The rise in prices was led by gasoline, up 21.2% in March. While the prices for consumer goods and services other than food and energy, or the so-called “core inflation rate” only ticked up 0.2% in March, the rise in fuel prices started to spill over into other goods and services. Airline fares, where jet fuel is a major cost, rose 2.7% in the month of March, and 14.9% from a year earlier.

This increase in prices and the rate of inflation follows the U.S.-Israeli war on Iran, launched in the last days of February. In response to the massive U.S.-Israeli bombings, with well over 10,000 targets, Iran has retaliated against U.S. bases and businesses in the Persian Gulf and Israel itself. In addition, Iran has taken control of the Straits of Hormuz, through which flowed about 30% of the world’s exported oil, and large amounts of natural gas, urea (used to make fertilizer), and helium, used in chip manufacturing and other high-tech goods like MRI machines.

With a relative ceasefire, Trump administration negotiators led by Vice President Vance are meeting with Iranian representatives for talks hosted by Pakistan. The flow of oil, fuels and chemicals is still just a trickle, mainly ships holding Iranian oil, which now fetch almost twice as much as before the war started because of the rise in the price of oil and the fact that the Trump administration lifted sanctions on their oil. Even though oil futures have dropped back down below $100 a barrel, this is still 50% higher than their pre-war prices. The purchase price of actual, or physical oil, is another $30 a barrel higher. Even worse, with the last shiploads of oil that made it out of the Persian Gulf unloading their oil at their destinations, the soaring price of oil will soon become a physical shortage of oil in more countries.

Not surprisingly, this surge in prices weighed on consumers’ confidence. The University of Michigan’s Sentiment Index fell to a record low of 47.6. This is the lowest in the survey’s 74-year history, lower than the 2008 financial crisis and the oil-price shock of 1979 after the revolution in Iran that ended the reign of the U.S.-backed Shah of Iran and the beginning of today’s Islamic Republic.

With prices soaring, more and more Americans who were living paycheck to paycheck are falling behind. One of the businesses benefitting from hard times are pawn shops, which reported more business in March. There are now corporate chains of pawn shops, whose stocks are at multi-year highs, in effect profiting from economic problems.

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While stock prices rose when Trump announced he was postponing an escalation of the U.S.-Israeli bombing campaign earlier, when he did this again on Thursday, stock fell on Friday. This shows that Wall Street is seeing through his almost weekly proclamations that the U.S. and Israel had “won,” or that Iran is desperate to negotiate an end to the war, that the war would be over soon, etc.

The reality is that Iran has taken effective control of the Straits of Hormuz, only letting through ships with Iranian oil or with cargos destined for non-U.S. allies such as China. Iran has been preparing for this attack for more than three decades, ever since the U.S. egged on Iraq to invade Iran in the 1980s.

Trump is actually the one who needs to end the war, as he becomes more and more unpopular just as the November midterm elections are coming up, threatening a loss of the House of Representatives and possibly even the Senate from Republican control. Trump’s “Plan B” is to further escalate by putting “boots on the ground” as thousands of Marines and Army troops are on their way to the war zone. The administration is also asking for an additional $200 billion in military spending, which could only mean a longer and wider war.

The Trump administration has learned nothing from the trade war with China last year, where the U.S. ultimately had to back down as China matched tariff for tariff and then won with export controls on critical minerals. Nor did the administration learn from the U.S. defeat in Afghanistan. As one pundit said, “While the United States took 20 years to replace the Taliban with the Taliban in Afghanistan, Trump has managed to replace the Ayatollah Khamenei with Ayatollah Khamenei in 20 days!”

On Wall Street, the prices of bonds also fell, meaning that interest rates on the bonds went up. The interest rate on the benchmark ten-year treasury bond has gone up by almost half a percentage point, from 3.96% before the war started to going up by 0.4 to 0.6 percentage points, making buying a home even less affordable.

More and more financial analysts are coming around to the view that Wall Street investors are still underestimating the length and cost of the war, hoping that there will be a quick end. What Wall Street and the Trump administration don’t seem to understand is that while it only takes one side to start a war, it takes both sides to end a war. With Iran holding firm under the U.S.-Israeli bombs, and the weakness of the U.S. side showing when the Trump administration lifted sanctions on Iranian and Russian oil, it is not clear why Iran would want to end the war any time soon.

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San José, CA – The price of regular gasoline has soared a dollar a gallon on average since Trump ordered this country to war with Iran. According to the American Automobile Association or AAA, the average price has gone from $2.96 a gallon a month ago to $3.98 gallon on March 24, or more than 34%.

How high could they go? No one really knows, but according to my “Trump secretly loves California” theory, since Trump has brought the national price of gas closer where the California price was before the war started ($4.63), it is quite possible that $5 a gallon gasoline could be seen in gas stations across the country in the near future.

