• baseball_dugout

    Payroll and Playoffs, Unrelated?

    The Friday File: Baseball's 3 teams with the highest payrolls are watching the playoffs on TV. The Yankees ($202.6 million) were upset by the Detroit Tigers ($105.7 million), while the Philadelphia Phillies ($172.9 million) were upset by the St Louis Cardinals ($105.4 million). The Boston Red Sox … [Read More...]

  • nobel

    Nobel Prize Winners in Economics

    The Nobel Prize in economics was awarded to Tom Sargent at NYU and Chris Sims at Princeton. Sargent's work has helped us understand the impact of permanent changes in economic policy. Sim's research has helped us measure the effect of temporary changes, or shocks, on the economy. Sims said he was … [Read More...]

  • stock_mkt

    Wealth Matters

    The stock market has fallen by about 10% in the last two weeks, destroying about $2 trillion of wealth. If the market does not rebound quickly this will cut GDP by about $70 billion; half a percent. Here's why. Suppose you just lost $10,000 due to the market decline, will you cut your annual … [Read More...]

  • manufacturing

    Everything is falling…

    The Institute for Supply Management’s manufacturing index fell 4.4 points to 50.9% in July, the worst reading since 7/10; barely above the 50% mark signaling growth. Since 4/11 the ISM has fallen 9.5 points; the worst 3-mth skid since 9/08-11/08 when Lehman failed. Other parts of the ISM like new … [Read More...]

  • currency

    Federal Budgeting is Nutty

    Federal budgeting is nutty because the federal budget assumes every item in the budget automatically rises annually regardless of economic conditions by somewhere between 3% and 10%. Based on this insanity if we simply freeze spending at the current level and do it for a decade, the Congressional … [Read More...]


Pet People


The Friday file: While Americans own 96 million cats and 83 million dogs, more families have dogs than cats. It’s is because 70% of dog owners have just one dog, while just 45% of cat owners have a single cat. By contrast, 10% of dog owners have three dogs or more, but 24% of cat owners have three … [Read more...]


Quirky Quarter

one quarter

After expanding at an annualized pace of 4.1% in Q3 and 2.4% in Q4, expect Q1 GDP to come in below 1.5% and that’s an improvement based on stronger March data. Q1 will be weak because of dismal weather, very weak inventory accumulation after large increases in Q3 and Q4 and an unexpected decline … [Read more...]


Eastern Enemies


While hostilities along the Ukraine-Russian border appear to be heating up, expect markets to ignore it. Absent direct US or EU involvement, this conflict has virtually no relevance to western markets. This is similar to Syria, where once US involvement was removed, markets yawned. That said, this … [Read more...]


Total Taxes


In 2013, federal government receipts (think taxes) totaled $2.778 trillion, while spending was $3.455 trillion, resulting in a 2013 deficit of $679.5 billion-- 4.1% of GDP. The largest deficit ever was in 1943 during WWII when inflation adjusted; receipts were $250.8 billion and spending was $820.8 … [Read more...]


Rising Reserves


With an increase of 4.5 billion barrels of crude oil in 2012, America’s proven reserves are now 33 billion barrels, their highest level since 1976 and have been rising since 2009. Moreover, the increase in reserves in 2012 was the largest since 1970, when 10 billion barrels of Alaskan crude were … [Read more...]


Degrees of Separation


The Friday File: In 1960, among married couples 21% of the time one spouse was better educated than the other; two-thirds of the time it was the husband. By 1990, 38% of married couples were unequally educated and 60% of the time the husband had more schooling. By 2012, 41% of married couples were … [Read more...]


Bad Buying


For the 12 months ending 1/31/14, S&P 500 firms spent $478 billion buying back outstanding shares, and in the quarter ending 1/31/14 spending on buybacks rose 29% compared to a year earlier. Seems the higher the stock price, the more committed firms are to buybacks. During the last bull market … [Read more...]


Poor Policy


Policies that didn’t help the economy recover from the Great Recession include tax credits for business investment and the first-time home buyer credit which didn’t exclude new homes as they incentivized new construction when there already was excess plant and an oversupply of vacant homes. The … [Read more...]


Persuading Persia


While hoping for a change of regime in Iran that forswears nuclear weapons is a lovely idea, it’s not policy. Rather, for diplomacy to work with a recalcitrant partner such as Iran, you need a continuous coercive element. As such, at minimum, the threat of increased sanctions will be necessary … [Read more...]


Lethargic Labor


Two caveats from last Friday’s decent labor report. First, rising temp employment, formerly a leading indicator of full-time employment, is no longer. Since 4/10, the number of temp workers is up 58%, while overall employment growth is up 7.8%. Second, at 3.7 million, the long-term unemployed are … [Read more...]