Posts by Econ70

While Producer Price Inflation is rising, since 1991 its correlation with core CPI is just 15%. Moreover, unemployment is high and global inflation is weak. Finally, while we are experiencing supply constraints, input prices have risen before. Recall that in 6/08 oil was $138/bbl, and as recently as 6/14 $111/bbl, yet since 1/1/94 core PCE,…

While GDP will return to its pre-pandemic level in 21Q3, absent expansionary fiscal policy the labor market will take until 2024. Correcting for worker misclassification by the BLS boosts the reported unemployment rate from 6.1% to 6.9%. Correcting for the sharp labor force participation rate decline unique to this recession further raises it, depending on…

January is normally a weak month for home sales. But not this January. Thus, the seasonal adjustments that are always made to allow for month-to-month comparisons are not valid. For example, had last month’s sales occurred in October, the season adjustment would have resulted in 4.3 million seasonally adjusted sales, not the 6.69 million reported.…

The Friday File: While marijuana is increasingly considered harmless, there are unintended consequences. Comparing retail scanner data in counties located in CO, OR, and WA where recreational marijuana is legal to counties where it’s not, sales of high calorie foods like ice cream, cookies and chips, is higher by 3.2%, in pot legal counties. On…

January retail sales jumped a smoking 5.3% M-o-M and arrested a surprising three-month decline. This was the biggest increase since June’s 8% rise when the economy was exiting lockdown, and the fourth largest bounce since at least 1992. Spending rose in all categories including bars and restaurants! This suggests 21Q1 should be pretty good, and…

If small changes in price lead to large changes in quantity demanded, think pizza, the item is elastic. Some goods, like gasoline, are inelastic. A change in that price does not alter the amount driven. Some things are infinitely inelastic, like electricity on a freezing day. The price per megawatt hour of electricity in Texas…

Since recordkeeping began in 1939, the 4.3 million net jobs created in 1946, the start of the post-WWII expansion, was tops. However, the recently passed $900 billion Covid-19 relief bill, rising vaccination rates, and now $1.9 trillion stimulus from the Biden administration means 2021 GDP growth of 5%, and creation of a record breaking 4.5…

Total American Express cardholder spending (an admittedly well-heeled group) fell 15% in 20Q4 Y-o-Y, compared to 19% in 20Q3 Y-o-Y, and 34% in 20Q2 Y-o-Y. Travel and entertainment fell 65% in 20Q4 Y-o-Y, an improvement from -69% in 20Q3 Y-o-Y and -87% in 20Q2 Y-o-Y. Non travel-related expenditures actually rose 4% in 20Q4 Y-o-Y, compared…

The Friday File: This Valentine’s Day, spending is expected to reach a whopping $27.4 billion, way up from $20.7 billion last year, and $19.6 billion in 2019. Clearly a case of pent-up pandemic demand. The average amount spent is expected to be $196.31, with men averaging $291.15 and women $106.22. A record 27% of celebrants…

The combination of the $900 billion support package signed by President Trump in December, the virtual certainty of another $1.9 trillion Democratic aid package, the probability of a large infrastructure/stimulus bill in February, and the Fed’s desire to keep rates artificially low, along with increased household spending due to high savings rates from prolonged pent-up…