We have used the word “unprecedented” to talk about the economy during and after COVID. We have never before locked down economic activity, while printing trillions of new dollars to help finance trillions of extra government borrowing to pay people not to work. But now, it’s all over…the Federal Reserve has lifted rates, M2 is falling, and we’ve stopped paying people not to work.
Read MoreHistory 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.
Read MoreChina and Russia have announced they, along with Brazil, India and South Africa, are “working to develop a new global reserve currency” to compete with the U.S. dollar.
Read MoreCountries hostile to the U.S. and others, including China, Russia, Brazil, India, Indonesia, Argentina and South Africa, have been meeting with another to devise ways to dethrone the U.S. dollar as the world’s primary reserve currency. These and other countries are in open revolt against the “financial imperialism” of the U.S.
Read MoreYou 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.
Read MoreThe housing sector was a huge and early beneficiary of the super-loose monetary policy of 2020-21. But, once the Fed started tightening, housing took the lead downward, as well. This isn’t a repeat of the 2006-11 housing bust, but it will drag on. Don’t expect any real recovery in housing until at least late 2023 or early 2024. Home sales and prices will continue to drag in 2023, particularly in the existing home market.
Read MoreWhat a difference a year makes!
One year ago the Federal Reserve was forecasting that real GDP would grow a strong 4.0% in 2022, that PCE prices would be up a relatively moderate 2.6%, and we should expect a grand total of three 25 basis point (bp) rate hikes by the end of the year.
Read MoreIt’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.
Read MoreInflation makes you rich — well, not exactly — but it can make you appear rich. As a teenager, did you dream of having a $100,000 car and a million-dollar home? A few more years of the present rate of inflation, that will be the norm for most people (at today’s over 7% inflation, the value of the dollar is cut in half every 10 years — meaning today’s $50,000 car will be $100,000 in 2032).
Read MoreAfter 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. For example, the federal budget deficit in FY2021 was $2.78 trillion, but for FY2022 (which ended on 9/30), it fell to $1.375 trillion.
Read MoreRecent economic reports further undermine the politically-motivated argument from earlier this year that the US was already in a recession. They also undercut the Fed’s hopes that inflation will soon subside.
Read MoreWe 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. At that time the S&P 500 traded as low as 677. What a time to buy!
Read MoreWe know many people think we are beating a dead horse, but this horse is far from dead. Instead, she’s in the middle of one of the most important races of her life. What we have been talking about – and will keep talking about until we think Americans understand it – is monetary policy and the Federal Reserve.
Read MoreReal GDP growth in Q2 was revised higher to a -0.6% annual rate from a prior estimate of -0.9%, narrowly beating the consensus expected revision to -0.7%.
Read MoreWith less than three months left before the 2022 mid-term elections, it is officially silly season when it comes to interpreting economic reports. For many analysts it’s pretty much all politics all the time, with data seen through a political lens first, and with real unbiased economic analysis coming maybe second, if ever.
Read MoreTo many investors, this week’s GDP report is more important than usual. The reason is that real GDP declined in the first quarter and might have declined again in Q2. If so, this could mean two straight quarters of negative growth, which is the rule of thumb definition many use for a recession.
Read MoreIf 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. Yes, raising rates may slow the economy, but that alone won’t fix inflation.
Read MoreHow many times have you heard that the US dollar will collapse because of Fed and fiscal policy? According to the pessimists, this will bring the loss of reserve currency status, and possibly the rise of China.
Read MoreAs 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. Although the economy has improved dramatically from the complete lockdown bottom in April 2020, it’s still feeling lingering pain from policy mistakes made to address the pandemic.
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