Archive for October 2019

US GDP grew at a modest 1.9% in 19Q3, down from 2% in 19Q2 and 3.1% in 19Q1. As was the case in 19Q2, consumer spending led the way. Other areas of strength; federal, state and local government spending, and a small lift from housing. Unfortunately, business investment was weak, suffering its worst decline since…

Unsurprisingly, the Fed cut rates a quarter-point. But the benefits of the cuts are waning. That’s because home construction has shrunk from about 5% to 3.5% of GDP, the wealth effect has weakened as equities and homeownership are increasingly concentrated among those with higher incomes (whose spending is less influenced by economic conditions), and because…

In 1936, the number of pages in the Federal Register (which provides a rough sense of the flow of new and changed regulations) was about 3,000. By 1970, it had grown to 20,000, and by 1980, it further expanded to over 70,000 pages, but fell to 50,000 by 1988. It then inexorably grew and topped…

In FY2019, the budget deficit was $984 billion, up from $779 in FY2018. This is the largest deficit in seven years, and the fourth year in a row the deficit has risen; the longest stretch since the early 1980s. The deficit has risen 68% since FY2016, a period marked by profoundly low unemployment and good…

The Friday File: The world’s heaviest pumpkin is 2,625 pounds, grown in 2016 by Belgian Mathia Willemijn. He broke the then record of 2,324 pounds set in 2014 by Germany’s Beni Meier. Meier broke Californian Tim Matheson’s 2013 record of 2,032 pounds. In 2012, Rhode Islander Ron Wallace was the first to crack one ton…

It’s earnings season again, however, unlike other seasons, this one lasts all year! It’s because public firms must report earnings within 35 days of the quarter close. Since there are thousands of firms and their quarters end at different times, earnings releases are an almost daily occurrence. However, many firms have the same quarter end…

Due to a prolonged period of super-low interest rates, US corporations have gorged on debt, with total non-financial corporate debt rising from a trough of $6 trillion in 2010 to $10 trillion today. Worse, the lowest quality investment-grade debt (BBB rated) has ballooned to $3.7 trillion, or 50% of investment-grade, up from 38% a decade…

While referendums seem like a great way to raise political engagement, they are risky (hello Great Britain) because they treat every issue in isolation, ignoring the inevitable and painful political and budgetary trade-offs inherent in lawmaking. This results in incoherent outcomes such as simultaneously demanding lower taxes and more government spending. While representative government may…

It may have been the dotcom bust of 2001 or the housing bust of 2008, but it’s always been the US that’s dragged other nations into recessions. Next time things may reverse. The US share of global GDP keeps falling, reducing our influence. Trade matters more to the US than before, and globally integrated capital…

The Friday File: Last Sunday, Simone Biles became the most decorated gymnast ever after earning her 25th career medal, including 19 golds, topping the prior record of 24 set by Ukrainian Vitaly Scherbo in 1996. Moreover, women’s gymnastics has only six events in which to medal; men have eight, making her accomplishment staggering. She has…