But gasoline prices are just the visible “tip of the iceberg” for consumer price inflation. Diesel prices are up 43% since the start of the war, even more in percentage terms than gasoline, and are now more than $5.35 a gallon on average nationwide. While very few individuals have cars that run on diesel, most trucks and farm equipment use diesel fuel. The rise in diesel prices will further squeeze smaller farmers and truckers, while the increase in costs will be showing up in food prices and the prices of almost all goods which are shipped to markets.

The cost of urea, the basic building block for nitrogen fertilizers, is also up 45% since the war started. Part of this is because the in response to the U.S.-Israeli attack and bombing campaign, most the major exporters of urea are either directly affected by the war (Saudi Arabia and Oman), or indirectly, as they (Egypt, China, Malaysia and Indonesia) import the natural and petroleum gas used in urea production from the Mideast. This will squeeze farmers even more, and some of the costs will pass through to higher food prices.

Finally, Qatar is a major producer and exporter of helium, which is a by-product of natural gas production. Helium is used in the production of MRI machines, production of semiconductors, and other industrial uses. Helium prices up 70 to 100%, will likely lead to shortages, depending on how long the war lasts.

While Trump has been saying from the start of the war, more than three weeks ago, that the war is almost over, the fact of the matter is that more than 5000 U.S. troops, both Marines and Army, are on the way to the Middle East, signaling another escalation of the war, with U.S. boots on the ground.

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But AI is not on the verge of being introduced, it has been introduced into every sector of the economy possible, and the balance sheets are coming up wanting. Last year MIT conducted a study of over 300 firms and found that 95% of them saw no return whatsoever on their investment in AI. British firm PricewaterhouseCoopers reported in its 29th annual CEO survey that over half of respondents had seen no benefit from AI whatsoever, either in the form of reduced costs or higher revenue.

Despite these gloomy reports and increasing fears that the dramatic overvaluation of the tech companies tied into the AI boom is a financial bubble waiting to pop, the tech moguls are still demanding more investment. For the most part, they are getting that investment, whether into sprawling new data centers or the power stations to keep them online. While cultural backlash to AI “slop” is becoming more and more widespread, it is clear that the capitalist class still sees AI as the future.

In trying to understand why, it is important to disaggregate the hype of AI’s most shameless salesmen, like Sam Altman or Elon Musk, from the actual capabilities of the technology. Essentially at its core all of what we see called “AI” is just a series of mathematical equations whose parameters are set by a combination of pre-existing data and manual rules set by its designers. The process of “training” AI can be likened to feeding paper into a shredder that can then recombine the letters and words to form new sentences. The AI is “incentivized” to make “good” sentences, which tends to mean ones that look like a human could have written them. The same goes for photos, videos, or music: all the AI is doing is regurgitating something it was already fed.

Throughout the entirety of the process, then, human labor still plays the essential role. Humans need to make the works to be fed to the AI in the first place, because if AI is trained on AI generated data it begins to “rot” and produce increasingly poor results. Then humans need to design the mathematical procedures for the AI to be “trained,” and humans often have to intervene forcefully to prevent the AI from breaking the law (by relaying legally sensitive information like how to make explosives or creating images of illegal activity like CSAM). Then, to create the final generated product, the AI needs to be prompted to do so by a human, who needs to write the prompt in such a way that the machine gives them the output they want. The value that AI possesses is the value of embodied human labor within it.

This is plainly not what capitalists believe. They think that AI carries in it the same unique capacity that only human labor power possesses: the ability to create new value beyond that which it cost to produce it. Capitalists do not understand that, out of the portion of capital they advance for means of production, and out of the portion of capital they advance for labor power, it is only the latter that creates new value in excess of that initial advance. To them, it simply appears as a profit in excess of the total cost they paid. While AI’s mystification is particularly intense, the capitalist class has never understood this fact about any machine, or indeed about their entire mode of production: the origin of profit is in the unpaid labor time of workers.

It is no coincidence that AI investment and speculation took off in the last five years, in the wake of COVID’s disruptions and the growing power and militancy of the labor movement that emerged out of them. Capitalists are desperate for the next big technological innovation to save them from the contradictions of capitalism, as Mr. Andreessen himself admitted last month. “If we didn't have AI, we'd be in a panic right now about what's going to happen to the economy,” he said on a podcast, claiming that “declining population” (a racist dog whistle he uses alongside Elon Musk) and “slow productivity growth” would be the “real crisis” that AI is thankfully solving.

What he is facing up to is the idea that without populations of “surplus” human beings to form the reserve army of the unemployed, and with the rate of profit falling continuously as more and more capital becomes advanced and embodied in machines that merely transfer value and do not create it, that capitalists are dinosaurs living on borrowed time. As they look up at the meteor of class struggle and socialism plummeting towards them, they are conjuring phantasms and trying to breathe life into them with dollars and electricity. AI can be a useful tool, a means of production like any other, but it will not save capitalism from itself.

