• fast-fashion

    Poor Productivity

    During Q1 2014, GDP declined at an annualized rate of 2.9% while employment growth increased at a rate of 1.5% meaning more workers produced less stuff and labor productivity collapsed. The last time GDP fell this much and employment increased was Q1 1974, after OPEC quadrupled the price of oil … [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...]


Terrific Ties


The Friday File: Yesterday was National Bow-Tie Day. Bow–ties were probably first worn by Croatian mercenaries and brought to Western Europe by French soldiers following the 30 Years War (1618-1648). This year about $850 million will be spent purchasing neckware with 7% of that total, $59.5 million, … [Read more...]


Winning Wheat


In the complex fighting between Russia and Ukraine (R&U), there are unambiguous winners. Wheat is at its highest price in three weeks on fears that R&U, which collectively account for 20% of global wheat exports, may fail to get the harvested wheat on ships for export. Similarly, U.S. crude oil for … [Read more...]


Gross Growth


In 2013, ND had the largest rise in Gross State Product; a staggering 9.7% followed by WY at 7.8%, WV at 5.1%, OK at 4.2% and ID at 4.1%. All but ID are energy-rich states. The worst performing state, AK which contracted by 2.5%, followed by DC which shrank by 0.5%, MD which had no growth, VA that … [Read more...]


Terrific Trend


The economic data released today were terrific. Two house price indices showed decelerating price appreciation which helps affordability. Consumer confidence is now as high as it was in 10/07 just before the Great Recession and manufacturing activity from MD through SC is at a 3.5 year high. Durable … [Read more...]


Holy Housing


From 1/1/14 through 7/31/14 new home sales totaled 266,000, down from 268,000 during the same period in 2013. Similarly, single-family starts are up just 3.2% year-to-date and single-family permits are up just 0.8% year-to-date. Single-family activity is, in part, so lackluster because the average … [Read more...]


Political Probabilities


The Friday File: The last time the Republicans won the White House without the name Nixon or Bush appearing on the ticket was in 1928, 86 years ago, when Herbert Hoover won with Charles Curtis as his Vice President. For this reason I strongly suggest that Florida ex-governor Jeb Bush seriously … [Read more...]


Seasonal Selling


Housing sales peak in spring/summer, with price gains doing so as well. However, distressed sales, of which there have been many, occur relatively evenly all year. Therefore, distressed sales are highest as a percentage of all sales in fall/winter, thereby dragging down house prices and amplifying … [Read more...]


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...]


Rotten Rates


While 10-year U.S. Treasuries yield just 2.4%, yields on 10-year German government bonds are a ridiculously low 1%, and 10-year Japanese government bonds yield a microscopic 0.507%. Yields this low tell us markets think GDP growth will remain anemic in the industrialized world for a while longer. … [Read more...]


Delightful Divergence

monetary policy

While the Bank of Japan is engaging in expansionary monetary policy and the ECB probably will in early 2015, the Bank of England will likely raise rates by 4/15 with the Fed following soon thereafter. While this monetary policy divergence reduces global growth, it keeps commodity inflation down and … [Read more...]