The employment report for July was widely hailed as a strong report. Total nonfarm employment rose nearly 1 million (943,000, the blue bar in the chart below) and the unemployment rate dropped 1/2 percentage points to 5.4 percent. However, as in June, a sizable portion of the gain in employment occurred in the state and … Continue reading Supply Restraints Continue to Hold Back the Economy (Revised)
The Economy: What Have We Learned from the Second Quarter?
The second quarter turned out to be something of a disappointment. Output was expected to grow at nearly a double-digit pace over much of the quarter, but came in at a 6-1/2 percent rate—little different from the first quarter. This is illustrated in the chart below produced by the staff of the Federal Reserve Bank … Continue reading The Economy: What Have We Learned from the Second Quarter?
The Economy: Lots of Demand, Not So Much Supply
The June establishment survey jobs report showed gains of 850 thousand new jobs, following increases averaging half that amount over the previous two months. It was hailed as good news. Furthermore, new claims for unemployment insurance have been declining over recent weeks—more good news. We should note, however, that 190 thousand of the 850 thousand … Continue reading The Economy: Lots of Demand, Not So Much Supply
The Economy: Will Inflation Be Contained?
The pickup in inflation in recent months has spurred worries about whether we are entering an uncomfortable new era beset by large price increases. The chart below illustrates that core inflation (which excludes volatile food and energy prices) has spiked recently. For nearly a decade before the pandemic, core inflation ran at a 1-1/2 to … Continue reading The Economy: Will Inflation Be Contained?
The Economy: Greater Strains Have Become Evident
The recent news on the economy confirms that the labor market continues to tighten, even though 7-1/2 million fewer people were employed in May than at the onset of the pandemic. Strains in the labor market are holding down gains in employment and growth in output and placing upward pressure on inflation. Indeed, hiring problems … Continue reading The Economy: Greater Strains Have Become Evident
The Economy: Housing Bubble Redux?
In light of the hot housing market, there is mounting concern about another housing bubble. Are things getting out of hand in the housing market? Is another crash coming soon? The first chart below illustrates that the twelve-month increase in the price of existing homes was 13 percent in March (the measure shown is not … Continue reading The Economy: Housing Bubble Redux?
Podcast – Live With Glatt Consulting Group, Inc.
https://www.youtube.com/watch?v=ARYv4j_4yy0 In this podcast Tom Glatt, Jr. and Matt Griffiths (of Glatt Consulting Group) dive into economics, in particular what to expect in terms of inflation and interest rates. Dr. Thomas Simpson joins as a special guest. Dr. Simpson spent most of his career at the Board of Governors of the Federal Reserve System in … Continue reading Podcast – Live With Glatt Consulting Group, Inc.
The Economy: A Soft Landing?
Not long ago, there was talk of a soft landing for the economy from the COVID shock—inflation picking up to the Fed’s 2 percent average target while vigorous growth in output and an improving labor market would result in full employment. However, then came the big surprises of sputtering employment gains and surging consumer prices … Continue reading The Economy: A Soft Landing?
The Economy: Holding Back the Burst
The news on growth in output in the first quarter, at a 6.4 percent rate, was certainly positive. As shown in the chart below, real GDP nearly recovered all of the lost output due to the COVID shock; real GDP in the first quarter was less than one percentage point below the peak in the … Continue reading The Economy: Holding Back the Burst
Inflation is Coming, but How Much?
There is growing concern that inflation—the rate of increase in the prices of consumer goods and services—is on the way. Home prices are surging, consumer spending has snapped back, federal spending is on a tear, and the Fed has given no hint about slowing its provision of liquidity. Moreover, CPI (Consumer Price Index) inflation has … Continue reading Inflation is Coming, but How Much?
Thomas D. Simpson, PH.D. 