As if food prices aren't high enough, climate scientists around the world are concluding that the October-December El Niño period this year could see numerous droughts, floods, and other climate catastrophes. If so, the impact on the supply of agricultural commodities could be serious.

 

There have been 20 El Niños recorded over the past 75 years. For those who don't know, this climate pattern occurs when unusually warm sea surface temperatures spread across the central and eastern Pacific Ocean. This causes a shift in global weather patterns that affects different regions in different ways. Some areas experience heavy rains while others wither under severe droughts.

 

Right now, more than half of England is already in a drought. Overall, as we watch and read about record heat in Europe and forest fires in France and Spain, something even more insidious is occurring in the Pacific Ocean. Scientists are already recording above-average sea surface temperatures for this time of the year (2.0 degrees above average). The tropical Pacific is warmer right now than at any time over the 45 years of satellite record keeping.

 

Consensus forecasts from scientists indicate this year's El Niño will peak at 3.6 degrees Celsius above normal. The record over 149 years of data is at most 2.75 degrees, which was set in 2015-2016. Throughout its history, only six El Niños reached the level of severity expected for this year's event.

 

Some are already calling it the "Super El Niño," which is expected to peak sometime this fall, at the very time of South America's planting season. As you might imagine, the weather could cause severe disruptions to planting cycles and to the harvest of food crops, including sugar, wheat, corn, soybeans, coffee, cocoa, and more.

 

How serious could it become? Back in 1877, the middle of the Pacific Ocean was hotter than anyone could recall. Rain did not come to India, Brazil, or China that year. The soil dried up as crops failed across five continents. Millions died, and it came down to governments deciding who starved and who ate. Fast forward to modern days.

 

You may remember the great run on the world's cocoa crop caused by El Niño a few years ago. The Ivory Coast, where 38% of the crop is grown, was deluged by heavy rains and extreme heat. Insects swarmed destroying the rest. Cocoa prices soared, hitting a record $10.97 a kilo in April 2024. That particular El Niño ranked fifth in modern record keeping. This one forming now is presently ranking number one.

 

In past El Niño events, wheat production in Australia fell dramatically and could again fall by 20-60 percent if drought becomes a factor. The same could be said for corn in Brazil, coffee in Vietnam, sugar in India, Thailand and Brazil, and grain supplies globally.

 

Compounding the weather threat is the impact of climate change, plus two wars at the same time, all of it disrupting the global food production system. The Strait of Hormuz has been shut to commercial traffic for five months. Aside from oil, much of the world's fertilizer production has also been choked off in the Strait, while Europe burns and crops wither. Russia and Ukraine together represent about 27-30 percent of the world's wheat crop. As their war drags on, both countries are aiming their missiles and drones at each other's wheat exports.

 

By this time, I think you are getting the picture. If there is a silver lining to this potential dark cloud, it is that El Niño may help grain production in the U.S. Warmer-than-normal weather conditions are expected across North America, which could benefit the growing cycle. At the same time, El Niño conditions might suppress Atlantic Ocean hurricanes. If farmers do not run out of fertilizer, the country could act as a buffer for grain markets worldwide, especially for corn and soybeans.

 

There is also a chance that between now and September, weather patterns change and the force of El Niño dissipates, along with rising temperatures in the Pacific waters. It is getting late in the day for that to occur, however. There could also be an end to Trump's war, and to the other war he promised to end on day one of his second term. If not, I expect that come winter, and just in time for the midterms, consumers will once again be hit with surging food prices on top of what we are already paying.

 

You may have missed it given all the geopolitical turmoil, wildfires, and so on. Congress passed a bill this month that some call the most significant piece of housing legislation in almost 40 years. It is called the 21st Century Road to Housing Act.

 

It is remarkable for a variety of reasons. It is a bipartisan effort by both houses of Congress, which the president refused to support or sign. It became law anyway (a first). The legislation encompasses 50 measures, a hodgepodge of ideas from both sides of the aisle. The intent is to relieve the scarcity of affordable housing for a generation of low- and middle-income Americans.

