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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 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

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?

The recent news on the economy, especially on the labor market, is confirming that a head of steam is building. Fortunately, the upbeat news has extended to the sectors hit hardest by the pandemic (owing importantly to fear and governmental restrictions)—notably, hotels, restaurants and bars, entertainment, and airlines. As noted in previous commentaries, the economic … Continue reading The Economy: What Can Slow This Train?

Although the statistical evidence has yet to provide widespread confirmation that the economy is accelerating, there is a growing list of indicators that point to an imminent boost to economic activity. To a degree, the upturn has been restrained by disruptions from supply chain difficulties and unusually severe winter weather in key portions of the … Continue reading The Economy: There’s Plenty of Fuel in the Tank

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