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This is about the same as the increase in the price of regular gasoline nationwide. According to the American Automobile Association, the price of gas had gone up 43 cents a gallon, or more than 14% since the war started on February 28.

I detoured past my daughter’s elementary school on my way home. It looked exactly the same, with a few children playing in the playground, about average for a non-school day. I was thinking of the girls’ school in Iran, which the United States had bombed on the first day of the war, killing some 175 people, mainly young girls, along with their teachers, school staff and likely a few parents. This was one of the United States so called “precision” missiles, which was guided to a civilian target, irrespective of the loss of life.

With the price of future contracts for delivery in April soaring above $100 a barrel on Sunday, March 8, up by almost 40% in the week since the war started, the price of gasoline and other petroleum products have even more room to rise. Diesel fuel is up about 14%, jet fuel is up over 50%, raising costs for trucking firms and airlines, with smaller businesses being hard hit. Larger corporations will use their market power to pass on the costs to consumers, while smaller firms are more likely to take losses, and if higher prices persist, even go out of business altogether.

According to the U.S. military, the war with Iran is costing about $1 billion per day. But Congressional Republicans have given an estimate that is twice as high, or $2 billion per day. Now nine days into the war, $10 to $20 billion dollars have already been spent, and the number grows with each passing day.

Another week and the costs of the war will be almost the same as the money the federal government saved by allowing the Affordable Care Act subsidy expansion to expire. At a time when food aid is being cut, health care is being cut, and more than 300,000 federal government staff have been cut, more and more of the claimed savings from those cuts are being spent on war.

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The job losses were widespread, including manufacturing, construction, transportation and warehousing, information, temporary help, health care, leisure and hospitality, and government all shedding jobs.

In addition, the job creation numbers for December were revised down by 65,000, meaning that instead of gaining 48,000 jobs as previously reported, there was a loss of 17,000. The very good January figures were also revised down by 4000, to 126,000. Taken together, only 7000 jobs were added in December through January, or about 2300 a month.

The unemployment rate also ticked up to 4.4% from 4.3% in January. This is a rise of a whole percentage point from the recent low of 3.4% in April of 2023. In addition, the labor force participation rate dropped from 62.1% to 62%, which tends to lower the unemployment rate, as people with jobs who stop looking are counted as out of the labor force and not unemployed. The increase in joblessness was concentrated among oppressed nationalities as the unemployment rate for Asians, Blacks and Latinos all rose, while the unemployment rate for white Americans stayed the same.

In another sign of economic weakness, U.S. retail sales declined in January by 0.2%, followed by no gain in December. Retail sales figures are not adjusted for inflation, which means that when the changes in prices are taken into account, actual sales fell for the second month in a row (note: these sales figures are seasonally adjusted to take into account the annual bump in sales during the holidays). This decline was led by a 0.9% drop in auto sales, which, as a big-ticket item, often are the first to suffer an economic downturn.

While one month does not decide the direction of the economy (look at the large gain in jobs in January), if large job losses continue, this would be a sign the economy is entering a recession.

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The court singled out Trump’s use of the International Economic Emergency Powers Act, or IEEPA, to levy tariffs on almost all countries and particular tariffs on Canada, China and Mexico – allegedly for facilitating the importation of fentanyl into the United States. The legal basis for the ruling was that the IEEPA makes no mention of tariffs.

This is the first major case where SCOTUS has limited the power of the presidency under Trump.

Trump was not happy about the decision, saying, “I can do anything I want” and re-imposed a global 10% tariff on imports using the Section 122 of the Trade Act of 1974, which allows the president to impose tariffs of up to 15% in response to a “large and serious” balance of payments deficits. The United States has been running large and serious trade deficits for decades, mainly because U.S., European and Japanese corporations have offshored production meant for the U.S. market, for example Apple’s computers and smartphones.

However, this law only allows for tariffs for a period of 150 days, meaning that Trump would have to ask Congress to agree to an extension in July. This is very unlikely to happen with the midterm elections looming.

Trump is also likely to expand sectoral, or good specific tariffs under section 232 of the Trade Expansion Act of 1962 where imports are a “threat to national security.” He has already used this to put tariffs on aluminum, steel, copper, lumber and wood products. This act is commonly misused because the threat to national security is not defined.

For example, imported kitchen cabinets are being tariffed because the wood products industry is claimed to be important to national security. However, this act requires an investigation and finding by the Commerce Department which takes time and effort and cannot be done on a whim.