 

Homeownership has long been a cornerstone of the American myth. For so many of the younger generations, it has become hopelessly out of reach. In many urban centers, a typical starter home can now command almost $1 million. Home prices have increased by 54 percent nationwide, and even if a young couple could scrape up enough for a down payment, the monthly costs of owning a home have also skyrocketed.

 

A report by the Joint Center for Housing Studies at Harvard reveals that the monthly cost of a median-priced home was $3,120 in the fourth quarter of 2025. Today it has jumped to $3,200, including mortgage payments, thanks to inflation and a variety of other costs. From 2019 to 2025, property taxes gained 31 percent, insurance premiums rose 72  percent, and interest rates on mortgages are above 6 percent and continue to increase. Overall, monthly costs have risen 46 percent since 2019. No wonder the homeownership rate last year fell for the second year in a row! No surprise that the largest decrease was in those under the age of 35.

 

In past columns, I have written at length about the plight of our youngsters. They are strapped with student debt, a weaker job market (thanks to AI and other factors), and are still living with family in basement apartments or their old bedrooms. There is little affordable housing being built to answer the needs of our younger generations. The new bill aims to remedy that problem.

 

It does so mainly by loosening local building regulations while encouraging building. In some cases, it offers areas that build more housing to receive a bigger share of federal funding while cutting money from areas that don't. On the lending front, the act reduces regulations around rural community banks, where most lending occurs in the small mortgage market of less than $100,000.

 

It also discourages the practice of private equity firms that buy up huge swaths of single-family homes. Critics argue that practice reduces the housing stock and forces many would-be buyers to rent instead. It allows investors to hold onto houses they already own but prohibits any future purchases that would bring their holdings above 350 homes.

 

Ask any builder, and they will tell you regulations are the bane of their existence. Red tape, they complain, adds delays, unnecessary costs, and huge headaches for builders and buyers alike. It won't happen overnight, but the act will loosen federal regulations, making it easier and cheaper to build housing at lower prices. It also relaxes lending rules, but probably the most important change is just a tiny tweak to a 50-year-old law.

 

Until now, mobile homes or manufactured homes were required to have a permanent chassis — that's the under-frame that is used to transport the house and must be left attached. It no longer needs to be attached. Those steel chassis can now be reused, saving anywhere from $5,000 to $10,000 toward the price of the house. That may not seem like much, but it is in the world of manufactured housing.

 

Remember, the bill is addressing affordable starter homes for buyers priced out of the market. Manufactured housing can cost anywhere from 27 percent to 65 percent less than houses built on site. When you consider the average manufactured home costs about $135,000 to build, a $10,000 reduction in costs would go a long way if the builder passed that savings on to the first-time home buyer.

 

Now, before you hold up your hands in horror that America will soon become a nation of trailer parks, settle down. Let's take a closer look at manufactured housing. They are built in factories like automobiles, and as such, economies of scale are at work. They use standardized materials and centralized purchasing. Weather isn't an issue, nor is a shrinking labor supply (due to immigration policies).

 

Getting rid of a huge, cumbersome steel frame under the house both saves money and opens a whole new set of possibilities. We could see multi-story versions or houses that are designed to be lower to the ground. Basement installations would be possible and cheaper as well. It could radically change the whole stigmatized trailer park environment we grew up with. The act also provides grants to communities to repair some of those dismal parks that have become eyesores in many neighborhoods.

 

There are too many parts to this legislation to cover thoroughly in the space I have allotted. Is it a panacea for filling the multi-million home building gap we are experiencing today in the U.S.? Not entirely, but it helps. It does set up the conditions to increase the country's housing supply, expand home ownership, and bolster community development programs.

 

It is not an instant cure. Although federal regulations on home construction are being relaxed, there are a myriad of local zoning laws and building regulations that need to be addressed as well, especially in the manufactured-home segment. And the legislation does not address two of the largest issues in the real estate market right now. High mortgage rates and the 54 percent increase in home prices over the past five years.

