Outlook 2021: Light At The End Of The Tunnel, Maybe
Over the holidays, I spent a lot of time reading forecasts for 2021 from leading economists, big banks, think tanks and other so-called experts. Coming off one of the most volatile economic years in history due to the coronavirus pandemic, I was very interested to see what forecasters were predicting for the New Year.
Never Before, Probably Never Again Milestones of 2020
Each January 1 as we turn the page to a new year, we are inundated with articles which summarize what important things happened in the outgoing year, both good and bad. I tend to avoid writing about such lists because we all know what happened last year.
US Poverty Rate Exploding - Parting Thoughts On 2020
With the COVID-19 pandemic spiking again, and with most federal stimulus programs having expired over the last several months, the US poverty rate is soaring at a rate never seen before. Nearly 8 million Americans have fallen into poverty over the last 5 months alone, since the government stimulus programs have largely ended.
Government Low-Balls Inflation, Fed Promises ZIRP For Years
In today’s letter, I’ll share my comments on several topics I find interesting. For starters, do you ever wonder why the official inflation statistics are so low, compared to what we see in the grocery store, what we pay for healthcare and the cost of housing, just to name a few?
Georgia Runoffs To Decide Direction Of The Country
The two Georgia Senate runoff races on January 5 will be among the most important elections in our lifetimes, whether you are a conservative or a liberal. As a result, enormous and unprecedented amounts of outside money are gushing into these runoffs.
Touching On Several National Issues of Interest Today
The media seems focused on President-elect Biden and his Cabinet and inner circle appointments, whether President Trump will leave the White House peaceably, coronavirus developments, the January 5 Senate runoff races in Georgia and which party will control the Senate.
New Retirement Bill Will Be Good News For Seniors
There is new reform legislation making its way through Congress which will significantly affect how many of us save for retirement and specifically how, and how much, we can contribute to our retirement accounts and at what ages. This is the most significant retirement saving reform legislation in years. I’ll break it all down for you below.
Gun Sales Break Records In 2020... But Why?
Gun sales in the US have gone through the roof in 2020, especially since the widespread protests turned violent last spring in many large cities across the US. Over three million more guns have been sold since March than occurred in the same period a year ago.
Long Forgotten Economic & Market Threat - Inflation
The US inflation rate has hovered around 1.5% over the last decade, well below the Fed’s target rate of 2% most of the time. Such low inflation for such an extended stretch is quite unusual given historical economic relationships, especially with the economy strong and the unemployment rate near historic lows late last year and earlier this year before the pandemic hit.
Thoughts On The Economy & Soaring Bankruptcies
US Economy Suffered Record Losses in First Half 2020. August Jobs Report Came in Much Better Than Expected. Business Bankruptcies Jumped 26% in First Half 2020. Trump Boat Parades Across the Country on Saturday
A Big Change In Fed Monetary Policy? Not Really
The Federal Reserve convenes a major economic symposium in late August each year in Jackson Hole, Wyoming, the popular ski resort. Lots of Fed officials, banking big-wigs and other financial market players attend each year, along with a collection of media correspondents who pay thousands of dollars to be there.
Is Our National Debt $26.7 Trillion Or Only $20 Trillion?
Our total national debt today is now $26.7 trillion, the largest ever, as reported by the Treasury Department and tracked by the US Debt Clock. There is no argument over that figure. However, our total national debt is broken down into two components: “Debt Held by the Public” and “Intra-Governmental Debt.”
Gold Is Soaring - Is Big Inflation Next?
There are numerous factors which can cause the price of gold to rise significantly, but I don’t believe inflation fears are the main driver behind gold’s recent surge. I believe it has much more to do with uncertainty and fears surrounding the COVID-19 pandemic. But I’m getting ahead of myself.
Brace Yourself For A Negative GDP Report On Thursday
The Commerce Department will release its first estimate of second quarter Gross Domestic Product on Thursday of this week, and it is widely expected to be really bad due to the economic lockdown earlier this year. Most forecasters expect 2Q GDP to be down 30-50%, making it the worst quarterly downturn since the Great Depression.
Gun Sales Skyrocketing, Big Banks Hoarding Cash - Why?
