If it continues to play out the same way, it would be all the worst scenarios lumped together all at the same time. A real unfortunate convergence, yet one that has been entirely predictable. Consumers reaching their absolute spending limits. Warehouse and storage capacity nationwide dwindling to long-time lows, leaving firms no options to store inbound goods. And, of course, [...]
The labor theory of inflation, the one the FOMC will use to justify rate hikes in 2022 (as far as they might go), isn’t just wages and competition for the presumed scarce marginal worker. While a tight labor market might drive up the marginal cost for labor inputs, in order for companies to then pass those higher costs back to [...]
The missing piece so far is consumers. We’ve gotten a glimpse at how businesses are taking in the shock, both shocks, actually, in that corporations are battening down the liquidity hatches at all possible speed and excess. Not a good sign, especially as it provides some insight into why jobless claims (as the only employment data we have for beyond [...]
It wasn’t entirely unexpected, though when it was announced it was still quite a lot to take in. On September 1, 2005, the Bureau of Economic Analysis (BEA) reported that the nation’s personal savings rate had turned negative during the month of July. The press release announcing the number, in trying to explain the result was reduced instead to a [...]
I wrote back in August 2016 out of frustration. There were any number of topics to have become flustered over at the time, but on this particular occasion it was the personal savings rate. Because it is, like productivity, essentially a plug in between two statistics whenever those two particular series, income and spending, are subjected to revision it can [...]
The plural of anecdote is not data. At any given time in any given economy you can find counterexamples. During the Great Depression, for example, millions of Americans were doing very well for themselves. It wasn’t difficult to locate and talk to those who were prospering during what was a legitimate catastrophe. It’s never all or nothing. Rather, the issue [...]
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 the following year to some [...]
When the Federal Reserve last month updated its estimates for consumer credit, we thought it was concerning if consistent with the labor market that revolving credit jumped by $11.2 billion in November 2017. The increase continued a pattern of greater regular usage of largely credit cards in lieu of growing incomes which have pretty much stagnated for several years. Undo [...]
Of all the moving parts contradicting the narrative of the growing economic boom, it’s incomes that will do it the most disservice. After all, there can be no such thing without them. Until our future robot AI overlords finally descend to either free humanity from labor, or eliminate us altogether, the economy still runs on the basic capitalist premise of [...]
Consumer confidence has been sky-high for some time now, with the major indices tracking various definitions of it at or just near highs not seen since the dot-com era. Economists place a lot of emphasis on confidence in all its forms, including that of consumers, and there is good reason for them to do so; or there was in the [...]
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