 

President Trump refused to sign the bill, which automatically became law on July 11. He said he would only sign the bill, which he dismissed as "a big yawn" and "of minor importance," unless Congress passed his pet legislation, a strict voter ID bill, called the SAVE America Act. Even his most partisan allies in Congress could not muster the votes that, if passed, would require proof of citizenship to register to vote and photo ID to cast a ballot. In a mid-term election year where affordability is of critical concern to voters, the president's decision on housing is right up there with his handling of the Iran war.

 

In an era of populism, distrust in government is rampant. That lack of trust has seeped down into just about everything one reads or hears. Government data is no exception.

 

As I wrote in my last column, our own president fired the head of the Bureau of Labor Statistics, claiming the BLS was "broken." He further claimed it would need new leadership "to restore trust and confidence in the BLS's data."

 

Since then, although there has been an acting BLS commissioner, no permanent replacement has made it past the Senate. Six months ago, Trump picked a veteran economist, Brett Matsumoto, as his nominee. This week, a Senate committee voted (12-11) to advance his nomination, but it is unclear whether the full Senate will vote to confirm the nomination. 

 

In his confirmation hearing, Matsumoto recognized the potential for further manipulation and politicization of the BLS. "It is important for the public to be confident that decisions at the BLS are being driven by science rather than politics," he said.

 

If it is science he is after, he may first need to hire qualified subordinates. Fully one-third of the top leadership positions at the BLS are vacant. That may be difficult, since there is a hiring freeze in effect, plus he must deal with a swath of deferred resignations and early retirements. That could be an uphill battle given that the Supreme Court gave the president carte blanche to fire independent government regulators despite federal job protections. As for the money needed to upgrade the governmental data systems, that too will be problematic.

 

In the meantime, meddling with government data, at least on the inflation front, continues. Last month, the Bureau of Economic Analysis, which calculates the Personal Consumption Expenditures Price Index (PCE), announced changes to how they plan to track data. The new method for capturing data and calculating price changes across three subcategories will be revised. In essence, the changes will make the numbers look better (with less inflation) than in the past.

 

Analysts estimate it will reduce core PCE inflation by about 0.2 percentage points. You may remember that Stephen Miran, a Trump advisor and chief architect of "reciprocal tariffs," was appointed to the Fed for a six-month stint and then replaced by the new Fed Chairman Kevin Warsh, another Trump appointee.

 

Miran, along with two Fed staff economists, is behind this effort to alter the PCE, the Fed's main inflation index used to determine the nation's inflation rate. I am sure the Fed will have logical, technical reasons to justify this improvement in their key inflation indicator.

 

At the same time, Fed Chairman Warsh is creating five new policy review task forces to investigate communications, balance sheet policy, productivity and jobs, inflation frameworks, and data. It seems more tinkering is ahead of us.

 

I guess it is pure coincidence that these changes come at a time when mid-term elections are a few months away. We won't know the result or the changes (if any) that may occur until next year. I'm hoping it helps rebuild trust and accuracy rather than the opposite.

 

In my career, I have seen instances of politically motivated meddling in places like Greece, China, and Argentina, to name just a few. In every case, investors lost faith in the data of the country in question, leading to higher borrowing costs.

 

We already have an almost daily problem with nonpublic information that can move markets coming from both within and without the government. Some of it is legal (if questionable); some of it involves leaked advance information from government sources. It doesn't seem that any of the regulatory agencies is willing or capable of stopping it.

 

Taken together, the leaks and inaccuracies among government agencies, both real and intended, are contributing to a deepening sense of distrust and cynicism among voters. Further neglect and delay in regaining that gold standard of government statistics that the country earned over decades should not be taken lightly.

 

The data system supporting U.S. economic decisions is losing staff and funding. What's worse is the diminished trust the financial markets have placed in that data.