What we’re seeing in our big cities today is unprecedented. No one knows where this violence is headed, how to stop it, or when it will end. We’ve turned a new corner in our country, and I don’t think anyone knows for sure where it will lead us. It is certainly not a good direction.
National Debt Tops $26.5 Trillion, 2020 Deficit Could Hit $6 Trillion
I haven’t written about our national debt in some time, largely because I feel like a broken record no one wants to hear anymore. This year, however, we’ve seen our national debt explode as never before. For that reason, I feel obliged to bring it up once again.
Record June Jobs, But The Recession May Not Be Over
For the second month in a row, the Labor Department reported last week that the economy added a record number of new jobs in June, vastly outpacing forecasters’ pre-report estimates. This far better than expected report is leading many economists to refigure their growth forecasts higher for the second half of this year.
Why Stocks Are Surging During COVID Crisis/Recession
I want to begin today by sharing with you the latest question I am getting over and over from colleagues and friends. That question is: How have the stock markets rallied to record or near-record highs in light of the terrible economic news due to the coronavirus crisis?
Are Negative Interest Rates Coming To The US?
There is a growing debate in financial circles over whether the US Federal Reserve should move to a negative interest rate policy in an effort to stimulate the economy during the coronavirus crisis. Even President Trump has said more than once in recent weeks that he favors negative interest rates and considers them a “gift.”
Are We Facing Inflation, Deflation Or Maybe Both?
With government spending clearly out of control and a budget deficit expected to top $4 trillion this year alone, more and more forecasters are warning that inflation is going to soar later this year and next.
Restructuring US Debt With Interest Rates At Record Lows
There is no shortage of negative economic and financial news that has been announced over the last week that I could continue to write about today. But the truth is, I’m tired of being all negative all the time. So today, I want to shift gears and tackle a topic that most Americans probably haven’t thought about, but one that I think we should.
Millions Of US Small Businesses May Never Reopen
While this may not come as a surprise, many US small businesses that are shuttered right now face a financial disaster. Unfortunately, it is becoming increasingly clear that millions of small businesses may not be able to reopen their doors when the economic lockdown ends.
US Farm Bankruptcies Surged Despite Trump Bailouts
American farmers faced a surge of bankruptcies in 2019, up 20%, despite aid efforts from Washington. The Trump administration allocated a record $28 billion in aid for farmers affected by his trade war with China in the past two years (more on this below), but bankruptcies were recorded at the highest level since 2011, according to a recent study by the American Farm Bureau.
US Birth Rate Falls 4th Straight Year - Should We Worry?
Forget those fears of a global “Population Bomb” and worldwide famine which were made popular several decades ago. While the world’s population is still growing, birth rates in most developed nations are falling, including the United States.
US Expansion To Continue In 2020, No Recession... Unless
With the year-end upon us, we are showered with economic and market forecasts for the New Year, as usual. Most of the forecasters I read expect the US economic expansion to continue next year, although many expect growth to continue to slow somewhat. Some I respect even predict the current unprecedented expansion will continue in 2021, thus further adding to the longest economic recovery ever recorded.
US Budget Deficit Spikes To $984 Billion In 2019, Up 26%
This is one of those weeks when there is seemingly a lot of news, but much of it – like the ongoing effort to impeach President Trump – is just simply “noise” that is not worthy of discussion herein. As a result, we’ll hopscotch through several topics of interest today that I think are worth talking about.
ISM Manufacturing Index Now In Recession Territory
As regular readers know, I have been very positive about the economy in recent years, unlike many financial writers who have been predicting a recession for the last two years or longer – the so-called “PermaBears.”
Recession Ahead? Oops, US Consumers Didn't Get The Memo
It is becoming increasingly clear that the Left and the mainstream media believe the only way to get President Trump out of office next year is a US recession. They are increasingly stoking fears of a recession next year, and that led to some wild markets last week.
China Needs to be Punished -- The Question Is, How?
I’ve written a lot about our trade war with China in recent weeks. I’ve made clear I’m not a fan of President Trump’s tariffs. Fortunately, the US Trade Representative announced today that most of the new tariffs on China, which were set to go in place on September 1, have been postponed until December 15.
Trump & Democrats Reach Budget Deal, Suspend Debt Ceiling
I wrote most of this E-Letter over the weekend and finished it yesterday morning. In it, I predicted that the ongoing political battle over raising the debt ceiling would continue until the last minute – sometime in September or October – when the government would run out of money and risk a dangerous default on its debt. In recent years, that’s what almost always happened.
