Archive for September 2015

The weakening of the Chinese economy impacts the US economy very indirectly. The US exports about $10 billion/month to China, slightly more than 0.5% of GDP and just 7% of all US exports, but imports about $40 billion/month. Slower Chinese growth won’t significantly reduce their appetite for US imports. Our pain will come from weakening…

The Good: unemployment is low and monthly job growth vastly exceeds the number of new job entrants. The bad: wage growth has been flat for years and inflation is non-existent (due to transitory factors such as falling gas prices and the strengthening dollar). The ugly: monetary policy takes a long time to work through the…

Many big banks have just agreed to pay almost $2 billion to settle allegations of rigging credit derivative markets. This comes on top of billions in penalties for rigging foreign-exchange, interest rate (LIBOR), and commodities markets. Worse, many were also penalized for homeowner foreclosure processing abuses, the violation of US sanctions, helping launder money, bogus…

The Friday File: On Wednesday, Queen Elizabeth II became the longest reigning British monarch — and the 48th longest reigning monarch of all-time — eclipsing the record of 63 years seven months and two days set by her great-great-grandmother Queen Victoria. The current longest serving monarch is Rama IX of Thailand at over 69 years.…

Despite Internet apps like TaskRabbit, Fiverr, and Uber that more easily than ever afford people the opportunity to work for themselves, the share of Americans who are self-employed has declined to 6.5% today, from 7.7% in 2005 and 8.5% in 1995. Moreover, the number of persons holding multiple jobs (say a full-time one and a…

Emerging market economies that export substantial raw materials face difficult choices. If they reduce interest rates, their currencies fall, inflation rises, capital quickly leaves and living standards decline. If they raise rates to protect their currency, investment and manufacturing will plummet and drive their economies into recession. The middle road, raise rates a bit and…

Friday’s employment data was good. The unemployment rate fell from 5.3% to 5.1%, employment growth in June and July was revised up, hours worked rose, the labor force participation rate didn’t fall and August earnings/hour rose 0.3%, 0.1% more than expected. While the 173,000 net new jobs were slightly disappointing, YTD employment growth/month is an…

The Friday File: With Mount McKinley now Denali, the tallest presidential peak in the USA is Colorado’s Mount Lincoln at 14,293 ft. (23rd tallest in US), followed by Washington’s Mount Adams at 12,281, Oregon’s Mount Jefferson at 10,497, NH’s Mount Washington (part of the Presidential Range) at 6,228, and SD’s Mount Coolidge (Coolidge?) at 6,025.…

The combination of falling global and tepid US growth has resulted in very low long-run inflation expectations which has caused long-term interest rates to continue falling. Moreover, the Fed will soon raise short-term rates. This will marginally reduce bank incentives to lend, as they borrow short and lend long. The average US bank net interest…

Annualized seasonally adjusted US auto sales hit 17.8 million last month, despite recent stock market gyrations. It was the single best month since 07/05, with the average transaction price hitting $33,543, 3.4% higher Y-o-Y, on booming pickup/cross-over/minivan/SUV sales, which were 56.4% of all August sales. YTD Lamborghini sales are up 3.3% to 504, Rolls Royce…