• Tariff Travails

    Prior to slapping tariffs on China, US tariff revenues were $3 billion/month. They’re now $7 billion/month; an increase of around $50 billion/year or 0.25% of GDP. Thus, GDP has been reduced by at least this much, and realistically much more because some purchases are simply not made and we’re … [Read More...]

  • Nobel Noteworthy

    Earlier this morning, the Nobel Prize in Economics was awarded to a trio of economists, Abhijit Banerjee and his wife Esther Duflo (only the second woman to win an Economics Nobel and the youngest recipient ever at 46) both from MIT, and Michael Kremer of Harvard. They won the award for their … [Read More...]

  • Substantial Savings

    From 1980-2007, US savings rates declined from about 10% to 2.5%. They have since risen and are now 8.1%. Unsurprisingly, savings rose after the recession as households rebuilt wealth. Rates may also be up due to rising economic uncertainty. But savings rates jumped dramatically after the Trump tax … [Read More...]

  • F&F Fix

    Here’s how to shrink/fix Fannie and Freddie. First, reduce the threshold for a conforming loan to 1.5 times the median price of an existing single-family home, which is currently $284,000. Second, end support for vacation homes and cash-out refi. Third, start treating F&F like banks when it … [Read More...]

  • Strong Statistics

    Not only did August retail sales rise a strong 0.4%, but June and July sales were revised up. We care because retail sales are about 25% of consumer spending, and consumer spending accounts for 68% of GDP. Thus, retail sales are 17% of GDP! Moreover, average hourly earnings rose at the fastest pace … [Read More...]


Dwelling Deficit

A key reason existing home sales have remained lackluster despite record low unemployment and spectacularly low interest rates is homeowners now stay in their homes for about 13 years, up from eight years as recently as 2010. Thus, the inventory of for sale homes has plummeted from 3/100 households … [Read more...]


Clueless Continent

Last decade, European growth and inflation were decent because excess savings in Germany and the north were matched by excess spending in Greece and other southern nations. Since the sovereign-debt crisis, southern nations have become much more frugal out of necessity, but the north has not boosted … [Read more...]


Wonderful Work

Despite the GM strike and the loss of 17,000 Census workers, 128,000 new jobs were created in October. Moreover, there were upward revisions totaling 95,000 to August and September. And, the labor force participation rate hit 63.3%; best since 9/13! The only weakness; wage growth is flat at 3%. … [Read more...]


Computing Craziness

The Friday File: Last week, a small window into the promise of quantum computing was opened. A mathematical calculation that would have taken a supercomputer 10,000 years to solve was done in 200 seconds. Rather than using bytes that are either 1 or 0, quantum computing uses qubits that can be both … [Read more...]


Ghoulish GDP

US GDP grew at a modest 1.9% in 19Q3, down from 2% in 19Q2 and 3.1% in 19Q1. As was the case in 19Q2, consumer spending led the way. Other areas of strength; federal, state and local government spending, and a small lift from housing. Unfortunately, business investment was weak, suffering its worst … [Read more...]


Fed Funds

Unsurprisingly, the Fed cut rates a quarter-point. But the benefits of the cuts are waning. That’s because home construction has shrunk from about 5% to 3.5% of GDP, the wealth effect has weakened as equities and homeownership are increasingly concentrated among those with higher incomes (whose … [Read more...]


Federal Folio

In 1936, the number of pages in the Federal Register (which provides a rough sense of the flow of new and changed regulations) was about 3,000. By 1970, it had grown to 20,000, and by 1980, it further expanded to over 70,000 pages, but fell to 50,000 by 1988. It then inexorably grew and topped out … [Read more...]


Depressing Deficit

In FY2019, the budget deficit was $984 billion, up from $779 in FY2018. This is the largest deficit in seven years, and the fourth year in a row the deficit has risen; the longest stretch since the early 1980s. The deficit has risen 68% since FY2016, a period marked by profoundly low unemployment … [Read more...]


Plump Pumpkins

The Friday File: The world’s heaviest pumpkin is 2,625 pounds, grown in 2016 by Belgian Mathia Willemijn. He broke the then record of 2,324 pounds set in 2014 by Germany’s Beni Meier. Meier broke Californian Tim Matheson’s 2013 record of 2,032 pounds. In 2012, Rhode Islander Ron Wallace was the … [Read more...]


Endless Earnings

It’s earnings season again, however, unlike other seasons, this one lasts all year! It’s because public firms must report earnings within 35 days of the quarter close. Since there are thousands of firms and their quarters end at different times, earnings releases are an almost daily occurrence. … [Read more...]