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
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?
Isn’t the stock market supposed to be a barometer of the economy? Yet, while the market climbs, hasn’t news on jobs and the economy been mixed? New claims for unemployment insurance seem stalled at a high level and many businesses are struggling, if not failing. Isn’t there a disconnect? Could the market be headed for … Continue reading What’s the Market Telling Us?
Analysts seem divided on where the economic recovery from the COVID shock stands. Some see recent news to be pointing to a still-vigorous expansion—a “V”-shaped recovery. But others read the news, including new COVID outbreaks, to be suggesting that the expansion is stalling out or even receding—that is, a “W” is unfolding. Putting the various … Continue reading The Economy: How Are Things Looking Now?
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?
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?
Proponents of democratic socialism like to argue that democratic socialism is the purest form of democracy. Everybody gets treated the same. But that can be true only in the abstract. What does it mean in practice? Does it mean that everyone gets the same allocation of food, regardless of their physical size or dietary requirements? … Continue reading Some Introductory Thoughts