not begin to cool. Energy prices have been impacted by the developments in the Strait of Hormuz, where Iran and the U.S. military have imposed restrictions, preventing oil tankers and other commercial vessels from transiting the waterway. While the strait remains largely closed, Energy Secretary Chris Wright said last Wednesday that over 17 million barrels of crude oil exited the Persian Gulf on Monday, August 31st, reaching a high since the war disrupted the roughly 20 million barrel daily average.

And finally, on Tuesday, Canada imposed tariffs on $20 billion in U.S. goods in retaliation for U.S. tariffs on $20 billion in Canadian. goods levied on August 22nd. Both countries are now terrifying an array of goods with Canada's duties expected to have an outsized impact on manufacturers in U.S. Midwestern states. Today, we'll get into views from the left and right on the state of the U.S. economy, and then after that, managing editor Ari Weitzvind gives his take. We'll be right back after this quick break. Here's what the left is saying. The left is worried about the economy, especially the labor

market. Some blame President Trump's policies for market stagnation. Others think artificial intelligence is driving some of the economic uncertainty. On his substack, Robert Reich discussed the biggest problem facing the U.S. economy. The Labor Department reported last Friday that the United States added 162,000 jobs in August. That's more than expected, especially given how few jobs the country has added over the last few months. But there are three real reasons to be concerned. Prices continue to rise faster than wages, which means most Americans are getting poorer. Average hourly earnings rose by just 10 cents or 0.3% for the month. That brings the year-to-year increase in hourly earnings to 3.1%. But prices have risen to 3.4% over the year. Another concern I have is that while

employers aren't firing many workers, they're also not hiring. A low-hire, low-fire labor market doesn't create opportunities for advancement. It's also difficult for young people to get into. Trump is interfering in the jobs market and the economy in ways that will make things worse. Bad enough is that he's waging a costly war in Iran and imposing costly tariffs around the world, both of which are driving up prices. The biggest problem facing the U.S. economy right now is Trump. In MS now, Steve Bennon said, Trump trips over his economic illiteracy again. Donald Trump frequently makes comments about the economy, the vast majority of which are plainly wrong. The president also occasionally makes economic assertions that expose his economic illiteracy. On Friday,

the president threatened to curtail all trade with a wide swath of U.S. trading partners unless the Federal Reserve agreed to slash interest rates. This was a mess for all sorts of reasons. The Fed functions as an independent entity, which is not supposed to raise or lower interest rates in response to White House extortion schemes. But Trump made things worse by arguing that economic growth is wholly unrelated to inflation and that we're entitled to lower interest rates, not because of economic conditions, but because he thinks were awesome. In case this weren't enough, the president later celebrated good monthly job growth in August by pointing to what he described as the quote, Trump boom. That didn't make sense either. So far in 2026, the U.S.

economy is generating roughly 80,000 jobs per month. While that's better than last year, it reflects a sharp decline from the final year of Joe Biden's presidency when the economy added over 120,000 jobs per month. In fact, excluding the 2020 pandemic from the equation, the first year of Trump's current term was the worst for American job growth since the great recession, and the second year of Trump's current term is on track to be the second worst. That's the opposite of a boom. In Bloomberg, Jonathan Levin declared America's labor market is paralyzed by policy. When you can't predict next quarter's bottom line,

you're better off retaining optionality, delaying staffing decisions that can involve steep upfront costs and are difficult to reverse. So if you want to know why America's no hire, no fire, labor market has lasted as long as it has, blame the surfeit of uncertainty, much of it self-induced. Layoffs remain mercifully low,

and unemployment is a respectable 4.1%, but new jobs are hard to come by. Workers are hesitant to quit, and wage growth has softened. Weak wage growth, average hourly earnings rose 3.1% from a year earlier, even as consumer prices rose more than that,

and the widespread nature of the hiring lull, spanning both white and blue-collar jobs, suggests this is primarily about weak labor demands, not supply. One likely culprit I've alluded to is the White House's endless barrage of shocks. Although some of them were foisted upon us or predate Trump 2.0, the latest have the White House as the instigator. Into this tempest emerges artificial intelligence, which challenges employers' math in more complex ways.

