Archive for October 2020

The Friday File: The percentage of US adults planning to wear a Halloween costume this year is 25%, down from 31% last year. By generation, 46% of Gen Z’ers will dress up, compared to 50% last year. Among Millennials, 43% will get outfitted, down from 50% in 2019. For Gen X’ers, 23% will be outfitted,…

After declining by a record 9%, or 31.4% if annualized in 20Q2, 20Q3 GDP has come in at a simply stunning 7.4%, or 33.1% if annualized! At this point, the US economy is 3.5% smaller than it was on 12/31/19, and about 4% smaller than it was in mid-March before the onset of Covid-19. While…

Over long periods of time, I suspect income inequality will systematically worsen. When first entering the labor force, workers generally know little and get paid poorly. However, labor productivity of educated, skilled workers steadily rises due to technological improvements. Thus, all else equal, skilled workers should earn more than their predecessors in the same job.…

In 12Q1, corporate profits surged and hit $1.88 trillion. Real corporate profits have never been higher since, despite recently lower tax rates. It’s because of the business cycle. Early in the cycle, when unemployment is high, wages stagnate and capital captures increases in worker productivity, boosting profits. As unemployment falls, wages rise, labor does better,…

September new home sales came in at a seasonally-adjusted annual rate of 959,000. While slightly below street expectations, starts are amazingly up 16.9% YTD. But Y-o-Y growth is declining, inventory is up slightly to 3.6 months from August all-time low of 3.4, and sales are 3.5% lower than last month and almost 1% down from…

The Friday File: Comparing the average asking price of a dog in the UK between March and September 2020 to the same period in 2019, the price rose from £888 ($1,161) to £1,883 ($2,462), an increase of 112%! By breed, Cocker Spaniels rose the most (184%), followed by Jack Russells (180%), and Cockapoos (168%). Among…

While equity prices have rapidly recovered from their 3/20 lows, the recovery means much less for the economy than in the past. In 1973, publicly traded firms accounted for 41.4% of total non-farm payroll employment. That percentage was just 29% in 2019. Why? In the 1950s, AT&T had the highest market cap and was the…

To spur growth, the Turkish Central Bank slashed rates and banks made cheap loans. The rate cut caused the lira to depreciate. To arrest that, the Central Bank sold $65 billion dollars and bought lira. But, simultaneously, households flush with cheap borrowed money bought imports, thus severely depleting the Bank’s dollar supply. A lira is…

While there is perpetual talk about increasing student subsidies to boost college attendance, the problem is schools will not increase enrollment. Thus, additional aid simply causes tuition inflation. Instead, push schools, via subsidies, to boost class sizes, with the subsidy rising with enrollment. This increase in student acceptances and reduced exclusivity will boost competition, put…

The 8/20 US trade deficit hit $67 billion. After inflation, the deficit hasn’t been this high since 2008. Imports have largely recovered but not exports. This is because the US imports goods but primarily exports services, and visits by tens of millions of foreigners to US for vacation and hundreds of thousands for higher education…