Archive for December 2015

I want to take this opportunity to thank you all for your interest in my daily economics blog. All of you enrich my life in many ways and I am profoundly appreciative. I wish you and yours the very best in 2016. May it be a year of full employment, good decisions, health, joy, love,…

While forecasts are generally worth less than the paper they are printed on, if you want to try forecasting, read Daniel Kahneman’s Thinking Fast and Slow. A close second is Philip Tetlock and Dan Gardner’s Superforecasting: The Art and Science of Prediction. And for those who are gluttons, read Scott Armstrong’s Long-Range Forecasting. Good luck,…

Last week, HUD reported that seasonally adjusted annualized new home sales hit 490,000. While up, the last time new home sales were this low before the Great Recession was in 9/91. Moreover, new home sales hit their all-time low of 270,000 in 2/11. Since that staggering low, the compound annual growth rate has been a…

Large firms exist because they solve two problems. The first, the ability to internally perform activities more efficiently than smaller firms can, even when markets assist in interfirm product trading. The second, the ability to transform time. Banks take in short-term deposits yet make long duration loans. Stores make short-term sales yet hire employees for…

In 2014, 26.3 million natural Christmas trees were purchased, down from 33.0 million in 2013, while 13.9 million manufactured trees were bought, down from 14.7 million in 2013. The average price was $39.50 for natural trees and $63.60 for plastic ones. Spending totaled $1.92 billion, equal to the GDP of San Marino. There are currently…

Cash home sales were 32.5% of all transactions in September, down from 35.9% 12 months ago. Cash sales peaked in 1/11 at 46.6% and have historically averaged 25% of sales. At the current rate of improvement, cash transactions should return to 25% by mid to late 2017. Cash sales were 58.3% of REO sales, 32%…

In 2014, federal, state and local government tax collections totaled 26% of US GDP. The average rate across the 34 most highly developed nations is 34.4%. The USA was fourth lowest in the level of taxation, ahead of only South Korea at 24.30%, Chile at 19.98% and Mexico at 19.69%. Taxes/GDP are highest in Denmark…

The Friday File: According to a Washington University professor, if one were to assume Emperor Palpatine was fiscally conservative, destroying the second Death Star and with it the Galactic government, the Rebels probably caused bond defaults of $500 quintillion. Absent a bailout of 20% of Gross Galactic Product, the galactic economy would probably have entered…

China’s wish to peg the yuan to a basket of currencies and not just the dollar is an attempt to weaken its currency, but the strengthening dollar makes the task harder. To keep the existing peg, China’s central bank (PBoC) must sell dollars and buy yuan, removing yuan from circulation, stymying the PBoC’s efforts to…

Earlier today, the Fed raised the fed funds rate by 0.25%, the first rate rise in almost a decade and seven years to the day since rates first hit zero. The S&P 500 jumped almost 1.5% and long bonds barely budged! In short, markets were well prepared and almost giddy about slightly less monetary stimulus.…