Category: Economy

The one data series you should follow to know if the US expansion is in good shape

The one data series you should follow to know if the US expansion is in good shape

Since we experienced a severe economic trauma due to the subprime financial crisis, there has been an almost reflexive disbelief in the durability this economic expansion. There are times when I would count myself amongst the disbelievers. For example, during the shale oil bust, I worried that Fed rate hikes would be the straw that broke the camel’s back. But […]

Read more ›
Why the downside risks of Brexit are mounting

Why the downside risks of Brexit are mounting

While the UK economy did better than predicted in 2016 in the immediate aftermath of the referendum vote on leaving the European Union, growth has since stalled and inflation has risen. Beginning in January, I have been saying that risks from Brexit are rising. Let me reiterate that case below. Now, because this is such a contentious subject, with Britain […]

Read more ›
What the 33,000 job loss means about where the US economy is right now

What the 33,000 job loss means about where the US economy is right now

The latest jobs number out of the US was a loss of 33,000 jobs in a hurricane-ravaged September. Despite the job losses, the unemployment rate ticked down to 4.2%. Viewed narrowly, this number puts the Fed on hold until December. But viewed more broadly, I believe now is the time to talk about Minsky’s ‘instability of stability’ and what it […]

Read more ›

Hurricane Irma, jobless claims and economic growth

Irma, the devastating hurricane that hit Florida with its full force, was not as destructive as it could have been. But the impact on the economy, beginning with unemployment, has already been felt. As the Hurricane made its way toward the US mainland, damage estimates ratcheted up. But the ‘Bermuda High’ dampened the impact. Here’s how Bloomberg describes it: The […]

Read more ›
Some thoughts on full employment and this asset-based economic recovery

Some thoughts on full employment and this asset-based economic recovery

I see that Dartmouth economics professor Danny Blanchflower is talking about slack in the US labour market because he believes the Fed is premature in assessing its full employment mandate as fulfilled. I have a few thoughts on this issue I want to flesh out below and the crux of my narrative revolves around the over-dependence on monetary policy as a policy lever.

Read more ›
US economic growth still in the 2ish% channel

US economic growth still in the 2ish% channel

In the aftermath of the shale oil bust that sent the US economy to stall speed in 2015, growth has rebounded, but only to a sort of 2%ish level. Continued low inflation insures further low nominal GDP growth aka secular stagnation. But so far, this stagnation has not made the economy more susceptible to recession. Some brief thoughts below Here’s […]

Read more ›
OLYMPUS DIGITAL CAMERA

Baumol’s cost disease, aging societies and inflation expectations

Quick hit here. I have been banging on about lowflation, repeatedly suggesting it is here to stay. The Fed, on the other hand begs to differ and is pre-emptively normalizing rates, as a result. No matter how you look at this, there’s a rub though: We all consume different products, so we each experience a different individual inflation rate. Even […]

Read more ›
The wisdom of crowds and government bond markets

The wisdom of crowds and government bond markets

When you look at how markets are positioned, it’s clear that a lot of people see continued low growth for years to come – a veritable Japanification of the US economy. I hope this is one of those times that markets are wrong. But I am not willing to bet on the hope, just the opposite.

Read more ›
Abenomics and Japanese growth

Abenomics and Japanese growth

Only during the Great Recession did nominal GDP break out of a tight range – and then, it did so to the downside. We are nowhere near the top of the range now, nor should we expect to be anytime soon.

Read more ›
Could the UK be headed for an inflationary recession?

Could the UK be headed for an inflationary recession?

The Bank of England kept its key policy rate unchanged at a record low 0.25% . Three dissents show how a weak currency and rising inflation are making it harder to keep rates low. The worst case scenario is an inflationary recession, which would topple Theresa May.

Read more ›
Anarchy in UK politics means lower yields and ends austerity as we know it

Anarchy in UK politics means lower yields and ends austerity as we know it

There are several threads I want to comment on in the wake of the UK general election. And from an economic standpoint, the conclusion that follows is that austerity in the UK has now lost its appeal politically. It also means lower yields for longer. Let me explain how I came to this conclusion.

Read more ›

Weekly initial claims down to 236,000 as Q2 heads to 3% growth

The labor market in the US is tighter today than it was at the same period last year. This, in conjunction with the last jobs report, gives cover to the Fed to hike rates in June.

Read more ›