70 Words
Oct
15

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...]

Oct
14

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...]

Oct
01

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...]

Sep
19

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...]

Sep
16

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...]

Sep
10

Inflation Imbroglio

Argentina is suffering a classic currency collapse. They usually happen like this: A sudden currency decline, usually the result of bad policy, causes imported goods (like oil and food) to dramatically rise. That reduces living standards, pushing workers to demand higher wages, which in turn fuels … [Read more...]

Aug
30

Mongolian Master

The Friday File: Last week, Bob Long won the Mongol Derby. What’s so amazing is that Mr. Long, originally from Cheyenne, Wyoming, is 70 years old, and the Mongol Derby is the longest multi-horse race in the world at 1,000 kilometers. Bob crossed the finish line on the 8th day of the race having … [Read more...]

Jul
30

Good GDP

19Q2 GDP came in at 2.1%, which, while a big decline from 3.1% in 19Q1, is in line with the 2.3% average over the entire record-breaking 121-month recovery we are enjoying. Business spending was negative, the first time since 16Q1, and exports declined due to trade tensions, slowing global growth … [Read more...]

Jul
19

Nifty NASA

The Friday File: Tomorrow at 4:17pm EDT is the 50th anniversary of Neil Armstrong and Buzz Aldrin’s lunar landing! Armstrong subsequently set foot on the Moon at 10:56pm EDT; Aldrin joined him 19 minutes later. That ended the Space Race with the USSR and fulfilled President Kennedy’s national goal. … [Read more...]

Jun
19

Right Rate

When the Fed last met, economic data was looking good. Now, not so much. Manufacturing is probably in recession, inflation is weakening, the yield curve is inverted, the dollar is strong, and trade concerns are elevated. However, equities are near records, unemployment is ridiculously low, and … [Read more...]