Archive for April 2020

Falling commodity prices, massive unemployment, vacant office space, unused manufacturing facilities, and cheap energy suggest weak inflation or even deflation are likely going forward. But spectacularly large increases in the federal deficit and huge jumps in the money supply suggest inflation and even high inflation is probable. I bet with 95% confidence low inflation is…

In 20Q1, GDP declined at an annualized rate of 4.8%. This means that GDP declined at a rate of 8.8% in just March after growing at 2% in January and February. This suggests that in April, GDP will decline by at least 20%, in May by another 10% and by June hopefully growth rises to…

During the week of 3/2/20, before Covid-19 had much impact on the US economy, 0.25% of all mortgage loans were in forbearance. During the week of 4/19/20 the rate was 6.99%, up from 5.95% the previous week! At 6.99%, 3.5 million mortgages are in forbearance. Forbearance requests peaked the week of 3/30/20 and have declined…

For the week ending 4/17/20, US petroleum demand averaged 14.1 million bbl/day, down 31% from the 2020 average through 3/13/20 before travel restrictions began. The 14.1 million bbl/day level is up slightly from 13.8 million bbl/day the previous week; the lowest weekly average level since the early 1990s. Demand for motor fuel has fallen 40%,…

The Friday File: America’s most popular sandwich is grilled cheese, with 79% of respondents liking or somewhat liking it. Next, in a fowl tie is the turkey sandwich and the grilled chicken sandwich at 75%. Roast beef follows at 71% then comes the pork parade with both the ham sandwich and BLT at 69%, club…

While the economy is shrinking quickly as we are in a brief depression (there is no definition, but a GDP decline of 7.5%/year or more works for me), the data is no longer all dismal. Car sales may have stopped falling, consumer sentiment and consumer expectations of the future are no longer declining, and demand…

While politicians can argue about who has the authority to reopen the economy, in the end it is consumers and businesses that will make that decision based on safety and security. Early evidence from China (which is at best an untrustworthy data source), is not good. March retail sales fell 19%, suggesting the combination of…

Over the last four weeks, 22 million jobs have been lost, 13.3% of the labor force. Add the initial unemployment rate of 3.5%, and the unemployment rate is 16.8%. By the end of the month, it will be meaningfully higher. However, many of those not working will not be considered technically unemployed as they will…

Plunging Petrol In a move without precedent, the price of a barrel of West Texas Intermediate crude for May delivery closed at -$37.63; there is simply no place to put it. Producers are literally paying buyers to take the oil! June WTI is selling for $20.43/bbl and November for $31.66/bbl as traders expect demand to…

The Friday File: On 11/10/19, three drivers in an innocent looking 2015 Mercedes Benz E63 AMG loaded with electronics sped from NYC to Redondo Beach, CA, the Cannonball run, in a record 27 hours and 25 minutes. But on 4/4/20 three drivers in an Audi A8 L took advantage of epically reduced traffic due to…