The Economy from 50,000 Feet
A few friends have expressed the belief that interest rates have nowhere to go but up. This, of course, has been the mantra of the market for the past several years, and, perhaps, my friends have been listening too long to the talking heads on bubblevision. Here’s why it won’t happen: Today’s U.S. economy has […]
On a Recession Watch
For the first time since the industrial revolution, the U.S. faces two significant growth issues: 1) a declining labor force; and 2) a job skills mismatch. The declining labor force is demographic in nature and is occurring in every industrial economy; likely a function of the long-term success of capitalism. The skills mismatch is a […]
“Normal,” It’s Not What You Think!
Most readers remember the pre-recession days of 4% GDP growth, interest rates at levels where savers had return choices worth pursuing (e.g., the 10 year T-Note at 4%), and workers could count on annual real wage growth. Today, many refer to this as “normal,” and there is a desire, if not a movement, to return […]
The Risk of Recession is Rising; So is Market Risk
Recession: This is the hardest world for any business economist to pen, especially when the equity market is on a tear. Nevertheless, that is the reality of a slow growth, deflationary world where not much negative must happen to push the 1% growth economy into negative territory. Post-election, markets initially rose on the hopes of […]
Does 2.3 percent economic growth justify Dow 20,000?
A survey of 53 economists by Blue Chip Economic Indicators forecast 2.3 percent economic growth for 2017, up from an estimated 1.6 percent in 2016. While better, 2.3 percent is still low by post-World War II standards. Consensus found that inflation would tick up to 2.4 percent, industrial production would begin to grow again (+1.6 […]
Painted into a Corner A Review of the Economic Environment Entering Q4/16
While Q3 started out much better than the very slow economy of the first half of 2016, August’s data was very weak although there was some bounce in September. So, we enter Q4 with some serious concerns about the fragile state of the economy, where an outside shock or policy mistake could have serious consequences. […]