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The Taylor Rule, a formula proposed by Stanford Professor John Taylor, tells the Fed how to set short-term interest rates. They are to be determined based on three variables: the gap between the actual inflation rate and the desired inflation rate, the gap between actual GDP and potential GDP, and the appropriate short-term interest rate…

Despite a generally strengthening economy, the combination of surprisingly cold weather in the Northeast and parts of the Midwest, declining capital expenditures (due primarily to falling oil prices) and weak exports (due a strengthening dollar) will reduce Q1 GDP growth to below 2.5% from earlier forecasts of 3%. Q4 GDP growth is also likely to…

The Friday File: The US cattle herd (including beef and dairy cattle) increased from 89 million in 2013, its lowest level since 1951, to 89.8 million in 2014. And the number of heifers being added to the beef-cattle breeding herd jumped 4% to 5.8 million. But because it takes one to two years for an…

Minutes from the last Fed meeting were released yesterday and the Fed is covering the bases. While some want to raise rates in June, most don’t as they see more downside than upside risk, including weakening exports and a worsening trade deficit despite cheaper gasoline. They also fret about both weak global growth and inflation,…

Despite a generally strengthening economy, the combination of surprisingly cold weather in the Northeast and parts of the Midwest and declining capital expenditures (due primarily to falling oil prices and weak exports due a strengthening dollar) will reduce Q1 GDP growth to below 2.5% from earlier forecasts of 3%. Q4 GDP growth is also likely…

Despite sharp rhetoric to the contrary, the GOP will nevertheless fund the Department of Homeland Security after 2/27/15 and will raise the debt ceiling when it becomes necessary later this year because doing otherwise will make them look profoundly stupid. And President Obama and the Republicans will agree to increase equally defense spending and discretionary…

The Friday File: After peaking at 19.6 billion catalogues mailed in the US in 2007, (that’s 65 catalogues per/person and 163/household) the number of catalogues shipped rapidly fell to 11.8 billion in 2012, but rose slightly to 11.9 billion in 2013, or 38 catalogues/person and 94/household. It turns out that customers who enjoy catalogues spend…

This week, Apple’s market capitalization surpassed $720 billion. While a truly mind-boggling amount, equivalent to roughly $2,200 per person in the USA, or three iphones, it also ranks Apple as the 24th largest nation on the planet based on GDP. At present Apple is just above Netherlands and just behind Argentina. Up next, Poland with…

Last Friday’s employment report was sizzling. Net job creation in January came in at a better than expected 257,000, December employment growth was revised upwards to 329,000 and November’s to a whopping 423,000, the most since 5/00. Better yet, the unemployment rose to 5.7% from 5.6% as improving employment prospects lured hundreds of thousands of…

Two weeks ago, the Department of Labor reported that private sector employee compensation rose 2.3% Y-o-Y, the highest level since the start of the Great Recession but quite low. Last Thursday, the DOL reported that unit-labor-costs, a measure of worker wages adjusted for changes in worker productivity, rose just 1.5% Y-o-Y. Finally last Friday the…