In a sign that the chaotic tariff rollout and retractions are not over, the day after Trump declared 10% global tariffs, he raised the rate to 15%, the maximum allowed by law. Still to come will be lawsuits by U.S. companies seeking to be reimbursed for the billions of dollars in the illegal tariffs that they paid. Finally, are the review of the USMCA (formerly NAFTA) coming up in July, where the United States is expected to try to tighten trade rules.

While the SCOTUS decision was a setback to Trump’s imperial presidency, it by no means a return to a more free trade approach.

Both Democrats and Republicans are likely to restrict trade, in particular with China, which is surpassing the United States in one industry after another. For example, Trump used the section 301 of the Trade Act of 1974 in his first term to impose tariffs on imports from China on the basis of “unreasonable or discriminatory” trade practices by a country as found by the U.S. trade representative. These tariffs were maintained by the Biden administration and continue to this day.

Even a future Democratic administration is likely to keep major tariffs, especially since there are now industries benefiting from protection.

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This meant the rate of economic growth for the entire year of 2025 was only 2.2%, as compared to 2.8% for all of 2024. Thus, despite Trump’s claim of “the best economy ever,” Trump’s trade war with the world and his efforts at mass deportations only served to slow the economy.

The biggest drag on economic growth in the fourth quarter of October to December was a drop in spending on goods and services by the federal government. This is due to the impact of DOGE employment cuts hitting in October, and the non-payment of government contracts and their workers during the shutdown (federal workers do get paid when a shutdown ends).

At the same time, the Personal Consumption Expenditures price index, or PCE, on a year over year basis accelerated slightly from 2.8% in the September to October period to 2.9% in the last three months of the year. Taking out food and energy, whose prices rise and fall more than other goods and services, the so-called “core” PCE rose 3% in the October to December period, up from 2.8% in the previous three months.

Trump has said that the war on rising prices is done, and declared victory on the affordability front, despite the reality of consumer prices rising at a faster rate. But the Federal Reserve Bank, which uses the PCE as the measure of inflation, will be looking at the data, making it less likely to lower interest rates in the near future.

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While Trump claimed that foreign companies would pay for the tariffs by being forced to cut their prices, this did not happen. This can be easily seen in the index of import prices, which was exactly the same in December of 2025 as it was a year earlier in December 2024.

Economic study after economic study said that 90% or more of the cost of the tariffs were being paid by U.S. businesses or consumers. The Trump administration finally had enough of hearing the truth, so their chief economist, Kevin Hassett, said that the authors one study (who were on the economic research staff of the New York Federal Reserve Bank) should be “disciplined.”

There are two reasons why Trumps tariffs were not able to bring back more manufacturing jobs.

If Trump’s goal was to bring back manufacturing to the United States, he needed to bring down the prices of goods and labor that manufacturing needs. Instead, he put tariffs on raw materials and intermediate goods (manufactured goods that are used to make finished products) like steel and aluminum.

Also, while Trump likes to harken back to the industrialization during the McKinley administration (1897-1901) when tariffs were high, he omits the fact that the factories of that time were filled with immigrant labor. Thus, Trump’s attempt at mass deportation and terrorizing immigrants are driving away the very workers needed to re-industrialize.

#SanJoseCA #CA #CapitalismAndEconomy #Tariffs #TradeDeficit

For all his boasting about the “world’s greatest economy,” Trump’s first year in office pales behind 2024, in the last year of the Biden administration, when more than 750,000 jobs were created, more than 60,000 a month, four times the 2025 figure. What did boom in 2025 was the stock market, with the broad index of the S&P 500 up by almost 18% that year. But half of all stocks are owned by the top 1% of billionaires and mega millionaires, while the bottom 50% of the population who have to work for a living only own 1% of all stocks.

This update on the labor market actually brings the official jobs numbers more in line with other, more negative measures of how working people are doing. Consumer sentiment surveys have cratered, the University of Michigan index going from 71.7 in January to only 52.9 in December. This reading was lower than the low numbers during the past recessions going back to 1980, when working people were hit by the “double whammy” of high inflation (the Consumer Price Index or CPI rose more than 14% that year) and high unemployment (of almost 8%). The Consumer Sentiment Index bottomed out at 51.7 that year.

The economic struggle of working people could also be seen in the rising rate of borrowers falling behind on paying their loans. The delinquency rate on household loans rose to 4.8% in the last three months of 2024, the highest since 2017. This increase was driven by more and more home buyers falling behind on their mortgages and former college students falling behind on their student loan payments. Low income and younger borrowers were hit especially hard.

Another sign of consumers feeling economic stress is the latest report on retail sales in December 2025, which came in with no change. While this report is adjusted for seasonal factors, such as seasonal holiday shopping, it is not adjusted for inflation. So flat retail sales would mean fewer, but higher priced items are being sold.