Aware of the wide distribution of outcomes, companies are sitting on their hands. All right, now here's what the right is saying. The right is mixed on the latest economic news, with some arguing that Trump's economic policies are starting to bear fruit. Others criticize Canada's management of trade disputes with the U.S. Still others say that the president's call to lower interest rates is misguided. In the New York Post, Daniel McCarthy said,

Trumponomics triumphs in U.S. jobs report just in time for the midterms. American manufacturing is on the rebound, and that good news could hardly come at a better time for President Donald Trump, as Republicans gird themselves for the midterm elections just two months from now. Manufacturing isn't the only sector that's on a hiring spree. Businesses across the board added 162,000 jobs in August. The workforce participation rate rose as well, which matters because people who drop out of the labor force are invisible in unemployment rates that only count those who are looking for. for work. The economy is pulling Americans who'd given up hope off the sidelines and putting them to work. That's a success not only for Trump's economic policy, but for his immigration crackdown, too. It's no longer easy for companies to abandon Americans by hiring foreign workers instead.

Establishment economists predicted none of this. Trump won't be on the ballot on November 3rd, but jobs will be, especially those in manufacturing. They'll be lost if a Democratic Congress adds its power to the campaign in the courts that's trying to drag America back to the age of offshoring. In the Washington examiner, Brandon Ferris said Trump didn't threaten Canada's sovereignty. Carney just handed it to Beijing. Canadian Prime Minister Mark Carney says the United States asked Canada to surrender its sovereignty during trade negotiations that his government recently abandoned in dramatic fashion. The reality is exactly the opposite.

Washington was asking Canada to do more to protect its own steel industry. Global steel excess capacity reached 640 million metric tons in 2025, and China is directly responsible for nearly 57% of that excess. We've seen what happens when Beijing gains control of strategically important supply chains. China has demonstrated its willingness to restrict access to critical materials to advance its geopolitical interests, allowing the same dependence to develop in steel would threaten economic and national security. Since President Donald Trump first imposed the Section 232 steel tariffs in 2018,

steelmakers have announced or begun roughly $47 billion in projects to expand and modernize domestic production. The European Union, for example, is pursuing parallel measures to strengthen its steel industry. Canada, though, has taken a different path. In Blaze Media, Daniel Horowitz wrote, Trump's interest rate fantasy runs into debt gravity. You can have very low interest rates and you can have debt-driven inflation. You can't just have both at the same time. That's the reality that President Trump refuses to recognize.

At the core of the president's half-baked plan to resuscitate the economy is a return to the good old days of near-zero interest rates. He wants endless spending for his projects. He doesn't want the inflation it causes, and he wants to pay near-zero interest on the resulting record debt, don't we all? There is a simple reason the Fed can no longer wave a magic wand, return rates to near-zero, and service the debt on the cheap as it did from the post-9-11 recession through COVID. On September 11, 2001, gross federal debt was about $5.77 trillion, roughly 55% of GDP. In April 2007, before the financial crisis, it was about $8.84 trillion, or 63% of the GDP. Today, it exceeds $40 trillion and is roughly 123% of GDP.

The long-term trajectory is even worse because faster debt growth creates a vicious cycle. Treasury needs more buyers, inflation and fiscal risk forced yields higher, and more existing debt rolls over at those higher rates. All right, that is it for what the left and the right are saying. Now I'm going to pass it over to Ari Weitzman for his take. Ari, to you. Throughout the second Trump administration, every update on the economy Tangal has published

has been focused on the impacts of tariffs, the persistence of inflation, rising gas prices, affordability, and employment, usually in that order. Today, instead of looking back, I want to look forward and undertake a fool's errand, which is making predictions.

I'm going to give you five, predictions about the economy under the remainder of the Trump administration, starting with safe bets that will be proven correct or incorrect soon, and then increasing in both boldness and time horizon, starting with number one. The Warsh Trump honeymoon is ending, giving this one one out of five on the heat scale and will know about it by the end of the month. President Donald Trump's thoughts on former Federal Reserve Chairman Jerome Powell are no secret. The president excoriated Powell for resisting rate cuts as the Fed continued its Sisyphysian toil to deliver on its dual mandate, keeping employment up and inflation down. With inflation still well above the Fed's 2% benchmark,

justification for a rate cut has thus far alluded the new Fed share. In September will not be a happy month for Trump. First, the easiest prediction possible, the Federal Open Market Committee is going to either hold or raise rates on September 16th, as Fed Governor Christopher Waller recently signaled. Waller's comments caused bond yields to briefly dip, but then immediately continue their upward trajectory that began in July, and they spiked again following last week's Rosie Jobs report. On the flip side of the macroeconomic equation, September has historically been the stock market's worst month of the year, ending lower than it started about half the time since 1928. Extend the current benchmark rate of 3.5% or higher add in high bond yields in a lethargic doubt, and multiply by high gas prices and uncertainty about tariffs. what do you get? You get frustrated consumers, negative press about the economy coming into the midterms, and a president unhappy with his new Fed chairman. I expect Trump to explicitly criticize Kevin Warsh

