There has been much talk about the death of bricks-and-mortar retail, which traditionally hires hundreds of thousands of temporary workers in November and December for the Christmas rush. With more and more business being conducted online, it stood to reason that general merchandise stores — the Macy’s and Targets of the world — would be […]
Category: CFE Analysis
Gangbusters Jobs Growth and No Fed Tightening. A Snapshot Unlikely to Persist.
President Trump tweeted on Christmas Eve that he was “all alone (poor me).” It was a sentiment with which Fed Chairman Jerome Powell could sympathize. As 2018 came to a close, the president blasted Powell for raising interest rates and causing the stock market to plunge. Wall Street pundits warned that swooning share prices suggest […]
Zero Bound
The outlook for growth in employment and corporate earnings over the next few years is headed down. The problem is not what the Federal Reserve will do, or what a Democratic (or Republican) Congress is likely to do, or the possibility of a mushrooming trade war. It is the unsustainable nature of what has caused […]
What did We Learn from Recent Monetary Policy Performance?
A growing chorus of commentators are now issuing warnings about additional Fed tightening in light of the flattening Treasury yield curve. Despite clear evidence that job growth in the U.S. is running well ahead of a sustainable pace, low wage and price inflation, for many suggest no need to firm overnight interest rates. Exhibits A […]
The slope of the yield curve and lessons from recent history
A downward sloping yield curve is widely seen as a harbinger of recessions, and indeed has an impressive track record. The yield curve inverted before the last two recessions and is likely to invert again within less than a year, which naturally raises fear of another recession. Much commentary of late has noted that yield […]
Lord make me pure, but not until 2020
In a recent post, we complained that Congress had muzzled the CBO, forbidding them from reporting budget projections until the forecasts could “reflect the tax legislation and any major decisions about spending that the Congress makes in the next few weeks.”[1] We conjectured that the spending cuts offered up would be slated for the out […]
CBO: The dog that didn’t bark, for now
Each January the Congressional Budget Office provides a 10-year budget forecast, driven by the interplay of tax laws, spending commitments, and a 10-year economic projection. Not so in 2018. CBO received a directive from the Senate and House Budget Committee Chairs, instructing them to hold off on supplying a report until they can produce a […]
A Happy New Year for Bitcoin?
The future of Bitcoin and other cryptocurrencies does not depend on whether digital currency is a good idea—digital currency or some equivalent is clearly a good idea. What will matter is whether cryptocurrencies are as good as other approaches to digital currency. From this perspective, cryptocurrencies look a bit ridiculous. A digital currency is nothing […]
While visions of Bitcoins danced in their heads
Nothing is but branding makes it so.Hamlet, Act 2, Scene 2, sort of Bitcoin has been branded a currency, and some analysts—even some Fed economists—seem to have fallen for it, arguing that Bitcoin’s value as a transactions vehicle explains why this intrinsically useless item has market value. The trouble is that there is no evidence […]
What will the FOMC be discussing next December?
The FOMC has communicated that it is likely to raise the federal funds rate 25 basis points in its meeting today; it would be a major shift in behavior if it didn’t. Thus, the main thing many folks are talking about is what the Fed will signal in the Survey of Economic Projections (SEP) and […]
Jobs and Inflation, Dec. 2017
Eighteen months ago, in “Six Degrees of Separation between jobs and inflation,” we argued that job gains of 200,000 per month could easily continue for the next 18 to 24 months without providing significant upward pressure on inflation. Eighteen months are up, and as of today’s job report we’ve seen solid job growth of 187,00 […]
What will the Fed do? Nov. 2017 edition
Ideally, if there has been no big news about the economy since the previous FOMC meeting, the FOMC should be back-page news. And maybe as part of “normalization” we are getting back to that: tomorrow’s FOMC announcement is likely to be a very sleepy event. Note: Let’s be clear that I’m talking about Wednesday’s FOMC […]