In 1967, the US Personal Savings Rate averaged just a little more than 12%. That was pretty consistent with consumer behavior observed throughout the decades before, and the one that followed. What that meant, in terms of economic theory, was that if you as a central bank intended to accelerate the economy via the manipulation of expectations you at least [...]
There is a lot to say about the latest GDP revisions, particularly as it relates to the breakdown of the measure in comparison with something besides itself. The headline was all that was needed to “confirm” the best economic growth in decades, though. “There is a positive feedback loop going on at the moment,” Mike Jakeman, global analyst for the [...]
The term consumer exhaustion can apply to several circumstances, but typically they all relate to exhaustion of resources. Households can appeal to wages, transfers, savings or debt, and usually some combination of the four, to maintain living standards and discretionary budgets. So exhaustion, like that of yesterday’s GDP, could be due to any one segment failing more than the others [...]
In anticipation of tomorrow’s jobs frenzy, with all attention fixed to a statistic that was never meant to convey meaning in the current predicament (the unemployment rate is not supposed to be driven by the denominator), a review of context is in order. That is particularly true as I have detailed recent indications of a foul and maladroit trajectory for [...]
The persistence of frozen precipitations and the attendant temperatures that accompany them have somehow become an economic variable. I suppose it will be official once the Federal Reserve announces that it has updated all its DSGE models to include a snow gauge, rendering them truly dynamic in more than one sense. The “unexpected” reappearance of “unexpected” weakness is never pinned [...]
The most important segments of the GDP report are, to me, final sales and gross private domestic investment (outside of inventory). Those are the proxies for end user demand in the economy (final sales to domestic purchasers), level of production (final sales of domestic product) and business tendency toward investment (or disinvestment). Overall GDP can grow at 3+% in the [...]
I rarely take on the issue of measuring inflation properly because there really is no “right” answer or methodology for it. But in the case of current “growth”, such that it is, inflation actually becomes a far more important component. “Real” growth in the past two quarters has been less than 2%, meaning nominal growth was somewhere around 2.5 - [...]
There is definitely a higher cost of living in certain areas of the United States. This can be because an area is geographically desirable, the beauty and climate of the California coast or the cosmopolitan setting of Manhattan; it can be because an area is economically desirable, Silicon Valley or Cambridge, MA. Everyone has their own marginal utility function. How [...]
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