Last but not least, the corporate-owned mainstream media focused on the January 2026 jobs numbers that came out in the same report. The report was better than expected, with 130,000 net new jobs, more than twice what economists expected, and the unemployment rate dropped a bit to 4.3%. However these monthly reports are revised three times, and the changes in the January numbers have been especially large. For example, the first report on January 2025 job creation that came out in February 2025 was 143,000 net new jobs created. But the final numbers just out show a loss of 48,000 jobs, or 183,000 fewer jobs than first reported. If a similar revision were to happen in February of 2027, it would wipe out all the new jobs in January 2026 and push the report to a net loss of about 50,000.

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Part of this is because private, for profit health insurance companies are raising the premiums on average of 18% this year. But most of the increase is because the Republican majority House of Representatives and Senate refused to extend government subsidies that lowered the cost of health insurance.

More than 20 million people will face premium increases. The doubling of costs is just an average, with many people facing far higher increases of three times, four times, or even as much as a 20-fold increase in their premiums. This will disproportionately affect people in ten mostly Republican-led states, including Texas and Florida, where the state governments did not expand Medicaid. In those states, people who would have been covered by expanding Medicaid had the use the ACA marketplaces for private health insurance. Another group more likely to face big hikes in health insurance premiums are the self-employed and employees of small businesses that don’t offer employee health benefits.

Millions of people will have to drop their health insurance, exposing them to financial ruin from health care expenses. This in turn will drive up premiums for all others, as the healthier are more likely to drop insurance, leaving those with more health problems and expenses to shoulder more of the cost.

The United States has the highest health care costs in the world, spending 50 to 100% more as a fraction of Gross Domestic Product (GDP, or total spending on domestic goods and services) as compared to other developed economies. At the same time, we have the lowest life expectancy and are falling even farther behind as U.S. life spans have stagnated for the last ten years.

This is mainly because of the for-profit health care system and lack of universal health insurance, making us almost alone among developed economies. The maternal death rate, or the number of women dying as a result of pregnancy, is high compared to other developed economies; for example, the maternal death rate in the United States is about twice as high as Canada’s. Not only that, the maternal death rate is almost twice as high as it was 35 years ago. In contrast, the maternal death rate in socialist China has dropped 80% in the last 35 years, so that their rate is about the same as the United States.

While Trump campaigned on a promise to lower prices on “day one,” in fact, prices have been rising at a fast rate in 2025, and could rise even more in 2026 because of the administration’s policies of higher tariffs on imports and reducing subsidies for health insurance.

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The rise in unemployment has hit African Americans the hardest, as their unemployment rate has soared from 6.2% in January to 8.3% last month, climbing by more than a third this year. In contrast, the unemployment rate for white Americans has gone up too, but only 3.5% in January to 3.9% in November, an increase of a bit more than 10%. So the ratio of Black to white unemployment has gone from 1.77 in January to 2.13 in November. This is in part a reflection of the long history of Black Americans being “last hired, first fired” and in part the racist policies of the Trump administration, in particular the big cuts in federal government workforce, which disproportionately hits Black workers.

The October and November reports on net new jobs saw a loss of 105,000 in October, mainly from federal workers who took buyouts from the DOGE cuts six months earlier.

In the last six months, three have seen job losses, while three showed gains. During this time there was a net gain of just 100,000 jobs, or an average of 17,000 per month.

The actual numbers might be worse, as the annual adjustments have been to lower the job creation by about 50,000 jobs a month. If this holds true for the adjustment, or benchmarking, for 2025, the economy would have been losing jobs for the last six months at an average monthly rate of 33,000 per month.

Despite Trump’s goal of “reshoring” manufacturing to the United States through higher tariffs, in fact manufacturing companies have shed jobs every month since Trump proclaimed “liberation day” when he announced higher tariffs on almost every country in the world in April. One problem is that Trump has also tariffed many inputs like steel and aluminum that are needed for manufacturing, making production more expensive in the United States, offsetting the tariffs on imports of finished goods.

While Trump has said that high tariffs under the McKinley administration (1897-1901), during the time of U.S. industrialization, he forgets that it was immigrants, not native-born Americans, who filled the factories at the turn of the century. Trump has not only stopped immigrants and refugees at the U.S./Mexican border, he has terrorized communities with deportation raids, and is limiting legal immigrants and refugees.

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While this inflation measure was lower than economists expected, the report should be taken with a large grain of salt. One of the reasons that inflation came in lower than expected is that it reported that there was basically no change in housing costs between September and November. Housing costs, including rents and estimated costs of home ownership, make up over a third of the CPI. This flatlining of housing costs typically only happens during a recession, and more likely reflected problems with the statistical methods used for this report.

One change that would also lower the inflation rate is that the Bureau of Labor Statistics, or BLS, that collects the data for the inflation report, removed the cost of long-term care insurance from the index. With premiums reported to have gone up 24% on average in 2024, this would tend to lower the index.

