Archive for June 2016

Headline inflation, as measured by the personal consumption expenditure (PCE) price index, the Federal Reserve’s preferred inflation measure, was 0.2% in May and 0.9% Y-o-Y. Core inflation, which excludes food and energy, was also 0.2% in May and just 1.6% Y-o-Y. While core PCE is meaningfully below the Fed’s 2% target, it’s fortunately stable. However,…

Total US revenues received by drug manufacturers in 2015 were $310 billion, up 8.5% from the 2014 level of $285 billion, which was, in turn, up 10.5% from 2013. These numbers exclude mark-ups and added costs associated with medicines reaching patients. The average patient share of the cost for a brand-name prescription filled through a…

The Medicare trust-fund, which provides coverage to 55 million Americans, will exhaust its reserves by 2028. Similarly, the Social Security trust-fund, which provides retirement benefits to 49 million Americans, will be depleted by 2034, triggering a 21% benefit cut if Congress doesn’t act. Social Security and Medicare accounted for 41% of federal spending last year,…

Last year, US exports to the UK were $55 billion, 2.5% of exports; just 0.3% of US GDP. The direct effects of a slump in the UK will be hardly noticed. The indirect effects are what matters. Heading the list; a rising dollar, falling commodity prices, reduced corporate investment, widening credit spreads, lower interest rates…

The Friday File: Shockingly, the UK voted to exit the EU. Sterling has touched levels last seen in 1985. Visit London!! Impacts here will be negative; GDP will be clipped by two-tenths of a percentage point through mid/late 2017, bond yields will fall, exports will suffer, and the Fed surely won’t raise rates before November!…

Sales of new single-family homes in May were seasonally adjusted at 551,000, 6% below April’s level and 8.7% above the 5/15 level. More generally, only since April have new home sales exceeded 2008 levels and YTD sales are just 241,000, up 6.6% from last year. YTD sales are flat in the west and Midwest, up…

While the labor force participation rate has been declining, the declines are in households in the bottom third of the income distribution. The LFPR for men in the top two-thirds has been flat since 1980 while it’s fallen from 80% to 70% for men in the bottom third. The LFRP for the top two-thirds of…

OPEC produces 32 million bbl/day of crude, slightly more than it produced 40 years ago. Then, that constituted half of global crude production, today it’s one-third. Moreover, the two largest producers, Saudi Arabia and Iran, are currently unable to cooperate, preventing unanimity making the cartel unworkable. Lastly, oil from fracking, while expensive, can come to…

Last Wednesday, the Fed kept short-term interest rates unchanged. But, the Fed’s communication was more dovish than expected, despite essentially unchanged economic forecasts of growth, inflation and unemployment, suggesting that the threats to the economy are to the downside. The take away; the Fed is no rush to raise rates, the ultimate rate is likely…

The Friday File: Annual recreational visits to the 58 national parks totaled 75.3 million in 2015, surpassing the 1997 record of 69.5 million. On a per capita basis, however, visits have declined to 0.22 last year from 0.26 in 1995. The most popular park; Great Smokey Mountains National Park in Tennessee with 10.7 million visitors/year…