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For Nine Million, Unemployment Benefits Have Suddenly Ended

The Economic Implications One of the major Wall Street investment houses recently lowered their Q3 GDP growth rate from 6.5% to 2.9% (!!), apparently realizing that two-thirds of the quarter was history, that the data have all been weakening (like August auto sales), and that the fiscal stimulus (helicopter money) was now in the rear-view mirror.  Readers of this blog know that we have been discussing much slower growth than …Read More

Delta-Variant, Soft Data Bode Ill for Near-Term Growth

The markets waited all week for Fed Chair Powell to speak at the Kansas City Fed’s Annual Jackson Hole Symposium.  Due to the Delta-variant, like many other business meetings, this one was held virtually.  There was growing market concern that Powell would turn somewhat more hawkish, especially since some Regional Fed Presidents appear to have done so in recent speeches and media appearances.  As a result, interest rates, as measured …Read More

The Payroll Numbers Won’t Prevent Economic Growth From Softening

Employment was the big story of the week with headline Payroll Employment rising +943K Seasonally Adjusted (SA). The consensus estimate was +870K, so, apparently, a big beat. But, looking beneath the surface reveals that this isn’t quite what, at first blush, it appears to be. Since the pandemic began, we have held the view that the Not Seasonally Adjusted (NSA) data present a truer picture than do the SA. The pandemic’s distortions haven’t …Read More

Despite Surging Inflation, Markets Now View It As “Transitory”

On Thursday, June 10, despite a headline CPI of 5.0% Y/Y, the highest reading since August 2008, the “Inflation Narrative” turned on a dime. How else can one explain the rapid 12 basis point (0.12 percentage point) decline in the 10-Year Treasury Note yield, over half of which occurred after the CPI data release? “Inflation Jumps to a 13-Year High” screamed the headline on page A-1 of Friday’s (June 11) Wall …Read More

No “Boom,” No Systemic Inflation Instead, a Return to “Normal”

In many parts of the country, no more masks!  Businesses reopening.  And, it sure does look like the impact of the latest stimulus checks (helicopter money) faded fast.  Despite the fact that the IRS continues to send out billions more in stimulus funds as they process 2020 tax returns, April Retail Sales fell -0.7% M/M.  Market expectations were for a rise of +1.0%.  In the retail sales world, this is …Read More

Employment and Inflation: The Double Whammy

As much as the big miss in employment was a shock on Friday May 7, the May 12 CPI data turned out to be a double whammy.  April headline CPI came in at +0.8% M/M, while market consensus was +0.2%, another huge miss by market forecasters.  Y/Y CPI was  +4.2%, up significantly from March’s 2.6% Y/Y print. What appears strange to us, and looks to be contradictory to reality, is …Read More