The report as a whole had a very large number of blank entries, partly because the October data wasn’t available. While inflation rates for specific goods were reported, other services – such as gardening and lawn care, which has many immigrant workers and was up 13.9% year over year in September – were not reported. One service that was reported that also has many immigrant workers was elder care, up 10.8%, possibly reflecting Trump mass deportation efforts that are hitting occupations with many immigrant workers.

Another under-reported service was insurance, including car insurance. Health insurance premiums were reported to be up only 0.6% in November, year over year, while in September they were up 4.2% from a year earlier, suggesting that these insurance premiums went down in October and November – something that virtually no one is seeing.

Last but not least, while many specific goods were down in price, such as eggs, many others were still rising at double digit rates. Beef was up 15.8%, while coffee was up even more, with prices 18.8% higher than a year ago. Home energy prices were up 6.9% from a year ago, even faster than in September, where the year over year rise was 5.1%. This was in part due to the artificial intelligence data centers being built, which require massive amounts of electricity, with more of it coming from new or reactivated nuclear power plants, which are the most expensive way to make electricity in the United States.

Finally, because of late start, with data collection only beginning mid-month, at the end of the government partial shutdown, this report included Black Friday sales, unlike normal November inflation reports, which would have pulled down prices reported and lowered the inflation rate.

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On October 15, a White House memo boasted a $13 billion investment in five Midwestern plants by automaker Stellantis. It also announced projects by Whirlpool, General Electric and others. Thanks to tariffs, Trump tells us, the prodigal sons of industry have returned.

But how does the scoreboard really add up for reindustrialization?

Not quite as advertised. These aren’t new factories; they’re old ones being retooled. Tariffs shoot manufacturers in the foot, since they drive up prices for supplies. Investing in new technologies takes skilled workers. This is a hard sell when ICE just deported over 300 Korean technicians from a Georgia car factory. Auto corporations, hearts full of liberal compassion, fear that “first they came for Hyundai.”

That said, there is a real attempt by both parties to “bring manufacturing back.” The truth is, this isn’t the same thing as creating jobs.

Putting America back to work?

The latest factories will be more automated than those of the past. For example, the Wall Street Journal reports that Hyundai’s latest auto plant in Georgia has a robot-to-human ratio of 2 to 1, compared to the 7 to 1 industry average. A study by the Society for Human Resource Management found that 23% of employment in direct production is mostly automated. While Trump promised booms in employment, the Bureau of Labor Statistics reported a loss of 12,000 manufacturing jobs in August alone. The Bureau predicts continued stagnation through 2034.

This trend is not new. In 1980, it took over ten hours’ labor to produce a ton of steel, and by 2018 this dropped to 90 minutes. Production levels have stayed constant, but the number of manufacturing workers has declined since 1979.

Automation not only reduces the number of jobs, it demands greater levels of education for the jobs it opens. Programming, overseeing, operating and repairing equipment often requires either college-level education or specialized training. Workers late in their careers, rural workers, or otherwise poor job-seekers are going to have a hard time accessing these skills.

Economist Robert Lawrence summarizes, “the sector should not be promoted as a vehicle of inclusive growth and employment for low-skilled workers.”

Falling rate of profit

Automation has sharpened the tendency for the rate of profit to fall. In order to undercut each other, manufacturers race to adopt the latest technologies. However, by doing so, they’re permanently raising the bar for machinery used throughout the industry (i.e. think the robot-to-human ratio discussed earlier). That means that a greater portion of their costs are constant. It’s impossible to squeeze an extra dollar out of a machine like it’s possible to exploit a human worker. The overall rates of profit can go down.

This can be seen in General Motors’ average annual operating margin, which went from 8.7% in the 1960s to negative numbers in the 2000s. Since 2008, car companies have been able to buck this trend to some extent. But this is the exception that confirms the rule: they needed help from Obama’s bailout and Biden’s subsidies. They’ve also slashed wages and relocated U.S. plants to union-busting states in the South. The 2023 strikers in the United Auto Workers know this all too well. But even in the past few years, automakers have seen their profit margins dip once again.

The race to the bottom is self-defeating. Low rates of profit make it harder to attract the finances needed to stay on the cutting edge.

Julius Krein, head of the New American Industrial Alliance, criticizes fellow capitalists for the big green dollar signs in their eyes. “During the last several decades, Americans found a way to financially engineer seemingly everything except for investments in critical techno-industrial capabilities,” he writes.

“Warning indicators are flashing red”

Because of this stagnation, more of the U.S. ruling class is ready for a heavier government hand. The prize at stake isn’t the average worker, it’s the average bottom line.

