Post Tagged with: "United States"

Understanding what a neutral macro-economic policy looks like






This is going to be a quick follow-on to the last post on monetary policy as the only game in town. I feel like the obvious question that post doesn’t answer is this one: what other policy tools we should use? And I want to tee up that question with this post.

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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.






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How the Fed handles financial stability is key to avoiding a crisis

How the Fed handles financial stability is key to avoiding a crisis






I’ve got two objectives here. One is to talk about the Fed and the other is to discuss the evolution of the US economy. Most of what I want to say is upbeat, both on the Fed and the economy. And I’ll lead with that. I do have some doubts about the long-term though – and I want to give […]

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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 […]

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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.






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The oil price cliff dive will end the prospect of double-barrelled tightening

The oil price cliff dive will end the prospect of double-barrelled tightening






A pause is being considered at the Fed, even by hawkish FOMC members. The oil price crash now gathering steam makes this pause more likely. Maybe Bullard’s infamous low dot on the Fed’s Summary of Economic Projections is the right way to look at Fed policy.






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How monetary policy entrenches secular stagnation






Recent statements by monetary authorities in Canada, the United States and the United Kingdom tells us rate hikes are possible in all three this year. This trio of English-speaking G7 nations is at a different phase of the monetary policy cycle than Europe or Japan. The implications are unclear though.






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The Fed will continue to tighten despite inflation below target

The Fed will continue to tighten despite inflation below target






New York Fed President William Dudley has reiterating Fed Chair Janet Yellen’s determination to push forward with interest rate hikes despite inflation below 2%. The Fed will continue to have this stance unless and until economic data weakens significantly.






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The Fed’s financial stability concerns, auto subprime edition

The Fed’s financial stability concerns, auto subprime edition






Below are some data points from recent credit statistics and analyses, showing trends in the auto credit sector.






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The Fed’s financial stability concerns before its June hike

The Fed’s financial stability concerns before its June hike






Hiking rates now after a monster commercial real estate cycle has already developed is akin to closing the stable doors after the horse has already bolted. But this may be a concern of the Fed. Let’s see what the Spring 2017 OCC Risk Assessment says when it comes out.






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Why commercial real estate will be central to the next credit bust

Why commercial real estate will be central to the next credit bust






On Sunday, macro strategist Lawrence McDonald made three tweets about corporate real estate I think merit highlighting. They show a corporate real estate market that has been white hot during this particular business cycle. And that means it is one of the credit sectors to watch for signs of distress






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Secular stagnation is a policy choice

Secular stagnation is a policy choice






In my most recent posts, I have been saying that bond markets are pricing in secular stagnation scenarios based on how shallow the yield curve is. But secular stagnation is a policy choice. And that is something I thought I should highlight in view of UK Prime Minister Theresa May’s change of heart in pursuing austerity. Some comments below






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