As a practical policy matter, monetary neutrality almost forces all official considerations to the downside. If you believe that money cannot alter the baseline for the economy, then the only time to consider the upside is where it is clearly “overheating.” In addition to placing inordinate importance on determining trend, in the aftermath of the Great “Recession” it has meant [...]
The Federal Reserve in early 2012 altered longstanding monetary policy. In January that year, the FOMC had voted to make explicit what everyone already knew, that it considered 2% inflation to be the definition of “stable” consumer prices, casting off one of the last vestiges of 1980’s era regimes where central bankers felt silence was the best course. It had [...]
Ever since the Reserve Primary fund broke the buck on September 17, 2008, policymakers have been quick to demonize money market funds as the weakness in an otherwise sound regulatory regime. MMF’s are a sort of deadzone for regulatory treatment, just beyond the reaches of depository rules but still within reach of some efforts including, it was believed, monetary policy [...]
Ever since the panic in 2008, the string(s) of events that made up that crisis have undergone tremendous scrutiny and for good reason. Proving, however, that the amount of attention paid to a specific occurrence doesn’t necessarily increase the chances of understanding it, a great deal of what went on then remains a jumble of confusion predicated on mistaken assumptions; [...]
Nonresidential Fixed Investment, the GDP component most alike capital expenditures, broke above $2.2 trillion in Q4 for the first time in over a year. It was up for the third straight quarter, suggesting that perhaps the start of the year and its near recession could be the worst of at least the appearance of negative signs in business investment. As [...]
Inventories in the fourth quarter rebounded rather sharply, at least in terms of how inventory is calculated as a contribution to GDP. The GDP version of inventory turned negative in Q2, and was only slightly positive in Q3. In the final quarter of 2016, however, the total change is preliminarily estimated to have been $51.1 billion. That isn’t quite back [...]
Gross Domestic Product for the fourth quarter of 2016 disappointed once again, which is to say that it was perfectly consistent. At just 1.856%, quarter-over-quarter, it was the fifth time out of the past six quarters less than 2%. Only last quarter where unusual export activity pushed GDP up was the growth rate anywhere close to what it should be [...]
Like it or not, this is where we have been all along and a great many people are just now catching up. No matter what Janet Yellen says about the economy, she is talking out the side of her mouth. Internally, the recovery is gone, and it is never coming back. Externally, we have sub-5% unemployment so we all should [...]
New Home Sales fell sharply in December 2016, from a seasonally-adjusted annual rate of 598k in November to 536k. That wasn’t unexpected given the behavior of interest rates since August in particular. It might suggest further declines in new sales as well as construction of new homes in the months ahead. In the bigger picture, interest rates just should not [...]
In 1998, Time Magazine asked Paul Krugman to write up a futuristic piece for the publication’s 100th anniversary issue. Time, pardon the pun, has not been kind to a lot of what he said, but in particular his whimsical predictions for the then-newly expanded internet. The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'–which states [...]
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