The US economy is being tugged in two different directions right now. On the positive side we have the lingering effects of the massive stimulus of 2020-21, the renormalization of the service sector after COVID Lockdowns, and, as always, the entrepreneurial and innovative spirit of the American people.
History is full of economic and societal collapses. The Incan and Roman societies disappeared, the Ottoman Empire fell apart, the United Kingdom saw the pound lose its reserve currency status. So, anyone who says the US, and the dollar, couldn’t face the same fate doesn’t pay attention to history.
Fifteen years ago, in 2008, the Federal Reserve started an experiment in monetary policy, switching from a “scarce reserve” system to one based on “abundant reserves.” This switch has created massive problems that are hitting not just the private banking system but the Fed itself.
If you were bullish for 2023…congratulations!
The Federal Reserve raised short-term interest rates by another quarter point on Wednesday.
The Fed raised short-term rates by another 25 basis points (bp) today and made no changes to the expected peak for short-term rates later this year.
The late great Supreme Court Justice Antonin Scalia was often in dissent in key legal cases during his long career.
In multiple ways, this is the most difficult time we have ever seen to make a forecast.
In the past few weeks, a growing chorus of economists and investors have decided that the pessimistic narrative had it wrong all along, that the US isn’t headed for a hard landing, which would mean a recession, it isn’t even headed for a soft landing, which would mean a prolonged period of low economic growth.
You can’t read or watch financial news these days without a heavy dose of speculation about what the Fed is going to do with short-term interest rates, when it’s going to do it, and how long it’s going to do it for.
Markets have been volatile, with reports convincing many that the Fed is done hiking rates.
At the beginning of the season, not many predicted that the Philadelphia Eagles would be in the Super Bowl this year.
The Fed downshifted to a smaller rate hike to start 2023, but the job is far from done.
The US federal budget is on an unsustainable path…but not for the reasons that most people think.
First, the good news: we estimate that real GDP grew at a solid 2.8% annual rate in the fourth quarter.
We wrote last week about the soft landing that markets now seem to expect.
Not long after Friday’s Employment Report multiple analysts and commentators were calling it a “goldilocks” report, by which they meant it showed that the economy was neither “too hot” nor “too cold,” but instead, “just right.”
The housing sector was a huge and early beneficiary of the super-loose monetary policy of 2020-21.
Last week Zero Hedge achieved the impossible, they managed to make a report from the Philadelphia Federal Reserve go viral.
What a difference a year makes!
The Fed downshifted to smaller rate hikes but isn’t close to done.
Our position on the economy has been that the US is headed for a recession, but we’re not quite there yet.
It’s that special time of the year, and we will all hear and read a great deal about Black Friday, Thanksgiving Weekend, and Cyber Monday during the next few days. Many pundits are going to make sweeping conclusions about the economy based on these very limited reports.
We will forever believe that locking down the economy for COVID-19 was a massive mistake. There is virtually no evidence that death rates were lowered by government mandates and lockdowns.
Election day is tomorrow and will bring results for key Senate, House, and Governors races from all around the country, plus local legislative races and more.
The Federal Reserve plans to keep raising rates at future meetings, but at a slower pace than it has for the last four meetings.
After nearly three years of the economic and financial market distortion due to COVID lockdowns, money printing, and massive government borrowing, some of these distortions are subsiding
Most investors we talk to think the US is already in a recession or that a recession will start by the end of 2022. We think they’re wrong on both counts.
The Nobel Prize in Economics was recently awarded to former Federal Reserve Chairman Ben Bernanke, as well as professors Douglas Diamond and Philip Dybvig, for their work on understanding the role banks play in the economy, especially during a financial crisis.
Recent economic reports further undermine the politically-motivated argument from earlier this year that the US was already in a recession.
We are not “recession deniers,” we just don’t think one has started yet.
We had been bullish on stocks all the way back to March 2009, when mark-to market accounting was fixed and the Financial Panic started to recede
The Federal Reserve once again voted unanimously to raise rates by three-quarters of a percentage point - 75 basis points (bps) - today, bringing the target for the federal funds rate to 3.00 – 3.25%, and signaled expectations for continued hikes ahead.
We know many people think we are beating a dead horse, but this horse is far from dead.
If you’re still wondering how much the Federal Reserve will raise short-term interest rates next week, you should wonder no more: the Fed is almost certainly going to raise rates by three-quarters of a percentage point (75 basis points), just like it did back in both June and July.
The housing sector surged during COVID in large part due to loose money.
The Dow Jones Industrial Average fell more than 1,000 points on Friday, caused apparently by Fed Chairman Jerome Powell’s attempt to use a brief speech to channel the ghost of Paul Volcker.
One thing we must remember when looking at economic data, is that everything is distorted.
We live in unprecedented times.
With less than three months left before the 2022 mid-term elections, it is officially silly season when it comes to interpreting economic reports.
With the Senate having passed a budget plan yesterday with only Democratic votes as well as a tie broken by Vice President Harris, it is only a matter of time before President Biden signs the first significant tax hike since the “Fiscal Cliff” tax hike in early 2013.
The Federal Reserve raised short-term interest rates by three-quarters of a percentage point (75 basis points) on Wednesday.
To many investors, this week’s GDP report is more important than usual.
If you follow the financial press, the conventional wisdom has come to the simple conclusion that the way to fight inflation is raising interest rates. Unfortunately, this is just not true.
How many times have you heard that the US dollar will collapse because of Fed and fiscal policy?
Some investors think the US is already in a recession. As we wrote two weeks ago and as recent data have confirmed, we don’t think that’s the case.
As we celebrate 246 years of national independence, our country is now more than two years into an economic recovery from the two-month COVID Lockdown Depression.
We've told people to watch the M2 measure of money in order to understand whether inflation will cool down or heat up.
Real GDP declined at a 1.5% annual rate in the first quarter and, as of Friday, the Atlanta Fed's "GDP Now" model projects zero growth in Q2.
We became bullish about stocks once mark-to market accounting was fixed in March 2009.
