Archive for February 2015

The Friday File: The evidence that the economy is improving is now irrefutable as the tooth fairy left an average of $4.36/lost tooth in 2014, a whopping increase of 25% from 2013. As recently as 2011, the TF left a stingy $2.60. Teeth in the South were most valuable at $5.16 each but were worth…

The January CPI numbers came out today and Y-o-Y inflation was -0.2%, yes, prices actually fell one-fifth of one percent. Before rejoicing, note that deflation is a double-edged sword. On one hand, it boosts worker pay since any raise is now a real raise. But it harms monetary policy because banks don’t lend at negative…

By not reducing the supply of oil in the face of falling demand, Saudi Arabia has caused the price of oil to plummet. That has caused households to increase their real consumption of gasoline by 4%, boosted purchases of light trucks by about 10% and reduced sales of hybrids and electric cars by about 9%.…

The Taylor Rule, a formula proposed by Stanford Professor John Taylor, tells the Fed how to set short-term interest rates. They are to be determined based on three variables: the gap between the actual inflation rate and the desired inflation rate, the gap between actual GDP and potential GDP, and the appropriate short-term interest rate…

Despite a generally strengthening economy, the combination of surprisingly cold weather in the Northeast and parts of the Midwest, declining capital expenditures (due primarily to falling oil prices) and weak exports (due a strengthening dollar) will reduce Q1 GDP growth to below 2.5% from earlier forecasts of 3%. Q4 GDP growth is also likely to…

The Friday File: The US cattle herd (including beef and dairy cattle) increased from 89 million in 2013, its lowest level since 1951, to 89.8 million in 2014. And the number of heifers being added to the beef-cattle breeding herd jumped 4% to 5.8 million. But because it takes one to two years for an…

Minutes from the last Fed meeting were released yesterday and the Fed is covering the bases. While some want to raise rates in June, most don’t as they see more downside than upside risk, including weakening exports and a worsening trade deficit despite cheaper gasoline. They also fret about both weak global growth and inflation,…

Despite a generally strengthening economy, the combination of surprisingly cold weather in the Northeast and parts of the Midwest and declining capital expenditures (due primarily to falling oil prices and weak exports due a strengthening dollar) will reduce Q1 GDP growth to below 2.5% from earlier forecasts of 3%. Q4 GDP growth is also likely…