Archive for September 2019

Not only did August retail sales rise a strong 0.4%, but June and July sales were revised up. We care because retail sales are about 25% of consumer spending, and consumer spending accounts for 68% of GDP. Thus, retail sales are 17% of GDP! Moreover, average hourly earnings rose at the fastest pace since 2007…

The Friday File: Out of 180 ranked nations, the most corrupt is Somalia, with a score of 10 out of 100. In hot pursuit; Syria and South Sudan both with scores of 13. Yemen and North Korea follow at 14. Denmark is the least corrupt, scoring 88, followed by New Zealand at 87 and Finland/Singapore/Sweden/Switzerland…

Recent suggestions that the Fed drop rates to zero and that we refinance our $16.7 trillion public debt are, at best, ill advised. Refinancing of US sovereign debt is without modern precedent. The instruments aren’t callable, and the fear it would generate would push rates up. As for bringing rates down to zero now when…

2019 will be the first year in history the majority of college-educated persons in the US labor force are women, despite women being just 46.6% of the labor force. Since 1980, women have been more than half of college grads, and the percentage has been about 57% since 1999. As a result, 28% of wives…

Argentina is suffering a classic currency collapse. They usually happen like this: A sudden currency decline, usually the result of bad policy, causes imported goods (like oil and food) to dramatically rise. That reduces living standards, pushing workers to demand higher wages, which in turn fuels more inflation which causes further currency depreciation. The stronger…

August’s employment gain of 130,000 jobs was weaker than it looks as it includes 25,000 temporary Census workers. Moreover, payrolls were collectively revised down by 20,000 for June and July. But, pay increases appear to be strengthening, the unemployment rate is unchanged, the labor force participation rate rose, and hours worked rebounded slightly. The Fed…

The Friday File: The world’s tallest unsupported flag pole is 560 feet high in Jeddah, Saudi Arabia, just ahead of the Dushanbe, Tajikistan flagpole at 541 feet. Next is the National Flag Square flagpole in Baku, Azerbaijan at 531 feet. Rounding out the top five, Kijongdong, North Korea at 525 feet and Ashgabat, Turkmenistan at…

In a move sure to please nobody, the Trump administration proposes privatizing Fannie Mae and Freddie Mac, without making it harder or more costly to get a mortgage, by backstopping the companies with lines of credit in return for fees. This is going back to the future with the F&F duopoly intact! Worse, the plan,…

In another sign the US economy is cooling, manufacturing activity contracted in August for the first time since 8/16 and is at its lowest level since 1/16 (when we didn’t enter a recession). The US now joins Germany, Japan, South Korea, the UK, and probably China which are already experiencing declines in manufacturing. Manufacturing is…

The problem with the recently created “Opportunity Zones” or the possibility of indexing capital gains against inflation is that it creates different tax rates for marginally different types of investment. Like nations that have complex exchange rate regimes, these tax treatment differences create huge opportunities (loopholes) for abuse and can only be countered by very…