Japanese household spending increased 5.5% in nominal terms in May; 4.8% in real spending growth. That was the first monthly increase since November and since it was a positive number, and not as typically close to zero, it is being hailed as another great sign of QQE success. With Q1 GDP revised up to nearly 5%, economists are back to [...]
Last week, the CBO updated some of its calculations and methods for estimating the effects of “automatic stabilizers” on the deficit. These are Keynesian concepts whereby the government increases spending or redistribution (redundant) without discretion as the economy falls into the downside of a cycle. For the CBO’s purposes, the agency measures automatic stabilizers not on their effects, intended effects [...]
If last month was another perfect payroll month, June was at least its opposite. While the Establishment Survey advanced by more than 200k yet again, the average monthly gains has dipped significantly of late (more on that below). Outside of that, however, it was ugly everywhere. All the upward volatility in the rest of the data points from May were [...]
The estimates for home construction in May were pretty much as expected except for one single data point. The calculation for new permits in the multi-family segment jumped by 53.5% year-over-year, completely out of character with everything else. Given that fact, it seems far more likely that the permits estimate is an outlier or artifact of even expected variation. That [...]
At some point in the middle of the last century, economics of money shifted to economics of psychology. When Milton Friedman wrote his 1963 book, A Monetary History, it was an effort that uncovered the role of money in the collapse of the Great Depression as he and his co-author, Anna Schwartz, saw it. Whether or not it was a [...]
If there were an economic recovery in the US then we would certainly find it on the fiscal budgets of the various states. You cannot spend or even generate income anymore without taking incidence of a taxable transaction. So if the US economy has been doing what the FOMC says it has, then the taxman will tell us. Even here [...]
With retail sales and some other recent indicators flashing deeper warnings about the current economic climate, the concerns I raised last week and before about the “bunker mentality” have increased in relevance as well as probability. Specifically, if recession on the consumer side is rightfully characterized by households taking on a “bunker mentality” then it is appropriate to suggest what [...]
Consumer credit is somewhat useful as a gauge for actual consumer behavior in actual activity, as opposed to consumer sentiment surveys which tend to follow stock prices (and be dominated by the upper incomes) and the theory on the “wealth effect.” In terms of the current “cycle”, or supercycle as it may be, sentiment and debt could not be further [...]
There really isn’t much to say about the housing market in the US right now except that economists clearly don’t know what to do with it. Having signed up wholeheartedly for the “booming” economy, or at least the narrative thereof, flagging sales in both new homes and resales doesn’t compute. Instead of recognizing why that may be, especially as it [...]
One of the primary pillars of even the tepid “recovery” of this cycle is undoubtedly auto sales. We can have a debate as to the influence of monetary policy in this arena, especially as auto loans have (along with student loans) been practically the only direct conduit of credit into the real economy. Clearly, despite the heavy flow there, auto [...]
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