 

There are roughly 13 primary statistical agencies embedded within various cabinet departments and federal agencies. There are another 100 or so small decentralized statistical offices scattered across different agencies. A major problem all these agencies face is in data collection. The process is antiquated, and the system overall is worse.

 

It is a system badly in need of modernization, innovation, and a huge technological overhaul. The introduction of artificial intelligence might help. To do so, we need to bring in outside partners in the private sector. The government needs to identify state-of-the-art players in AI but also in other areas. Those that have the ability and experience in data gathering necessary to come up with new methods and strategies to obtain data in the most efficient and accurate ways possible.

 

Currently, in this age of cost-cutting through bureaucratic reductions, there is little enthusiasm in Congress or the White House to address the problem. Few data advocates exist in today's mostly populist Congress. Since bureaucrats rarely, if ever, get to talk to legislators, it's an out-of-sight, out-of-mind kind of situation.

 

As things continue to fester, another issue has also seeped into the equation. A growing belief among many is that this data is trustworthy. Is this data truly unbiased, or has it become politicized?

 

Readers may recall that a year ago, President Trump fired the head of the Bureau of Labor Statistics, Erika McEntarfer. Trump, fresh off his second presidential win, was incensed when the BLS released a revised employment statistic. The BLS reduced the number of jobs thought to have been created from March 2024 to March 2025 by 91,000.

 

Those 91,000 ghost jobs rank among the largest revisions in recent decades. "Biden's economy was a disaster, and the BLS is broken," Trump claimed, "This is exactly why we need new leadership to restore trust and confidence in the BLS's data on behalf of the financial markets, businesses, policy makers and families that rely on this data to make major decisions."

 

Trump had a point. Ever the political animal fresh off a tight race, the president recognizes the iron law of American politics — economic conditions drive election results. Historically, good economic indicators (such as low unemployment, rising wages, and low inflation) often help incumbents, while poor performance hurts them.

 

Conspiracy theorists immediately accused the former administration of padding the numbers in hopes of tilting the voters toward the Democrats' candidates. Whether that was true or not, experts insist that the process that produced that number, while imperfect, was transparent and has been used by the agency for decades. This conclusion was largely echoed by the Chairman of the Federal Reserve.

 

Back in December 2025, former Fed Chairman Jerome Powell explained that the BLS has consistently overstated jobs by at least 60,000 per month since April of 2025. The culprit was a monthly BLS estimate of how the labor market is affected by business openings and closings. The estimate, known as the birth-death model, guesses at the jobs gained and lost due to closings. This, Powell said, was "something of a systematic overcount" that would likely see big revisions to job growth numbers.

 

Nonetheless, Trump, without any evidence, fired the BLS chief, claiming the data was being rigged. That move had ramifications that reverberate today. New research by four economists at the Center for Economic and Policy Research indicates that because of Trump's claims, there was a sharp increase in policy uncertainty among American businesses. That reduction in trust and increased uncertainty depressed economic activity as corporations pulled back on investment. 

 

The hit to the economy was in the vicinity of $20 billion. Next week, I will discuss additional ramifications of doing nothing to change the status quo of how government data is gathered and distributed. 

 

It has been 10 years since Brexit took center stage in the politics of the Western world. The populist furor of an unhappy electorate triggered Great Britain's exit from the European Union. How has that worked out for the Brits?

 

The populist rhetoric of a "Global Britain," their answer to MAGA, was supposed to secure their borders by reducing immigration. Bureaucracy would be jettisoned; regulations and the budget would finally be restored after 14 years of Conservative Party mismanagement.

 

It would be the first populism-led attempt to overhaul one of the world's oldest and wealthiest democracies. A decade later, it appears the nation is up to its ears in chaos. Prime Minister Keir Starmer resigned this month after serving less than two years despite a landslide Labor Party victory. He was supposed to save the country from years of successive Conservative Party prime ministers.

