• 200336479-013

    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...]

  • fwx-diy-big-macs_35

    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...]

  • Money. AFR FIRST USE. 080428. Pic by Michel O Sullivan. Pic shows businessman with his hand out. Use for bonus, money, pay rise, salary.    Photographer  Michel O Sullivan/MAO SPECIALX 83767

    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...]

  • easy-money-man-rain-money

    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...]

  • irs-form-1120-corporate-income-tax-return

    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...]

May
22

Quantity Quandary

long term short term

 Given that the Fed has begun to raise short-term rates, it’s necessary that the Fed also raise long-term rates. And doing that requires shrinking its balance sheet because the trillions there are almost all long-dated securities. By holding those securities, the Fed artificially depresses long-term … [Read more...]

May
19

Rock Revenue

springsteen

 The Friday File: Last year, the top 100 grossing musical acts generated $4.45 billion in concert tour revenue. Adele placed 5th with $168 million. Guns N’ Roses was fourth with $188 million, Coldplay was third with $241 million, and Beyonce was second with $246 million.  Bruce Springsteen remains … [Read more...]

May
18

Debt Dollars

household debt

In 17Q1, household debt rose by $149 billion and now totals $12.73 trillion, surpassing the previous peak of $12.68 trillion set in 08Q3, 8.5 years ago. Mortgage debt currently equals $8.63 trillion or 68% of all household debt. In 08Q3, mortgages totaled $9.99 trillion or 78% of all debt. Today, … [Read more...]

May
17

Wall Work

building the wall

 On average, each $1 billion of construction spending results in about 6,000 full-time one-year equivalent construction jobs and roughly another 6,000 non-construction jobs. Naturally, different types of construction create different employment numbers. That said, assuming the wall costs $21 … [Read more...]

May
16

Historic Housing

mcmansion

 April housing starts were OK. Single family starts were up 8.8% Y-o-Y, 7.4% YTD, and, somewhat surprisingly, have been flat since 10/16. Importantly, trends have emerged. Comparing 15Q1 - peak house size - to today, median and average house sizes are down 130 and 108 square feet respectively. … [Read more...]

May
15

Meek Malls

empty mall

 Consumer spending is fine! Retail sales, that is sales at stores, restaurants, and importantly online retailers, rose 0.4% in April, the best gain in three months and sales in March were meaningfully upwardly revised. However, April non-store retail sales (which includes online shopping) jumped … [Read more...]

May
12

Tax Trophy

canadiens

The Friday File: If your favorite sports team isn’t winning, don’t blame the players, coaches, and GMs, blame politicians! Turns out that the higher the income tax rate, the lower the team winning percentage. This effect is most powerful for teams in leagues that have salary caps; they cannot … [Read more...]

May
11

Work Week

paris bistro

While you may sneer at each mention of the 35-hour French workweek, it’s not as extreme as it sounds. It’s simply the legal maximum number of hours that must be worked before overtime is paid. Moreover, the average workweek in France is 36 hours, and third, the average US workweek is currently 34.4 … [Read more...]

May
10

Crude Collapse

crude oil storage

 Despite a sizeable cutback in oil production by OPEC and several non-OPEC nations and a subsequent rise in price, oil prices are testing 5-month lows. The initial rise in price caused US fracking activity to increase, negating the OPEC cutback. Moreover, total US gasoline demand is noticeably … [Read more...]

May
09

Bitcoin Bonanza

bitcoin

While Bitcoin was first used on 1/12/09, its value remained well under $50 until early 2013 when it hit $200 for the first time and $1,100 six months later. Bitcoin then collapsed, bottoming at $200 in mid-2015. Since then, it’s been on a tear and is now worth over $1,600. This is amazing as nations … [Read more...]