at least once by the end of the month. Prediction two, the Fed will raise the interest rate by 50 basis points this year. I'm giving this one a two out of five and we'll know about it by December 9th. It's almost too easy to predict a rate boost of 25 basis points or a quarter of percent before the end of the year. All the signs point to it. If current projections hold, however, 50 basis points is just as likely. The FOMC has three more meanings left in the year, and all the sober economic analyses you can find are predicting at least one rate hike between now and the year's final meaning on December 9th. The Fed Watch tool puts the odds of two rate hikes by December almost even with the chances of one, and basically no one who lives outside the White House or Mar-a-Lago is predicting a rate cut.

If energy prices remain high and unemployment low, the Fed has no reason to cut rates and every reason to raise them. So watch for these two signals coming out on Friday. First, the Bureau of Labor Statistics will release the consumer price index, a barometer the Fed uses to watch inflation. Economists expect a 3.4% year-over-year increase in headline inflation, which would keep the metric well off the Fed's 2% target. The reasoning is simple. Gas prices remain high due to the war in Iran, and in the end up. import prices are elevated due to tariffs, and those policies aren't going to change anytime soon. Second, the University of Michigan will release its Consumer Sentiment Survey. And I think I can predict the headline. Consumer sentiment is bad, still. And it's not just bad now. It's worse than it was

at any point in the Biden administration when inflation was soaring and the vibe session was making headlines. Unless employment totally collapses, this equation equals more than one rate hike by the end of the year. Prediction three, the national debt will reach $44 trillion by the end of 27. This is a three out of five, and we'll know about it by the end of 27. The national debt equation is only marginally more complex than predicting rate increases. Obviously, if the Fed's borrowing rate is high, then the government's debt becomes more expensive.

And as we repeat and tangle just about every week at this point, servicing our national debt is now the federal government's third largest expense. So if that line item gets higher, the projection. federal deficit also expands. Our current gross national debt is already over $40 trillion. For the last fiscal year, the federal deficit was approximately $1.8 trillion, and the Congressional Budget Office projects expenses to continue to outpace income for the current fiscal year. That'll add about $2 trillion to the current figure, factoring interest in inflation, forgetting the idea of any significant spending cuts that gives us a minimum $43 trillion a national

debt by the end of next year. Taking the extra leak to get to $44 trillion isn't difficult. It just requires a little bit of pessimism. Do you expect tariffs and oil disruption to continue? Do you think Congress will pass tax hikes or budget cuts? If you answered yes and no, respectively, then you're probably looking at a national debt figure that is racing further and further away from us. Prediction number four, which is a four out of four on the heat scale,

and we'll know by September 9th, 2028. the AI bubble will burst and it will be weird. As blogger Rusty Foster memorably put it last year, the economy might just be three AI data centers in a trench coat. Some estimates attribute as much as 30% of our GDP growth to investment in artificial intelligence and data center infrastructure. If you think AI is the future and that demand for the technology will continue to ride a line with a slope so steep,

you'll need crampons and axes, then this is good news. But if you believe that data center construction is based on projections that are too rosy to be believed, then that figure is concerning. Consider this. Data centers are a political liability. CEOs are reporting that they're investing in AI not as part of their business strategy, but more because they're afraid not to.

Maybe a future approach to AI will be different, but LLM technology seems to be at its natural ceiling. If these models fail to meet their unbelievable projections, then we're not looking at a technologically revolutionized society, but instead of much older and much more common tale, a bubble. Typically, when bubbles pop, they create our part of the economy. The AI bubble, though, will be a little different because it will probably be bad for capital investors, but good for workers.

Already, blue-collar workers and those without college degrees are experiencing a very good job market. If AI doesn't automate out the lower rungs of the career ladder, then that job market is set up to with, withstand a bursting bubble. I'm concerned about the interaction of those two conditions, though. On one hand, investors facing losses and on the others, workers facing opportunities. Traditionally, when conditions get rough, the haves tend to always end up ahead of the have-nots, and layoffs follow closely behind lagging corporate earnings. But when companies have the option

