Fed Likely to Put Economy at Risk
Market volatility finally showed up in the popular indexes (DJIA, S&P 500, NASDAQ). These were down two weeks in a row as of November 17 on rising volume (never a good sign when markets are falling), and they are no higher than they were a month earlier (October 20). The VIX, a measure of market […]
The Headlines Say Growth…
The headline numbers, for jobs and GDP, and most of the sentiment indexes, would lead one to conclude that the economy was robust and accelerating. Even the Fed agrees, as they upgraded their view of the economy to one now in “solid” growth mode. The reality is that much of the data was distorted by […]
Deflation’s Persistence Implies Yields Will Be Lower for Longer
Despite what you hear from the TV pundits, the U.S.’s second quarter ended on weakness, and there is little evidence that economic acceleration occurred. In previous years, slow GDP growth in Q1 was followed by 3%+ in Q2. Not this time! The Atlanta Fed GDPNow model, which uses a lot of sentiment indicators, is all […]
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 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 […]
Why Helicopter Money and Unconventional Monetary Policies Won’t Help the Economy
The equity markets continue to flirt with record highs while the yields on fixed income instruments are at or near all-time historic lows. Generally, those two market movements are not compatible. Everyone feels a high level of anxiety about the economic future. Ben Bernanke visited the Bank of Japan in early July to help them […]