Unfortunately for Jay Powell, labor statistics are at best backward looking and often just plain misleading. Can you imagine if the wage data contained with November 2018’s payroll report had been released last December instead? Today, pretty much nobody cares anymore. We’ve flipped from inflation hysteria to inversion unease and that was always the appropriate direction. Average hourly earnings increased [...]
There’s no sign of inflation, markets are unsettled, and now new economic data keeps confirming that dark side. Forget each month, every day there is something else suggesting a slowdown. That much had been evident across much of the global economy, but this is now different. The US has apparently been infected, too, not that that is any surprise. That’s [...]
The first central banker to blink wasn’t Jay Powell it was Stephen Poloz. The Bank of Canada has been steadily raising its policy rate like the Fed, or had been. It was widely expected that Canada’s central bank would skip this last meeting but there was no doubt about another 25 bps increase next month. Instead, things are a little [...]
R-star is a fiction which like term premiums for interest rate decomposition allows Economists to skate past reality and onto their econometric blackboards. If there was a neutral rate, which R-star (or R*) proposes to be, why would there be only one and what good would knowing its level today do? In a dynamic world, if you figure out where [...]
On August 30, 2006, the Bureau of Economic Analysis (BEA) reported preliminary estimates for US Gross Domestic Product (GDP) in the second quarter. It was figured back then that domestic output increased 2.9% over the first quarter, seasonally adjusted, somewhat of a decrease from the robust start to 2006. Final estimates for Q1 thought the economy had advanced 5.6% during [...]
When the FOMC published the minutes for its November policy meeting, they included an unusually lengthy discussion about federal funds (effective) and IOER. I have no doubt that policymakers would rather have skipped the topic altogether. Demonstrating how little they actually control matters, the plight of EFF has forced them into an almost detailed digression. One thing they wrote with [...]
In most cases, it all seems so far away. I write about the shrunken global economy all the time. The evidence is all around, and yet still somehow it seems like some remote dreamscape. Human evolution hasn’t prepared us to be able to accept something so big and unconscionable. Most people’s initial response is, “what do you mean the economy [...]
Is the media data dependent? Depends, of course, on what you mean by “dependent.” One year ago, as December 2017 dawned, you couldn’t go a day even a few hours without some mainstream outlet publishing an ode to the LABOR SHORTAGE!!! A full part of the hysteria of the time, the idea of globally synchronized growth last year was started [...]
By the time things got really bad, China’s economy had already been slowing for a long time. The currency spun out of control in August 2015, and then by November the Chinese central bank was in desperation mode. The PBOC had begun to peg SHIBOR because despite so much monetary “stimulus” in rate cuts and a lower RRR banks were [...]
Is the Fed's monetary tightening about over? Maybe, maybe not but there does seem to be some disagreement between Jerome Powell and his Vice Chair, Richard Clarida. Powell said just a little over a month ago that the Fed Funds rate was still "a long way from neutral" and that the Fed may ultimately need to go past neutral. Clarida [...]
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