The FOMC policy statement released last month wasn’t improved by the “minutes” publicized today. If you believe the committee is “hawkish” then there is plenty for you to find agreement; the opposing equally so. From what I see, they spend an inordinate amount of time and words on the labor market, but after repeated emphasis that instead of fashioning confidence [...]
The inventory component in GDP, change in private inventories, was revised upward yet again forming the basis for the upward shift to -0.2%. At a $110.7 billion increase, the last four quarters have seen inventory gain by a combined $399 billion. That is the largest nominal expansion in history, and the most gained in terms of final sales since the [...]
There weren’t any surprises in the “final” GDP update for Q1. Going back to -0.2%, the same interpretations still apply, especially and including the inventory contribution. Economists and policymakers want to talk particularly about how Q1 is prone to “residual seasonality” but that is missing the bigger part of the problem. Whether Q1 was -0.2% or +2% doesn’t really matter, [...]
An old Wall Street saying opines that one shouldn't "fight the Fed" and it is said to be good advice. The popular belief about this saying is that it means one should embrace risk when the Fed is easing because ultimately the goal of the easing (more growth) will be accomplished. When the Fed is tightening one should shun risk, assuming that [...]
GDP estimates for Q2 2015 have been rising in June, largely due to updates on consumer and household spending. The first, the Quarterly Services Survey (QSS) showed a somewhat higher spending pattern for financial services (the largest component), which pushed Q2 GDP forecasts (according to the Atlanta Fed’s GDPNow tool) to +1.4%. Last week, the strictly seasonally-adjusted “surge” in retail [...]
The title is a shorthand way of saying that the most recent performance of the economy isn't predictive of the future performance of the stock market. The bottom line is that GDP growth today doesn't necessarily mean stock price growth today - GDP growth and stock returns are not highly correlated. In fact, some analysis suggests that they are negatively [...]
While the recovery narrative received a boost from only the seasonally adjusted retail sales data this week, the rest of the domestic economy, including and especially unadjusted retail sales, is still being marked down. First, the World Bank reduced its estimates for global growth to 2.8%, meaning that the promised annual recovery is now put off yet another year. Further, [...]
It is exceedingly difficult these days to detect where finance ends and the economy begins. That was intended, of course, as it was believed that greater intrusiveness on the part of the financial ends were consistent with greater, and better, economic control. Certain strains of economics have been obsessed since the dawn of the discipline with finding “optimal” outcomes. More [...]
If there is some small gain to be had from current economic circumstances, it might be a lesson in what the dollar is and what it is not. Just a few months ago the idea of the “strong dollar” was almost ubiquitous, scarcely any shaky economic commentary could be found without mentioning that as the trump to the upside. It [...]
Personal spending fell slightly in April, making three of the last five months for declines. Such a sustained slump is actually quite rare, and you have to go back to the Great Recession to find anything like it in recent history. There are a few reasons for this now-accumulated downtrend, but it always starts with income. While personal income has [...]
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