Archive for May 2017

Tax cuts, let alone tax reform, are becoming increasingly impossible. The White House and Senate nixed a border tax adjustment, and that will reduce revenues by $1 trillion over a decade. Moreover, the healthcare reform bill that passed the House will reduce the deficit by just $120 billion over the next decade compared to $330…

The US economy expanded at just 1.2% in 17Q1, better than an earlier estimate of a dismal 0.7%, on the back of better consumer and business spending and slightly less contractionary government spending than initially thought. Given the lousy data and weakening inflation, the Fed is backpedaling. Don’t believe them. They will raise rates next…

The Friday File: The President with the shortest term was William Henry Harrison; 31 days. James Garfield follows, his term lasted just 199 days. By comparison, Zachary Taylor, with a term of 491 days, was a long-term tenant at the White House. The 4th shortest term was served by Warren Harding, who was president for…

While April existing home sales were down 2.3% M-o-M and up just 1.6% compared to 4/16, it’s due to limited inventory. While inventories rose 7.2% M-o-M, April marks the 23rd consecutive month of Y-o-Y inventory declines! As for new home sales, they rose just 0.5% Y-o-Y and new home inventory at 5.7 months is almost…

Household financial health is modestly improving. In 2016, 70% of Americans said they were living comfortably/doing OK, up from 69% in 2015 and 62% in 2013. Similarly, the percentage with no retirement savings has declined from 31% in 2014 to 28% in 2016. And, while 44% of Americans wouldn’t be able to pay cash for…

After quickly rising by a strong 5% on a trade-weighted basis after Trump’s election win, the dollar has fully retreated and is back where it was before the election. 10-year bond yields have given up almost half of their gains while the stock market is at or near an all-time high. This combination suggests no…

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 rates. The Fed is trying to get both long-run and…

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 The Boss, having generated $268 million. The…

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, student loans total $1.34 trillion,…

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 billion, it will create 125,000 construction jobs and 125,000 non-construction jobs. That’s 250,000 jobs! The economy…