• slow_4

    Lower Level

    Since 1947 real GDP growth has averaged 3.26%/year. Since 1/1/10 it’s averaged 2.3%. Economists think that some of the decline will persist for a while because of both slower productivity gains and population growth. Therefore, the neutral Federal Funds rate, the rate that’s neither expansionary nor … [Read More...]

  • TR007241

    Wonky Wages

    Seattle’s decision to boost its minimum wage to $15/hour, the highest anywhere, is bad policy. Unlike a rise in the federal minimum wage which affects all employers, this increase only applies inside the city. Thus, employers in low-wage industries in Seattle will be at a distinct financial … [Read More...]

  • The newspaper  GOOD NEWS  and coffee

    Nice News!

    On Monday we learned that existing home sales in May jumped 4.9% to a rate of 4.89 million/year, the best pace since last October. Better yet, yesterday we learned that new home sales jumped from a rate of 433,000/year in April to 504,000/year in May, the best activity level since 5/08 and that … [Read More...]

  • euro

    Mediocre Monetary Meddling

    Rather than using a cannon, last week the ECB used a popgun. By reducing the rate it charges banks on loans and by charging banks on deposits held at the central bank, the ECB hopes to spur lending. It won’t happen. Separately, it’s also finally injecting liquidity into the banking system. What … [Read More...]

  • percentage-dice

    Rotten Returns

    Why are rates so low? Let me count the reasons: flight to quality due to rising geopolitical risk, the Fed’s promise to keep short-term rates low for a long time, Japan’s massive monetary stimulus, the ECB’s decision to start printing money, weaker than expected US growth, no evidence of commodity … [Read More...]

Jan
23

World Wealth

world money

The Friday File: The wealthiest 80 people on the planet have a combined worth of $1.9 trillion, the same as the total wealth of the bottom half of the world’s population; 3.5 billion people. The wealthiest 1% of the population, 70 million people, hold 48% of global wealth and average $1.8 … [Read more...]

Jan
22

Avaricious Airfares

airlines

Over the last year jet fuel prices fell 23.5% but fares only declined 4.7%! It’s because fuel is 26% of the cost of a ticket, and airlines hedge their fuel needs to guarantee price stability which prevents them from realizing savings when prices fall. Also, when energy prices have historically … [Read more...]

Jan
21

Petrol Pay

gasoline

Real median household income in the USA in 2013 was $51,939, up a microscopic $181 from 2012. Moreover, it’s back to the level first achieved in 1989! As a result the expected average household savings of $750 on gasoline in 2015 (down to $1,762) is huge! The savings are three times as large as the … [Read more...]

Jan
20

Juicy Jobs

Workers

Job quality is finally improving. Last year, industries that paid more than the average private wage of $24.57 accounted for 66% of all jobs created. Business services at $29.27/hour created 26% of all new jobs followed by goods-producing at $25.81/hour which created 18% of new jobs while education … [Read more...]

Jan
19

Foul Franc

swissnationalbank

The sudden decision by the Swiss National Bank to allow the Franc to freely float against the euro not only destroyed the SNB’s credibility, resulted in huge losses on its euro-bloated balance sheet and unleashed deflation in Switzerland, but also led to the insolvency of a number of … [Read more...]

Jan
16

Corrupt Compensation

corruptcompensation

The Friday File: While some argue that skyrocketing CEO pay is linked to performance, recent research suggests otherwise. Looking at CEO compensation across US firms, British academics find that firms that hired compensation consultants paid their CEOs 7.5% more than those that didn’t. It appears … [Read more...]

Jan
15

Budget Balance

balancedbudget

In calendar year 2014, the budget deficit was $488 billion, $72 billion less than in 2013 and the smallest deficit since 2007. Since the start of 2010, revenues have risen from $2 trillion to $3 trillion, while spending has been flat at $3.5 trillion. If revenues continue rising by $200 … [Read more...]

Jan
14

Ill-conceived Immigration

immigration

President Obama's December Executive Order granting temporary immigration relief will boost GDP by 0.5% over the next decade, while the 2013 Senate-passed immigration bill would have boosted GDP by over 3%. Obama's Order helps primarily undocumented immigrants, most with very limited skills, and … [Read more...]

Jan
13

Oily Operations

oil derek

Before oil prices can rise, production must decline and/or demand must rise and demand won’t increase anytime soon with Europe, Japan and Brazil weak, Russia in recession and China slowing. That means supply must fall and that will probably require still cheaper oil. Recent research suggests that … [Read more...]

Jan
12

Sickly Salary

wages1

While the economy created 252,000 jobs in December and 2.95 million last year, the most since 1999, and the unemployment rate fell to 5.6%, looks can be deceiving. The steep unemployment rate decline is because the labor force participation rate declined to 62.7%, a 37 year low, thus the combined … [Read more...]