Much has been said about the slowdown in the economy in the final months of 2020 and the beginning of 2021. Employment gains averaged only 30 thousand per month over the months of November to January, compared to nearly 1 million per month over the previous three months. In contrast, growth in industrial production—mostly tangible … Continue reading The Economy: The Pause is Ending
Anemic job gains in January and stubbornly high new claims for unemployment insurance have led many to conclude that the economic recovery has stalled out and that more fiscal stimulus is needed to jump start the economy. It should be noted that the employment report for January contained some encouraging signs, and the economic fundamentals … Continue reading The Economy: Spring is Just Around the Corner
Are you exhausted from watching the craziness in the market for GameStop stock and a few other companies? Are you upset by the decision of some brokerage firms, most notably Robinhood, to restrict trading in GameStop and a handful of other stocks? Are you fascinated by the story of David (small investors) versus Goliath (hedge … Continue reading Frenzy in the Market: What’s Going On?
The era of ultra-low interest rates is upon us and is likely to remain for a good while (see Buoying the Economy: An Era of Ultra-Low Interest Rates, July 13. 2020 and The Fed’s New Game Plan: Radical?, August 31, 2020). The Fed has committed to keeping its target for the policy interest rate—the overnight … Continue reading The Impact of Ultra-Low Interest Rates
The economic news of late—retail sales, labor market data—and the COVID-19 outbreaks and tighter restrictions has been somewhat discouraging. Many have concluded that the recovery has come to an end, and more fiscal stimulus is needed. The incoming president is proposing nearly $2 trillion in new stimulus—on top of the $0.9 trillion recently enacted. Such … Continue reading More Fiscal Stimulus Justified? A Contrarian View
THE NATIONAL ECONOMY: RECOVERING FROM THE COVID-19 SHOCKDownload Presentation
The start of the year is a good time to take stock of where the economy has been and where it is headed. The COVID-19 shock in early 2020 led to the sharpest contraction in output on record. The table below shows that real GDP plunged 9 percent in the second quarter (at a quarterly, … Continue reading Taking Stock of the Economic Recovery
Like the impending death of Mark Twain, the recent commentary suggesting that this economic expansion has lost its life is considerably overstated. Much has been said about the uptick in new claims for unemployment insurance, shown in the chart below, and its link to the restoration of restrictions by many governments in response to the … Continue reading The Demise of This Expansion is Greatly Exaggerated
The recent news on retail sales and job claims, along with renewed outbreaks of COVID-19, seem to be suggesting that we are in for a long, dark winter. The zip in the economy seems to be gone. However, it is worth putting recent developments in perspective. The economy still has forward momentum. Recall that the … Continue reading The Ins and Outs of This Recovery
Many analysts are worried about the recovery losing steam, especially in the face of renewed outbreaks of COVID-19 and the absence of more fiscal stimulus. Yet the unemployment rate fell to 6.9 percent in October, down nearly 8 percentage points from its peak six months earlier in April. To put this information in perspective, it … Continue reading Has the Recovery Topped Out?