• 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
30

Cruising Cars

carsales

With new cars sales hitting an annualized rate of 17.4 million last month, the best since 2006, there’s not much room for improvement. Boomers are driving less, half of all drivers are now women, income growth is flat, Millenials are not big car enthusiasts, suburban life is not as attractive as it … [Read more...]

Sep
29

Baseball Bucks

baseball

With the league’s highest payroll at $239 million, it isn’t surprising the Dodgers made the playoffs and won 94 games. However, they spent $2.5 million/win! Conversely, Oakland with a payroll of $75 million won 88 games but only spent $850,000/win, and Pittsburgh with 88 wins and a payroll of $78 … [Read more...]

Sep
26

Thrifty Threads

buyingclothes

The Friday File: In 1991, the average American bought 40 garments/year. Imports then began flooding the market, prices fell and the number of garments purchased/year steadily rose, peaking at 69 in 2005 with average spending/person reaching $860. With imports now accounting for 97.5% of all garment … [Read more...]

Sep
25

Decent Dwellings

soldhouse

While existing home sales are down 5.3% year-over-year, recent sales numbers are really pretty good. Inventory is up 4.5% year-over-year and cash sales are at their lowest level since 12/09. More importantly, non-distressed sales are almost exactly the same as they were 12 months ago because … [Read more...]

Sep
24

Rising Rates

intrates

Short-term rates will remain at zero until mid-June when the Fed will start raising them. By the end of 2015, expect short-term rates to be between 1.25% and 1.5%. Expect them to rise to between 2.5% and 3% by the end 2016 and be about 3.75% by the end of 2017. For the remainder of 2014 and all of … [Read more...]

Sep
23

Marina Mania

brazil

On 10/5/14 Brazilians go to the polls in a presidential election. While Dilma Rousseff is the incumbent, surprise opposition candidate Marina Silva has my vote. Not only will it be impossible for her to utterly mismanage the Brazilian economy as badly as Rousseff has, but she’s come out in favor of … [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...]