Oren Kass, chief economist at a conservative think tank, writes in Foreign Affairs: “Across the American economic dashboard, warning indicators are flashing red. The globalization and financialization of the past several decades have slowed investment, innovation, and growth. Industrial output and productivity have declined, and the United States has lost its leadership position in vital technologies – including in aerospace, energy, and semiconductors.”

It’s not just that lights are blinking on the dash, it’s also that capitalists won’t pay for a new car. “Simply put, the activities that generate the highest returns on capital are not the ones that have anything to do with building productive and innovative enterprises.”

Their solution is for the government to support gains that capital can’t achieve in the marketplace. Tariffs are one step of many. These are starting to compel manufacturers to invest in the U.S., which in turn forces companies to automate to avoid paying more workers. Industry representatives are also begging for subsidies and state-funded retraining programs. “Lead us,” the blind ask of the blind.

Salvaging jobs, or empire?

Attempts at reindustrialization have nothing to do with jobs and more to do with recovering profits. But above all else, it’s U.S. imperialism’s scramble against foreign competition.

Within U.S. borders, European and Asian automakers assemble more vehicles than the Detroit Three (Ford, General Motors, and Chrysler/Stellantis). Julius Krein complains that the U.S. is in the “middle of the pack” for overall automation levels.

China is leading the pack. The ruling class has come to admit the country’s economic superiority. “China has achieved advanced electrification with astonishing speed in part because of government support,” a recent Foreign Affairs article noted. “If the United States wants to achieve results like China, it will have to build more like China by replicating certain aspects of how Beijing organizes and mobilizes its production economy.”

In the same pages, former US Deputy National Security Adviser Nadia Schadlow recommends: “A commitment to reindustrialization would undercut China’s efforts to weaken the United States.”

The motivation behind attempted reindustrialization is clear – the U.S. monopoly capitalists face an existential threat from socialist China. And they can’t foot the bill to pull ahead. They are right to be worried. Modern manufacturing is central for everything from cars to drones to artificial intelligence. As much as Trump wants to sell the idea of some untapped potential for jobs, he won’t revive the factories of the 1950s. He’s desperate to shore up imperialism by milking what he can out of a declining industrial base.

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Trump was reacting to China’s announcement late Wednesday that it was strengthening its export regulation of rare earths and their products, in particular to prevent diversion to use by hostile militaries. China, in turn was reacting to the United States strengthening its export controls on computer chips in September. China also responded to the imposition of U.S. port fees on Chinese-operated and Chinese-built ships with similar regulations, which mainly fell on ships with some U.S. ownership.

Many people knowledgeable about China were left wondering why Trump reacted with higher tariffs, since the April escalation of tariffs to over 140% didn’t work. If anything, China’s economy may be even stronger to withstand another round of U.S. tariffs than it was in April. The latest trade report from China showed that while China’s exports to the United States had dropped more than 25% in September as compared to a year ago, overall exports had risen 8.3%. This shows that China has been successful in expanding trade with the rest of the world to more than offset the loss of U.S. markets.

China’s imports also rose 7.4% in September as compared to a year earlier. This is a sign that China’s economy is doing relatively well, as a growing economy will buy more imports. Here too China has managed to buy imports from other countries such as Brazil, which has become China’s main source of soybeans instead of U.S. farmers.

While China has pledged to retaliate if and when the Trump administration goes through with the high tariffs, there are still more than two weeks for Trump to back off.

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But there are twice as many workers contracted by the federal government than there are federal employees. These more than 4 million workers will be furloughed, and their lost wages will not be made up.

Depending on the length of the partial shutdown, making ends meet will be difficult for federal employees who lose pay, estimated at about $400 million each day. But the partial shutdowns have had a relatively small economic impact once they end, when back pay is made to employees the programs resume functioning.

However, this time could be different. During the last major shutdown, in Trump’s first term, new job creation was good, with about 150,000 new jobs being created each month. But in this time, job growth has only been about 25,000 jobs per month and is more likely to be hit harder by the losses from a partial shutdown.

In the first sign that the economy took a turn for the worst in September, the ADP, or Automatic Data Processing, report on non-government jobs showed a loss of 32,000 jobs, when a gain of 45,000 jobs was expected. Further, the August report was revised down to a loss of 3000 jobs, when the initial report was a gain of 54,000. Together with the loss of 23,000 jobs in June, this is the longest stretch of job losses reported since the recession of 2020.

Government job losses will add to decline in private sector jobs, as more than 150,000 federal workers who accepted a buyout during the DOGE cuts earlier this year will lose their severance pay September 30 and be unemployed. Further, Trump and other Republicans have threatened to fire even more federal workers, which hasn’t been done in previous shutdowns.

At the center of the political disputes are the large cuts in health insurance in the so-called Big Beautiful Bill. The cuts to Medicaid, the federal government health insurance for low income households, will lead to more than 10 million people losing their Medicaid insurance coverage. To make things worse, there is no money in the budget to extend subsidies to buy private insurance, causing those costs to more than double in 2026, forcing another 4 million to give up their health insurance. Last but not least, insurance companies are planning to increase premiums on average 20% next year.

