Archive for July 2018

In 2017, federal government revenues were $3.316 trillion, of which 1%, or $34.6 billion, came from tariffs. While more money will come from tariffs, how much is unknown. Firms may import non-tariffed substitutes, they may buy the product from a US producer, or sales may be lost due to higher prices. Either way, tariffs are…

The US economy grew 4.1% in 18Q2, its fastest pace since 14Q3. Better yet, excluding volatile exports, inventories and government purchases, growth was a stellar 4.3%, and I see Q3 growth coming in at a strong 3%. Longer term, I’m apprehensive. In the two quarters following President George W. Bush’s 2003 tax cuts, GDP hit…

The Friday File: With data showing pitcher performance declines considerably when facing opposing batters for a third time, innings pitched by starters is averaging just 5 1/3 innings. This makes relief pitching critical. And, because relievers on average pitch to just 4.5 batters/game because data says they should pitch hard and hold nothing back, teams…

An inverted yield curve, a situation where short-term rates are higher than long-term rates, has preceded each of the past seven recessions by 8 to 23 months. At present, the yield curve is very close to inverting. But, rarely have we had massive fiscal stimulus this late in a cycle, or a central bank with…

While wages are increasing very slowly in response to the remarkably low unemployment rate, regrettably inflation is also rising and is at a six-year high. Real wage growth, which has been slowing since late 2016, was flat Y-o-Y in May and declined by 0.2% in June. This is surprising as we’re late in the cycle…

China’s economic growth slowed to 6.7% in 18Q2, from 6.8% the previous three quarters. Given government efforts to slow debt growth by reigning in risky lending, along with decelerations in investment growth, industrial output, and retail sales, 6.7%, if true, is good. However, add rising trade concerns and further slowing is likely, unless the government…

Last week President Trump said he hoped the Fed would stop raising rates. Bad comment. Markets value central bank independence, and Trump’s comment could easily backfire. The Fed may raise rates earlier than planned to assert independence, and if conditions weaken and the Fed slows its pace of rate hikes, investors will wonder if the…

The Friday File: there are roughly 360,000 billboards in the USA. The most expensive is the largest billboard in New York’s Times Square, which measures 25,000 square feet and rents for $2.5 million/month. The largest billboard in the world is in Madrid and it’s 56,672 square feet; almost the size of a football field including…

While June housing starts and permits were disappointing, these data are very volatile, and YTD starts remain up 7.8%; good given the headwinds this sector faces. More interestingly, a key reason the current expansion is now in its tenth year is because housing starts were MIA the first few years of the recovery, due to…