Initial claims for unemployment insurance jump and universities shut down campuses and return to all on-line classes—news pointing to a setback for the economy. In contrast, existing home sales surge and the stock market moves into record territory—news pointing to an ongoing rebound from one of the sharpest declines in history. What does it all … Continue reading The Economy: Sorting Through the Pluses and Minuses
“A billion here, a billion there, and pretty soon you are talking about real money.” Attributed to Senator Everett Dirksen (Illinois) One wonders how Senator Dirksen might react to the current federal budget outlook, given the nearly $3 trillion of red ink that has been spilled so far in the 2020 fiscal year and the wrangling … Continue reading A Trillion Here, a Trillion There: How Will the Federal Debt Problem Get Resolved?
The resurgence of COVID-19 and its impact on the reopening of businesses has gotten a lot of attention lately. Moreover, the news on initial claims for unemployment insurance staying in the 1.4 million per week range has generated concerns that the recovery has stalled out. Meanwhile, we have gotten a lot of information on the … Continue reading The Economy: Any Spring in its Step?
The recent news on the COVID-19 crisis has been mostly negative, suggesting that the recovery may be experiencing a major setback (the glass is mostly empty). However, a variety of reports on the economy recently have pointed to unexpected vigor (it’s mostly full). Granted, many of these reports are from June, before the recent COVID … Continue reading The Recovery: Is The Glass Mostly Full or Mostly Empty?
Many have puzzled over the rebound in the stock market during this period of COVID-19 struggles. The blue-chip S&P 500 stock price index is only 6 percent below its mid-February peak, having recovered more than 80 percent of its COVID-related losses. Moreover, the Nasdaq index—a barometer of the tech sector—has soared to new highs. Has … Continue reading Buoying the Market: An Era of Ultra-Low Interest Rates
Perhaps you bought something recently and were told that the merchant could not make change because of a shortage of coins. The merchant may have been told by his or her bank that the bank has imposed a limit on the coins that it will dispense to its business customers because it has been subjected … Continue reading Can You Spare a Dime? Have Coins Gone the Way of Toilet Paper?
Recent disappointing news on the spread of COVID-19 has raised questions about whether the rebound in economic activity has been dealt a serious blow. Ironically, this comes at a time when the blowout 4.8 million increase in employment in June again surpassed forecasts by experts by a country mile. Will these emerging chutes of economic … Continue reading Could the Recovery be Losing its Legs?
Recent data pointed to the willingness of households and businesses to resume spending in May. Personal consumption outlays on goods and services increased 8 percent in May, retracing nearly 40 percent of the plunge over the previous two months. Especially encouraging was the bounce back in purchases of big-ticket durable goods, such as motor vehicles … Continue reading Encouraging Signs
The National Bureau of Economic Research (NBER)—the semiofficial arbiter of business cycles in the United States—has officially determined that the longest postwar expansion came to an end in February. In other words, the COVID-19 recession got going in March. No surprise there. Of more interest now is whether a turnaround has begun and are we … Continue reading Has the Recovery Begun?
Since mid-March, the M1 measure of the money stock has grown $900 billion—an increase of more than 20 percent over just two-and-a-half months. If it kept this pace, M1 would double in a year. Accompanying this, the Federal Reserve has injected massive amounts of liquidity into our economy by purchasing more than $2-1/2 trillion of … Continue reading Any Signs of Inflation Yet?