201804.16
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The Retail Sales Shortage

Retail sales rose (seasonally adjusted) in March 2018 for the first time in four months. Related to last year’s big hurricanes and the distortions they produced, retail sales had surged in the three months following their immediate aftermath and now appear to be mean reverting toward what looks like the same weak pre-storm baseline. Exactly…

201804.13
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There Aren’t Two Labor Markets

Allusions to a labor shortage continue to be ubiquitous. Two weeks ago, the Wall Street Journal published yet another such story under the headline Iowa’s Employment Problem: Too Many Jobs, Not Enough People. Ostensibly about the experiences of companies trying to hire in the one state, the implication was clear enough. If Iowa, IOWA, has…

201803.23
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Harvey and Irma Passed, Back To Same Procyclical Housing

Why does monetary policy pay so much attention to housing? The easy answer over the last twelve years is the bubble. It was hard not to, though for a very long time policymakers did attempt a systemic disavowal. But beyond the middle 2000’s housing mania, central banks have had a very keen interest in real…

201803.22
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If Powell Is Angry And Disgusted, That’s A Small Positive

According to one research company, new Federal Reserve Chairman Jerome Powell was disgusted and angry at his press conference yesterday. The firm, Prattle, employed facial recognition software to track Powell’s expressions throughout his inaugural press conference. By their count, he was disgusted 36 times, angry 41 times, and expressed contempt another five. Powell conveyed joy…

201803.09 5

The Return of The Perfect Payrolls

Over the past two days, Chinese exports exploded, US payrolls bested 300k, and China’s CPI recorded the hottest inflation in 5 years. Globally synchronized growth? It’s times like these where remembering how nothing goes in a straight line helps settle and ground interpretations. In thinking that way already, you are never surprised when there are…

201803.08
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Predictable Non-residual Seasonality

Our contention behind “residual seasonality” has always been that there is no residual but to some extent an understandable and easily explainable seasonal issue. Each Q1 appears to be unusually weak because, well, it is unusually weak. The reason is simply Christmas. Americans splurge for the holiday and then spend the first several months of…

201803.07
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Really Looking For Inflation, Part 2

Continued from Part 1 What these unusually weak productivity estimates lean toward is, quite simply, the possibility the BLS has been overstating jobs gains for years. In early 2018, there is already the hint of just that problem in a 4.1% unemployment that doesn’t lead to any acceleration in wages and labor income. What it…

201803.07
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Really Looking For Inflation, Part 1

Most people have been looking at Jerome Powell’s Chairmanship of the Federal Reserve as continuity, a comprehensive extension of Janet Yellen’s (and therefore Bernanke’s). This would by nature include all the nasty habits Chairman Yellen had picked up during her one term. At the top of that list is the word “transitory”, particularly how it…

201803.01
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It’s Q1 Again, Do You Know Where Consumer Spending Is?

Residual seasonality isn’t a residual, but it is seasonal. The concept was introduced several years ago mostly because Economists were finally being embarrassed about their meteorological predilections. It had become common, far too common, to blame snow, cold, and general wintry like conditions during the winter. Thus, something else had to be brought forward to…

201802.21
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Not At All The Inflation They’ve Been Hoping For

The National Association of Realtors is confused. The trade group for real estate professionals and salespeople just reported a significant drop in the level of resales for January 2018. After peaking at an annual pace of 5.72 million (revised) in November, existing home sales declined to 5.56 million (revised) in December and now just 5.38…