 

Instead, the country is struggling with low growth, higher inflation, faltering public services and an electorate that is every bit as angry and partisan as our own. Over the past decade, the country has had six prime ministers. David Cameron, Theresa May, Boris Johnson, Liz Truss, Rishi Sunak and now Keir Starmer are some of the names you may recognize. Brexit itself, scandal, market panic, immigration, and electoral rejection are just some of the factors that have sunk Britain's leaders.

 

Back when, many economists were predicting an immediate recession if the country left the EU. It didn't happen. What happened was that, over time, the British economy grew far less than it might have if it had stayed in the trade bloc. At the same time, business investment and productivity slumped as trade suffered. The typical family is worse off by thousands of pounds per year.

 

The pound dripped sharply after the Brexit vote, collapsing by 10 percent, the largest one-day drop in its history. That triggered a sharp increase in import prices, leading to an inflation shock that affected everyone across the board. The exit from the EU also involved erecting trade barriers that hit goods exports, since the EU was still the UK's largest trading partner until last year.

 

The problem deepened since no one in government had a clear plan on what to do once the votes were counted. This led to years of political infighting and indecision. A weaker currency should have led to a surge in exports, but the uncertainty around Britain's future clouded business judgment and investment. Investment is estimated to be almost 18 percent lower and productivity 4 percent lower than it would have been if a plan had been forthcoming.

 

The currency has never recovered.

 

The Office for Budget Responsibility, the independent watchdog of the UK Treasury, predicts that the UK is on track to suffer a 4 percent hit to national income over a 15-year period. A U.S. National Bureau of Economic Research report claims that the country's GDP per head is between 6 percent and 8 percent lower than it would have been without Brexit.

 

As for unemployment, that fell dramatically in the initial Brexit days to the lowest rates since the 1970s. However, COVID took its toll on the labor market. The employment rate has never really recovered and remains between 3 percent and 4 percent below what it would be under a "remain" decision.

 

Can I extrapolate from the UK's experiences to the present immigration, trade, and tariff policies of the Trump administration? Not really, at least in the short-term. Equity markets in both countries recovered quickly after the referendum and Trump's Liberation Day. Both countries' economists initially predicted a steep decline in economic activity, and both were wrong. However, over the long term (a decade in the UK), large trade policy shocks seem to lead to lower investment, productivity, and employment growth as supply chains and trade patterns unravel.

 

Not surprisingly, public support for Brexit has fallen since the 52 percent versus 48 percent leave vote. Today a majority of voters (56 percent) would back rejoining the EU, according to YouGov, and 70 percent of Britons support a closer relationship with the EU. Support is strongest among Labour and Green Party voters and weakest among Nigel Farage's right-wing, Reform UK party. Reform UK members oppose rejoining the bloc by 83 percent. That party has gained support as immigration and affordability have become major issues for voters.

 

The next candidate for PM, at least among the Labour Party, is Andy Burnham, a Manchester mayor with authentic populist appeal. In a special election, Burnham beat the Reform Party, which pundits believe will clear the way for him to head his party and win the PM title in Britain. The question is how long he can last, given the issues and the populism in his country and around the world.

 

Readers may recall several of my past columns in which I have explained the populist wave of discontent in the U.S. and worldwide. I wrote that, here at home, over a 20-plus-year period, no single president survived to serve a second term, except Richard Nixon (who was impeached without completing his second term).

 

Populist voters have a very short fuse. Promises are made, but unless real progress is made within four years, the electorate has no patience for incumbents who can't or won't deliver. Overseas, beyond the UK, France, Germany, and Hungary, several other countries are facing populist challenges to incumbent parties.

 

We are seeing this here in the U.S. as we head into the midterms. Promises made but not kept have sent President Trump's approval ratings into the 30s. Within the Democrat Party primaries, a war is already brewing between a growing populist wing of the party and the more conservative incumbents. Established Democrats, their critics say, offer failed 40-year-old policy solutions that have been rejected out of hand by younger generations of disenfranchised voters.