• Heading Home

    In 1965, the US home ownership rate was 63% and rose to 65.6% in 1980. Home ownership then fell and held steady at about 64% from 1984 through 1994, when it began a meteoric rise and peaked at 69.4% in 2004. It’s since collapsed and is now 63.5%, where it was last in 1967. Demographics aside, home … [Read More...]

  • Meaty Measurement

    The Friday File: Assuming exchange rates and prices eventually adjust to make the same item equally priced everywhere, the Big Mac Index was developed. In Switzerland, a Big Mac is a whopping $6.82, its currency is hopelessly overvalued. In Russia, $1.88. Putin, clearly a meaty monetary master. … [Read More...]

  • Expensive Entitlements

    In FY 2014, Medicare, Medicaid and other healthcare programs accounted for 25% of federal government spending, Social Security was 24%, welfare and other entitlements claimed 11%, and interest on the debt was 7%. That leaves 33% for discretionary spending. But defense was 17%, leaving just 16% of … [Read More...]

  • Spending Splurge

    Household spending should remain healthy for four reasons. First, household net worth hit a record $84.9 trillion in Q1/15, up $1.6 trillion from Q4/14 and the ratio of household net worth/personal disposable income (PDI) is at its highest level since Q3/07. Second, household debt service as a … [Read More...]

  • Inefficient Income

    The US corporate tax rate of 35% is the highest in the world. In Germany it’s 16%, Canada 15% and Ireland 12.5%. Worse, it raises little money. In 2014, US pre-tax corporate profits were $2 trillion. 35% of that would be $700 billion. But due to loopholes and fancy accounting, the corporate income … [Read More...]


Jumbo Jets

The Friday File: 1/3/18 was the last time a US passenger airline flew the iconic Boeing 747. It first flew on 2/9/69, and though designed for up to 660, the Israelis modified it to carry 1,087, service must have been spotty. It gets five gallons/mile and can travel 11,000 miles. It initially listed … [Read more...]


Longer Labor

In another sign the labor market is tightening, average overtime in October and November was 4.5 hours/week, tops since mid-2014; up substantially from 4.2 during the first five months of 2017. Back in 2014, OT was elevated out of a fear the economic recovery would stall. Now, there simply aren’t … [Read more...]


Petroleum Prices

Oil prices have, somewhat surprisingly, more than doubled since 1/1/16. OPEC and Russia have cut supply by two million bbl/day, random outages and steadily declining Venezuelan production have helped, and geopolitical concerns (Iran) have pushed up prices. The biggest factor, however, is brisk … [Read more...]


Goner Government

Markets are currently pegging the odds of a government shutdown this Friday at midnight at 30%. If there is a shutdown, the average duration of the 11 that have occurred since 1977 is less than 4 days, and the cost to the economy is between $1 billion/day and $1.5 billion/day, with the losses rising … [Read more...]


Debt Desirability

 While the yield on two-year Treasuries is up due to Fed action, and ten-year Treasuries are up due to small observed rises in inflation readings that are overdue - which markets may be reading too much into - inflation-linked rates aren’t up. This means markets currently expect higher future … [Read more...]


Big Beer

The Friday file: The six-pack was invented in 1923 by the Coca-Cola company to spur sales. While the first beer company to sell product in six-packs is hotly debated, the plastic six-pack ring currently used was invented in 1960 in St. Louis. Denver-based Declaration Brewing Company brewery made the … [Read more...]


Cooling Cars

 After setting records in 2015 and 2016, car sales slipped 1.8% in 2017, the first decline since the recession. One reason, the huge number of three-year old leased cars that are off-lease. The price gap between those vehicles and new ones: $14,200, up from $10,500 in 2010. 12% more cars will come … [Read more...]


Good Growth

 17Q4 is shaping up to be surprisingly strong, with US GDP growth possibly as high as 3% for the third straight quarter. Employment growth is solid, auto sales are down but still strong, construction spending is good, surveys of manufacturers are profoundly positive, and inflation remains pleasantly … [Read more...]


Shelter Shortage

 In 2017, 1.2 million houses were started. While that’s double the number of starts in 2009, the worst year on record, it’s still 400,000 starts below what’s needed based on population, job growth, and teardowns. This means we’re currently underbuilt by 4,500,000 units, with the gap widening, albeit … [Read more...]


Workers Wanted

While December’s net job growth of 148,000 was slightly disappointing, it’s understandable given the dearth of unemployed workers! To wit, the unemployment rate for African Americans hit 6.8%, its lowest level since record keeping began in 1972, and the rate for Hispanics/Latinos at 4.9% is … [Read more...]