Archive for April 2021

The Friday File: At 4 feet 3 inches in length and weighing in at 49 lbs, Darius, a Flemish Giant Rabbit, has held the Guinness World Record’s largest rabbit title since April 6, 2010. Unfortunately, this leporine recently vanished from its large enclosure in Stoulton, Worcestershire. The authorities strongly suspect bunnynapping, and the thieves are…

Unsurprisingly, researchers find that raising unemployment benefits by $600/week last spring reduced job applications. But despite the higher wages that workers might have demanded, and the reduced job search conducted, job vacancies did not rise! This suggests the generous unemployment benefits had no employment effects. Rather, bigger benefits reduced search by the non-serious unemployed, but…

In a clever study, researchers compared municipal bond yields in counties with three or fewer local newspapers before and after a newspaper closure, to counties with three or fewer newspapers that didn’t experience a paper closure. They found that three years after a closure, municipal borrowing costs were 0.05 to 0.11 percentage points higher! Moreover,…

Since 1992, there have been four instances when Y-o-Y headline inflation, as measured by the CPI, rose by nearly 4% or more; in 2000, from late 2005 to mid-2006, from Jan-September 2008, when inflation reached 5.5%, and in September 2011. In each of these time periods, core CPI never exceeded 2.9%. Stay alert but don’t…

While higher corporate taxes are unlikely to boost corporate investment, they reduce it less than you think. Absent a corporate income tax, firms borrow to invest in plant and equipment if the return on investment exceeded the interest rate. By imposing an income tax, you simultaneously allow for deductibility of interest. As such, if firms…

The Friday File: The price of ketchup packets has risen 13% since 1/20, as their market share has exploded at the expense of tabletop bottles. Catsup is the most consumed table sauce in the US with about 300,000 tons sold to food service in 2020; more is eaten at home. With higher prices, ketchup sales…

The economy continues to roar back to life. The Institute for Supply Management’s services index rose to a record high of 63.7 in March, and in the process blew away the previous high of 60.9 of 10/18. This is great news as the recovery in services has, for obvious reasons, lagged well behind the manufacturing…

The price index for personal-consumption expenditures rose 1.6% year-over-year, and the core index, which excludes energy and food, and is the Fed’s favorite measure of inflation, rose just 1.4% over the same period. This means prices in 2/21 were only trivially higher than in 2/20, prior to the onset of Covid-19, despite $3.1 trillion in…

Initial weekly jobless claims, a proxy for layoffs, were 719,000 for the week ending 3/27/21 and 658,000 for the prior week! These are the two lowest readings since the pandemic began, and they have been gradually trending down since 1/1/21. The four-week moving average is 719,000, its lowest reading since the week ending 3/21/20. However,…

916,000 net new jobs in March, upward revisions from 379,000 to 468,000 in February and from 166,000 to 233,000 in January!! 347,000 people entered the labor force, and the unemployment rate fell from 6.3% to 6.0%! Hopefully, we see numbers like this through 2021. The only downside, the Fed might start tapering in fall rather…