Following up with some more detail on yesterday’s GDP euphoria, a closer examination reveals that not much has changed beneath the headline refiguring. Again, I highly doubt the 3.9% (plus some rounding) survives further estimations, but that really doesn’t much matter at this point. Whether it ultimately arrives at 5% or 2% won’t change the trends that are embedded beneath [...]
After marveling at the speed at which the FOMC downgraded, once again, its over-optimism regarding 2014 growth, my good friend Fred Everett started to calculate exactly how daunting a task even hitting the lower end of the reduced range actually might be. It’s not just the misstep in Q1 that is the problem, it is the sometime tortuous nature of [...]
It’s that time of year where the world awaits the World Bank. Or maybe nobody cares anymore since the economists of that institution have cried “recovery” a few too many times. Like clockwork, global GDP forecasts are being lowered on US weather. From Bloomberg today: The World Bank cut its global growth forecast amid weaker outlooks for the U.S., Russia [...]
There seems to be perhaps more than a little too much notice about Friday’s jobs report finally regaining the prior peak. In some places, largely political in nature, it has been cause for celebration as if it is some reckoning akin to an actual recovery. That might be true in a vacuum, but compounding in economics is more than just [...]
The end of deleveraging, or the end of the cycle? That is where pertinent attention needs to focus from April’s jump in revolving credit. For most of the “recovery” period, households eschewed credit cards. That changed in the snowy winters of early 2014, which either means deleveraging has finally run its course and a new debt cycle is beginning, or [...]
It’s payroll day again, which means we get to watch the straight-line march of the Establishment Survey “confirm” whatever the observer wishes to infer because a straight line is both uninteresting and mostly not useful. This happens, of course, regardless of what other parts of the survey or other surveys show. The most prominent disagreement continues to be with the [...]
Now that GDP in Q1 has been revised significantly below expectations, particularly in comparison to the +3% that was expected at the outset of 2014, rather than dwell on the individual components I think it is useful to note that negative result in the context of cycles. Negative quarters are actually exceedingly rare in the circumstance outside of recession. In [...]
The cyclical change from sustained growth toward recession impacts a broad section of the economic system, but does so in different ways. Consumers grow more cautious as income growth fades and price signals get confusing and less consistent. For businesses, the proclivity to expand production capabilities is scaled back to something more like just replacement levels. Instead of adding new [...]
There are sentiment surveys and then there are real dollars. The sentiment surveys are holding their own, but there is nothing they can tell us about absolute levels of growth. Further, sentiment surveys were designed and calibrated under far different conditions than what we experience today. As much as even the major statistical releases are struggling with faded correlations, that [...]
Last week the Bureau of Labor Statistics reported that real average hourly earnings declined in April for the first time since last July. With hours worked stagnating from March to April (despite the assumed jump in the number of employees via the Establishment Survey) that meant average weekly earnings, adjusted for “inflation”, fell as well. So for all the celebration [...]
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