Democrats have refused to vote for these cuts to health insurance, which is blocking the budget vote. But Republicans have been unwilling to negotiate, with the House of Representatives voting to keep the cuts and then headed home. President Trump and Senate Republicans are also insisting on the cuts, leading to a stalemate and the partial government shut down.

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The official unemployment rate in August, or “U-3”, ticked up to 4.3%, from 4.2% in July. This was the highest rate since 2021. While the unemployment rate for white Americans did not change, the unemployment rate for African Americans and Latinos both went up by 0.3%. The unemployment rate for Black Americans is now 7.5%, more than twice the rate for white Americans, which was 3.7%. Since African Americans have long been “last hired, first fired,” this increase points to higher overall unemployment in the near future.

The number of workers who are working part-time because they cannot find full time work because of the weak economy also rose, bringing the total unemployed and underemployed rate to 8.1%, again, the highest since 2021.

The positive number of net new jobs was held up by gains in health care and leisure and hospitality industries, which added a total of 75,000 net new jobs. But this was offset by losses of more than 50,000 jobs total in manufacturing, wholesale trade, temporary help services, the government, and other industries.

Manufacturing jobs fell by a net of 19,000, making this the fourth month in a row that manufacturing industries lost jobs. One example of this is farm equipment manufacturer John Deere, which announced hundreds more job cuts in August and has plans for more. U.S. farmers have been squeezed between the loss of export markets, especially China as a result of Trump trade wars, and the rising cost of farm equipment, and have cut back on new machinery orders.

Other measures for the health of the job market have also been in decline. On Thursday, the report on unemployment insurance claims showed another increase, this one of 8000 for the week ending August 30. The Job Opening and Labor Turnover Survey or JOLTS showed another drop in the number of job openings, falling below the number of unemployed. This is only the third time this has happened in more than four years.

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The average U.S. tariff rate on imported goods has gone up from about 2.5% before Trump unleashed his trade war in April to about 18% today. This increase in tariffs of about 15% would require a drop in import prices of about 13% to fully offset them, meaning that the foreign exporters would be paying the entire cost of Trump’s tariffs.

But in fact, the average price of imports has started to rise, not fall. In July of 2025, U.S. import prices rose 0.4%, and over the past year have fallen 0.2%, far from the 13% drop needed for “the world” to pay for Trump’s tariffs. This means that the vast majority of the tariffs are being paid by U.S. businesses and consumers.

Tariff-related price increases have just started to show in the Consumer Price Index or CPI. The CPI has gone from a low of 2.4%, as compared to prices a year earlier in March, before Trump’s “Liberation Day” tariffs, to the latest 2.7% in July. So far it seems that the bulk of the cost of tariffs have been borne by U.S. businesses, but more and more of them are saying that they will be raising prices in the future.

This is not a small matter, as Trump is continuing to raise tariff rates, with the de minimis exception on all countries but China ending at the end of August (China’s de minimis tariff exception already ended).Trump is also threatening even more tariffs, as high as 200% on medical drugs, and 300% on semiconductors. Given that these tariff hikes from Trump never seem to end, the price increases will be even greater as time goes on.

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This surge in the PPI portends higher consumer prices in the future. Since the PPI does not directly include import prices, consumers are now going to be hit with a double whammy. First by rising prices from domestically made goods and services, as prices of products made in the United States are rising faster, according to the PPI. And second, by import prices, which will increase by September, when the latest August tariff increases will start to show up.

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The disappointment was caused by the report that the economy only created 73,000 net new jobs in July. This was a much lower number than expected by economists and meant that the economy created the fewest jobs over the past year since March of 2021, when the economy was just starting to shake off a recession. There was also disappointment that the unemployment rate for African Americans and for Asian Americans increased by 0.4%, or four times as much as the unemployment rate for white Americans.

Many were also shocked by the very large downward revision in new job creation in May and June. While the original reports said that 144,000 and 147,000 net new jobs were created, the revisions brought the numbers down to only 19,000 in May and 14,000 in June. This raises the possibility a similar revision would that the economy actually lost jobs in July, which is a traditional way to mark the start of a recession in the United States.

Last but not least, President Trump was angry about the report. He claimed that he would bring prices down, but in fact they have been rising at a faster rate. Trump also said that his tax cuts and tariffs would grow manufacturing, but now the economy has shed manufacturing jobs for three months in a row. So, he shot the messenger by firing the head of the Bureau of Labor Statistics, which prepares the monthly report. This will cause even more doubt about whether the statistics in the future reflect the best estimate of reality or what best serves the interests of President Trump.

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