Archive for January 2022

Because investment in physical plant as a percent of GDP has fallen over time, the impact of higher interest rates now primarily works through new home construction and net exports. Thus, higher rates may now be necessary than before to affect the same economy-wide impact. Moreover, real rates are currently very negative. This also suggests…

The Friday File: While bigger northern nations win more Olympic medals, a fairer comparison is per capita medal wins. Looking at results from the 2018 winter Olympics in Pyeongchang this way, Liechtenstein, with one medal, placed first with a population/medal ratio of 37,918. Norway, with 39 medals, was a very distant second at 136,205. In…

Inflation is usually a monetary phenomenon and while the American Rescue Plan included huge dollars, it alone has not caused inflation. Rather, aggregate demand has been very strong, and supply-chains have broken down. In time the private sector should fix the supply-chain problems, and demand should naturally return to trend. The labor market problems, punctuated…

Today, unsurprisingly, the Fed told us they will start raising rates on 3/16/22. Powell was careful to say the rate hikes are designed to reduce inflation, and hopefully not hurt labor markets. With labor supply so tight that should be doable. Markets were somewhat spooked about the Fed’s plans to shrink its huge balance sheet…

During the four calendar years ending 2019, 5.5 million employed persons/day didn’t go to work. In 2020, the year Covid-19 arrived, the number jumped to 6.9 million persons/day. In 2021, it fortunately declined to a still elevated 6 million/day, with the 500,000 person-rise directly attributable to illness. This large increase directly hurts supply-chains, boosts inflation,…

In 2020, single-family housing starts totaled 1,004,000 and multifamily starts were 392,800, for a total of 1,396,800. During 2021, rents and home prices skyrocketed. One would thus expect huge increases in both sectors. Multifamily activity increased to 471,500, a Y-o-Y rise of 20%, and their best level since 1987. Conversely, single-family activity was 1,127,000, a…

The Friday File: Using a sample of super-elite chess games, research shows that males are much more likely to quit when being dominated by a female. By contrast, females appear to show no observable behavioral differences based on the gender of their opponent. The obvious question is why? I haven’t a clue, but possible explanations…

While the $810 billion Paycheck Protection Program was timely and temporary, it was badly targeted. 94% of eligible firms, that is firms with fewer than 500 employees, received funding. This near-universal participation resulted in the saving of three million job-years of employment, but at an average cost/job-year saved of $169,000! The third PPP tranche of…

Before the pandemic, on-line sales accounted for about 14.25% of all retail sales. During the lockdown of March/April 2020, the percentage unsurprisingly jumped to 20.2%. Since, it has steadily fallen to 16.5% by 6/20, 15.9% by 3/21, and 14.9% through 12/21. The current on-line sales level is now below what the pre-covid growth trend would…

Before Covid-19, 5% of work was conducted at home, and on websites like GlassDoor, 1 job in 66 offered the potential to partially work-from-home. Now, almost two years into pandemic living, 15% of workers want to WFH exclusively, 30% want a hybrid arrangement. On job websites, 1 in 6 jobs now offers the ability WFH…