Despite “Strong” Jobs Report, Recession Still Locked In

November’s jobs report surprised to the upside. Nonfarm Payrolls (NFP) rose +199k, close to the +185k consensus view. But, it was the sister survey, the Household Survey (HS), that shocked the financial markets, as it rose +747k, more than doubly offsetting its -348k fall in October. So, it isn’t a surprise that the Unemployment Rate […]

The “Excess Savings” Hypothesis vs. Economic Deceleration

There is some speculation that because only a little more than half of the buildup in savings from the stimulus checks and enhanced unemployment benefits was spent through July, Q4 economic activity will continue to show recovery as the “savings” continues to be spent.  Call this the “Excess Savings” Hypothesis.   Unfortunately, the incoming data makes […]

The Recovery Stalls; Fed Pledges “Lower for Longer;” Equity Markets Pause

With the Fed pledging to keep rates low even when (or if) inflation rises above its 2% target, it is hard to see why long-term Treasury yields (and those of other quality issuers) won’t move toward yields of similar debt in the world’s other industrial economies (i.e., Europe and Japan). The economic lull is now […]

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 […]

The Trump Rally

For the third time in six months, markets reacted opposite to expectations.  First, it was Brexit.  Markets swooned after the unexpected vote.  That lasted for two days before markets shook off the surprise and headed higher.  Last month, when Trump won, the swoon lasted a whole 9 hours, and the tantrum ended just prior to […]