• slow_4

    Lower Level

    Since 1947 real GDP growth has averaged 3.26%/year. Since 1/1/10 it’s averaged 2.3%. Economists think that some of the decline will persist for a while because of both slower productivity gains and population growth. Therefore, the neutral Federal Funds rate, the rate that’s neither expansionary nor … [Read More...]

  • TR007241

    Wonky Wages

    Seattle’s decision to boost its minimum wage to $15/hour, the highest anywhere, is bad policy. Unlike a rise in the federal minimum wage which affects all employers, this increase only applies inside the city. Thus, employers in low-wage industries in Seattle will be at a distinct financial … [Read More...]

  • The newspaper  GOOD NEWS  and coffee

    Nice News!

    On Monday we learned that existing home sales in May jumped 4.9% to a rate of 4.89 million/year, the best pace since last October. Better yet, yesterday we learned that new home sales jumped from a rate of 433,000/year in April to 504,000/year in May, the best activity level since 5/08 and that … [Read More...]

  • euro

    Mediocre Monetary Meddling

    Rather than using a cannon, last week the ECB used a popgun. By reducing the rate it charges banks on loans and by charging banks on deposits held at the central bank, the ECB hopes to spur lending. It won’t happen. Separately, it’s also finally injecting liquidity into the banking system. What … [Read More...]

  • percentage-dice

    Rotten Returns

    Why are rates so low? Let me count the reasons: flight to quality due to rising geopolitical risk, the Fed’s promise to keep short-term rates low for a long time, Japan’s massive monetary stimulus, the ECB’s decision to start printing money, weaker than expected US growth, no evidence of commodity … [Read More...]

Sep
22

Financial Fecklessness

G-20

In one of the dumbest economic announcements ever, the G-20 group of industrialized and developing nations has agreed to boost global growth by two percentage points over the next five years; from 3.4% to 5.4%. What puzzles me is if these narcissists really think they can do it why did they wait? … [Read more...]

Sep
19

Costly Coinage

penny

The Friday File: It costs the US Mint 1.7 cents to produce a penny, 9.4 cents to mint a nickel. As the Mint makes about five billion pennies/year and one billion nickels/year, those overages sum up to a loss of $110 million/year. Being a penny pincher, I say stop pushing pennies, or at least make … [Read more...]

Sep
18

Sluggish Salary

lessmoney

Inflation-adjusted US median household income (MHI) rose to $51,939 in 2013, up $181 from 2012. The problem is that MHI is still slightly less than it was in 1989 -- 25 years ago -- and MHI is still 9% below the all-time peak of $56,895 in 1999! Since 2009 incomes have only risen for the top 5% of … [Read more...]

Sep
17

Inexpensive Internet

internet

Congress’ decision to extend the prohibition on states taxing Internet access through early 2015, stinks. Taxing the Internet is great tax policy because few households will reduce their demand for the Internet because it’s taxed. Inability to avoid taxation is part of what makes a tax good, because … [Read more...]

Sep
16

Feeble Food

soybeans

To the bewilderment of many, economists ignore food and energy prices when considering inflation. Here’s why. Two years ago soybeans were $17.94/bushel because a drought sent prices to all-time highs. Today, due to outstanding weather, front-month soybeans are at $9.90/bushel. Similarly, today … [Read more...]

Sep
15

Good Guidance

fomc

With the economy still weak, I expect the key phrase that interest rates will remain as is for “considerable time after the asset purchase program ends” to remain in the Fed’s statement following their two-day meeting this Wednesday. Altering this critical sentence will spook markets and boost rates … [Read more...]

Sep
12

Pricy Pigskin

football

The Friday File: The New England Patriots have the priciest average non-playoff game ticket prices at $122 (non-premium) and $566.67 (premium). The NFL averages are $84.43 and $252.06. Costliest brew: Oakland at $10.75, priciest parking, Dallas at $75, costliest hat, Pittsburgh at $35, costliest … [Read more...]

Sep
10

Scary Scotland

scotland

Scotland’s independence bid assumes using the British Pound and gaining EU admittance. Britain will forbid Scotland from using the Pound and the EU will force Scotland to apply for EU membership and adopt the euro. Scotland could bypass the EU and use a new currency tied to the Pound. This means … [Read more...]

Sep
09

Marginal Millenials

millenials

In 2010, households headed by those under age 35, the Millenials, had median income of $37,600, now it’s just $35,300. Worse, 41.4% of them have student loans, up from 33.6% in 2007 and 23.3% in 1998 and the balances are up from $10,000 in 1988 to $17,300 in 2013. Moreover, just 38.6% hold equities, … [Read more...]

Sep
08

Awesome Autos

Cars

The combination of falling gas prices, zero percent six-year financing, an aging fleet, and newly styled feature-rich cars is turbo-charging auto sales. Annualized 8/14 sales were a stunning 17.53 million units, up from 15.94 million in 8/13, 11.80 million in 8/10 and the highest since 17.57 million … [Read more...]