26 Aug ‘Cause there ain’t no cure for the summertime blues

By Pasadena Private Lending President Mike McAdams

Eddie Cochran released “Summertime Blues” in August of 1958. From an economic perspective, a weird coincidence seems to exist with today’s economy and with the economics of the summer that song debuted. Today’s environment also has a mixture of economic plusses and minuses that mirrors the conditions of the summer of 1958.

Take a look at these highlights from 1958:

• GDP fell by 1.5%.
• High unemployment, peaking at 7.7% after the mid-50s recession and August 1958 was the high point.
• Stubborn inflation, where consumer prices continued to rise despite slow economic statistics and high unemployment.
• Mixed consumer spending that favored non-durable food and clothing over autos, furniture, and appliances (where tech spending wasn’t a factor yet).
• Regional and select industry differences were significant as the “old economy” was slowing in the Midwest and
• Northeast traditional manufacturing states. Some migration by workers was beginning to be seen to states with more jobs and better economic prospects.
• Government debt from WWII, while down 75% from war levels, was combined with stimulus measures and lower tax revenues to stress investors.
• FED members disagreed about whether to raise or lower rates to curtail inflation or reduce unemployment.

Anything look familiar?

At PPL, we are not economists, but we are focused on the uncertainties that exist today. We have the benefit of talking with our past, existing, and prospective borrowers and at least at the micro, small and medium sized business level, we see the current uncertain world as at least “half full.”

• Improved balance of trade position from tariff strategy could benefit long term employment, GDP, and the dollar at the cost of short-term inflation.
• Most of the small and medium sized businesses we finance are more domestically focused, both from a supply as well as sales standpoint. As such, much of the global trade noise is less of an issue to them.
• Cost of labor has continued to remain high since COVID and, with the lower echelon of workers being subject to ICE investigation, supply issues are likely to remain.
• On the other hand, tax breaks and reduced regulatory hurdles are helping simplify strategic initiatives.
• Either by Presidential “jawboning” or Fed conclusion from data, it does seem rates will be cut to some degree in the next few months.

In summary, just as August 1958 marked the turning point of the Summertime Blues of 1958 as unemployment began to decline, rates began to slowly recover, GDP began to grow, and markets began to stabilize, we see the last half of 2025 to likely be a period of consolidation that leads to a reasonably strong 2026.

Yes, there remains extraneous crosscurrents that can knock the economy’s trajectory off course, but we do not forecast any significant derailments. We would hope that trade and tariffs will get sorted out, one way or another, and that businesses will adapt, as we hear what they need is consistency.

Beyond that, most other aspects of domestic economic policy are pro-business. So, with a relatively bullish consumer and industrial demand, we expect to see slow but growth in GDP in the 2% range, with declining inflation and rebalanced job growth… as in lower unemployment but new job creation moderating.

We do expect minor interest rate and government spending cuts (net of defense spending and tax cuts) and are waiting to see how markets will react longer term to the deficit after all attempts to reduce it are factored in.

There are cures for the current malaise and they are likely on their way but maybe not till the summer is past when we are closer to Simon and Garfunkel’s “Hazy Shade of Winter.”