Contrary to typical pessimism, European financial and government officials are relatively optimistic about their economic outlook. They believe they successfully navigated the Trump tariffs with minimal damage, though concerns about future trade disputes and unmet investment commitments remain.
Despite causing significant personal hardship, government shutdowns have a minimal and short-lived impact on overall GDP. Lost federal worker pay is quickly restored upon reopening, and most economic activity catches up, making the net effect a near wash over subsequent quarters.
Beyond its long-term growth benefits, rational immigration policy can be a powerful short-term tool against inflation. By addressing labor shortages in critical sectors like construction, agriculture, and elder care, an increased and targeted immigrant workforce can directly reduce cost pressures on essential goods and services.
The recent government shutdown will create a permanent void in crucial economic data for October. While statistics like payrolls might be collected retroactively, survey-based data such as the Consumer Price Index (CPI) and household unemployment figures are likely lost forever due to recall bias, creating a black hole in the historical record.
A proposed 50-year mortgage, intended to improve housing affordability, is a flawed solution. The extended term means borrowers build equity at a negligible rate, making the financial outcome similar to renting and failing to deliver the key wealth-building benefit of homeownership. It's a demand-side fix for a supply-side problem.
Despite a sense of calm among some European officials, the trade dispute with the U.S. is not over. A proposed 107% tariff on imported Italian pasta, scheduled to take effect January 1st due to dumping allegations, highlights that tensions remain and future conflicts may target specific, culturally significant products.
A wave of federal job cuts structured as "deferred resignations" did not spike unemployment insurance (UI) claims because they were classified as voluntary departures, making workers ineligible. This technicality masks the true labor market impact, which instead appears in claims from laid-off private-sector government contractors.
To address the housing supply crisis, policymakers should index the capital gains tax exclusion for home sales to inflation. The current thresholds, unchanged since 1997, create a disincentive for long-term homeowners to sell. Adjusting the exclusion would incentivize downsizing, releasing existing housing stock onto the market for new buyers.