Factory orders declined rather sharply in June, offering more evidence that the (economic) summer might be upon us. It was not a surprise given that the flash durable goods estimate also for June already indicated as much, since durable goods provide a significant basis for factory orders. The unadjusted series showed a decline of 5.6%, the worst by far since [...]
By experience of different kinds and settings of balance sheet expansion in the United States, Europe, and Japan, we can only conclude that monetary policy with these intentions has no effect, direct or otherwise, on inflation in each of these jurisdictions. The varied forms and exact nature of central bank execution allows us a broad and nearly comprehensive examination of [...]
Offering the longest track record of balance sheet policy, the Bank of Japan should have been a cautionary tale for the central banks that have since followed. Unfortunately, ideology at the center of monetary policy in all jurisdictions leaves no room for objective interpretation such as this. Economists and policymakers (redundant) believe QE works, full stop. When it doesn’t, such [...]
The ECB’s experimentation with balance sheet expansion, both as a matter of bank “reserves” and overall balance sheet size, encompasses at least two distinct episodes. The first began in earnest in May 2010 with the initial concerns being limited to Greece and eventually PIIGS nations, finally exploding in later 2011 as a full-blown crisis (and far more than euros, it [...]
Yesterday’s publication of PCE and Personal Income also included the monthly update for the PCE Deflator, the Federal Reserve’s stated preference for measuring inflation in the economy. The June 2016 figures for the deflator were also negative in terms of both short and longer term perspectives. The year-over-year change in the index was just 0.88%, down slightly from 0.94% in [...]
The Personal Savings Rate is a rather important economic indication. Because it is derived from the difference between income and spending, it can tell us a great deal about the state of the economy from the consumer perspective. Unfortunately, nobody can say with any degree of confidence what the savings rate is right now, or even what it has been [...]
Very few people are against the concept of free trade, and those who are aren’t worth listening to. As a matter of economics (small “e”), free trade was established as a universal good that benefits all sides in one of the first scholarly debates that in the early 19th century helped turn political economics into a separate study meriting its [...]
On January 25, there was sudden burst of MBS repo volume in the DTCC statistics. This only covers the repo market that is visible taking place on the exchange, but without any other data for the vast majority of hidden transactions we have to assume that these are decent approximations for the whole. Since the published GC rates as well [...]
Construction spending had been increasing steadily since the start of 2011. Factoring both the size of the decline due to the housing bust and the timing of the turnaround in sales and prices, the mere fact that construction activity had been recovering was not really economically significant. As with most economic sectors, positive growth even to a substantial degree did [...]
Earlier in April, analysts were projecting $26.69 in as-reported second quarter earnings for the S&P 500. By the week of June 22, just prior to the start of Q2 earnings season, that estimate had only declined slightly to $26.38. For the week of July 21, just a month later, with about one-third of companies reporting the earnings figure sank to [...]
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