to cut their AI investment instead of performing layoffs, that equation could end up looking different, I expect that in two years, AI advancement will have waned and the unemployment rate will remain somewhere in the 3.5 to 4.5% range. Lastly, colleges are going to close and soon. I'm giving this one a 5 out of 5 on the heat scale and I'm putting the expiration date at December 31st, 2028. The federal government is the only major institution facing annual budget shortfalls. All across the country, our institutions of higher learning are bleeding money. A recent Wall Street Journal report looked at Syracuse University to provide an example of the headwinds some schools are facing. Enrollment rates are lower. Students increasingly only want to go to schools

in nicer climates, and the federal government is investing less in research grants that universities depend upon. That's bad for schools like Syracuse and the University Dense Northeast. But take a step back. Colleges are simply struggling to deliver on their value proposition right now. If tuition continues to rise and the job market continues to improve for those without college degrees, while at the same time the biggest and most accessible product AI has delivered is the ability to turn out passable term papers, why would parents continue to show out their life savings to send their kids to AI Cheaters Luxury Camp, as described recently in a notable blog post by Joanne Jacobs? Simply put, they're not going to. My favorite writer on the beat of issues in higher education

is former professor Tyler Austin Harper. Here's what Harper says, on this issue. People are underpricing the possibility of a Black Swan-esque event where significant chunks of higher ed collapsed suddenly. At some point, parents will decide they will not pay $100,000 to $400,000 combined for their kids to cheat their way through college. I expect a bang, not a whimper. And I think he's right. By the end of 2028, I wager not one, but several major universities will announce they will be shunning their iron gates for good. And those are my predictions for the economy. on me today. If you've got anything to add the conversation, though, you can add it to the comment section

over at gretango.com. I'm going to pass it over to Will for the rest of the podcast. Have a good one. Peace. We'll be right back after this quick break. Thanks, Ari. All right, and now for today's This Day in History feature. On September 9, 1976,

Mao Zedong, leader of China and one of the most infamous figures of the Cold War, died at 82. In 1921, at 27 years old, Mao was a founding member of the Chinese Communist Party, the CCP. As various warlords in a fractured China failed to unify under one government, the CCP and the Kuomintang Nationalist Party, the KMT, allied in an attempt to form a cohesive country. By 1927, KMT leader Chang Kaysek turned against the communists,

removing them from powerful positions within the party and, eventually resulting in a massacre of tens of thousands of communists. In 1934, the CCP marched 6,000 miles under threat of the nationalists to relocate to northwestern China. Mao began the trek as a follower, but he became the undisputed leader of the party the next year. When the CCP won the Chinese Civil War in 1949, Chang and the Kuomintang fled to Taiwan, and the Communist People's Republic of China was declared with Mao as its leader.

Throughout the 1950s, China would join the Korean War on behalf of communist North Korea and begin Mao's attempt to shift China from an agrarian to industrial society, with the great leap forward, resulting in the worst famine in history, which killed between 15 and 45 million people. In the 60s, Mao led the cultural revolution, an attempt to eliminate capitalist elements of Chinese society, killing an additional 1 to 2 million people. Mao began to improve,

relations with the United States in the 70s, though, culminating in President Richard Nixon's trip to China in 1972. Following his death in 1976, Mao's handpicked successor, Huaguo Fang, briefly took control before being outmaneuvered by reformers, who then took control and shifted China toward market socialism. And finally, here is today's Have a Nice Day story. This one is close to home for me as someone who has spent some time on the Appalachian Trail myself. Living to 91 is a feat worth celebrating in itself, but Dale Sanders has upped the ante for all nonagenarians. On the final day of August this year,

Sanders, whose trail name is Greybeard, completed the 2,193-mile through hike of the Appalachian Trail, summiting Maine's Mount Katodin at the trail's northern terminus. He is now the oldest hiker to complete a through hike, beating the record set by his then 83-year-old friend M.J. Iberhardt, trail name Nimble Will Nomad, in 2021. Sanders estimated that he fell 71 times during the hike, including one that put him in the hospital and another just 200 yards from Katadn's summit. But he never lost sight of his goal. Quote, I had to thank God and I had to thank my support team and everybody that got me here, he said.

The Associated Press has this story and we'll drop a link to it in today's show notes. All right, that is it for today's episode. Thanks, as always, for being with us and excited to be back with a new episode tomorrow. Until then, have a great day and... Peace! Our executive editor and founder is me, Isaac Saul, and our executive producer is John Law. Today's episode was edited and engineered by Dewey Thomas. Our editorial staff is led by managing editor Ari Weitzman with senior editor Will Kovac and associate editors Audrey Moorhead and Bailey Saul. Music for the podcast was produced by Diet 75.

To learn more about Tangle and to sign up for a membership, please visit our website at reetangle.com.