Archive for August 2021

Inflation is not all the same. Commodities like soybeans, lumber, oil, and even used cars and silicon chips can fluctuate sharply but have little, if any, momentum. Conversely, wages and movie tickets tend to rise slowly, but importantly, can create their own inflationary energy. We have a great deal of the first type of inflation,…

Congress increased the size and duration of unemployment benefits and the universe of unemployment insurance recipients. In June and July, 26 states ended some or all those benefits prematurely to encourage the unemployed to return to work. This patchwork allows for interstate comparisons. The results so far, at best tiny relative employment gains in early…

The Friday File: By square miles (mi2) Vatican City is the smallest country on Earth at 0.19 mi2. Coming in a distant second at roughly four times the size is Monaco at 0.78 mi2. Next comes the southwestern Pacific Ocean nation of Nauru at 8.1 mi2. The west-central Pacific Ocean Island nation of Tuvalu is…

Since 1/1/2021, the Conference Board’s monthly survey of consumer confidence has been steadily rising, while the University of Michigan’s monthly survey of consumer sentiment has been softening. The Conference Board essentially looks at labor market conditions and they’ve been improving. The UofM’s sentiment survey looks at buying intentions for big-ticket items including homes and autos,…

There are currently 16 House members that have announced they will retire. While evenly divided between Democrats and Republicans, the Republican retirements are all in heavily Republican districts. Conversely, half the retiring Democrats are in Republican leaning districts, three others are in slightly Democratic leaning districts. Add redistricting, and considering that the president’s party usually…

With most, if not all forbearance programs soon to end, I expect three foreclosure waves. First, a foreclosure spike when the moratorium lifts, resulting from households in trouble before Covid-19. Second, a steady monthly stream between now and when the relief programs end. Lastly, a spike at the end when all last-chance relief expires. With…

While July’s retail sales numbers (which include almost exclusively purchases of goods) were not stellar, some perspective please. First, the Delta variant necessarily had some impact, and may well have more in August. Second, the fact that online spending and purchases of building materials declined shouldn’t be surprising. That activity remains well above trend and…

The Friday File: At the 100th Saratoga Sale earlier this month, 135 yearlings sold for $55,155,000. The average price, $408,556, just shy of the 2019 record of $411,459. The median price was $350,000, equaling the record set in 2019. The priciest horse, $2.6 million. It was one of four lots to reach seven digits, the…

While the current inflationary surge is largely economy reopening related and thus temporary, there’s a caveat. Strong job growth, improving household formation, higher wages, and house prices that are booming, may stimulate rent inflation. After averaging 3.5%/year in the years prior to Covid-19, it steadily fell to 2% early this year but is now rising.…

With an increase in the debt ceiling still awaiting congressional attention, the bond market is pricing in default risk. 1-month T-Bills are yielding 0.0203% while 3-month T-Bills are 0.0583%, over twice as high, a yawning gap given that they are usually almost identical. This gap suggests bond buyers expect the Treasury to, absent an increase…