Understanding Facebook's Upcoming "LIBRA" Currency
By now I’m sure you have at least heard something about the new “Libra” currency that Facebook plans to roll out in 2020. There are those who welcome the new currency and believe there’s a chance it could rival the US dollar in the future.
America is Not Aging Gracefully-Implications For the Economy
The average American is getting older as Baby Boomers hit retirement age and our national birthrate continues to fall, according to new data from the US Census Bureau. The median American was 38.2years old in 2018, the Census Bureau said, up from 37.2 years in 2010.
Odds For Fed Rate Cut July 31 Just Hit 100% - Unbelievable!
Let me say at the outset, I’ve never seen anything remotely like this in my almost 40 years of following the Fed. Based on Fed Funds futures (CME FedWatch), the odds of a Fed interest rate cut on July 31 have surged to 100%. This is unbelievable based on what the Fed has said since its most recent policy meeting on June 18-19.
Did President Trump Make the Right Decision on Iran?
As you know, President Trump decided last Thursday not to go ahead with plans to bomb multiple Iranian military facilities, in response to Iran’s downing of an expensive US military drone last week. Mr. Trump initially received widespread, bipartisan praise for his last-minute decision not to bomb Iran. Even liberal news outlets praised him initially.
Household Wealth Hit New Record $108.6 Trillion in 1Q
The Federal Reserve reported last Thursday that US household wealth hit a new high of $108.6 trillion in the 1Q. As I reported two weeks ago, we knew the number hit a new high, but we didn’t know exactly how high until last week. As we now know, the increase in household wealth in the 1Q was the largest ever recorded.
Surprise: Trump Orders Tariffs on All Imports From Mexico
Today, we’ll look at last week’s second estimate of 1Q Gross Domestic Product. While the report showed the economy still growing by just over 3%, some of the internals of the report are troubling and suggest the economy will slow significantly just ahead.
Record Household Debt, Yet Balance Sheets Are Strong
Today we’ll look at new Fed data which showed that US household debt hit a new record high in the first quarter, marking the 19th consecutive quarterly increase in debt held by American families. However, that same report noted that household balance sheets improved over the same period. How can that be, you might ask? I’ll explain as we go along.
Understanding the Greenspan, Bernanke, Now Trump "Put"
In talking with clients, colleagues and friends, it occurs to me that a lot of adults (especially investors) have heard terms like the “Greenspan Put” or the “Bernanke Put,” but I also observed that most people don’t really know what they mean.
Australia's Economic Miracle - 28 Years Without a Recession!
If the US economy remains in positive territory this month and next, as looks increasingly likely, this will be the longest economic recovery in America’s history. Expect a lot of celebrations just ahead. While that will be a true milestone, consider that Australia has not had a recession in almost 28 years!
GDP Much Stronger Than Expected in First Quarter
The US economy has a tendency to lag in the 1Q following big holiday spending, but not this year. While there have been widespread predictions that the economy was slowing down and the recovery might be ending, the latest GDP report put all that to rest.
80% of Americans Got a Tax Cut, But Don't Know It
With the run-up to the 2020 elections already underway, President Donald Trump’s tax cuts have triggered the biggest partisan rift in two decades and could play a big part in whether or not he is re-elected.
The Government's Enormous, Ongoing Private Land Grab
We all know the federal government owns a lot of land around the country. You know – national parks, protected forests, tribal reservations, fish and wildlife refuges, rivers, historical battlefields and other sensitive areas. But I’ll bet you don’t know just how much of America the federal government owns. I sure didn’t, until last month.
Economic Growth Near 3%, Fed's Next Move?
The Commerce Department reported late last week that 4Q Gross Domestic Product rose only 2.2% (annual rate), down from its initial estimate of 2.6%. For all of 2018, GDP rose by 2.9% versus only 2.2% in 2017 and 1.6% in 2016.
Global Economy Weakest Since 2008, Signs of a Bottom?
Global economic growth contracted sharply in the second half of last year, from above a 4% pace in the first half to 2-2.5%. While still positive, momentum eased across all of the world’s major economies, including the US. The question is, will this global slowdown continue?
Trade Deficit Hits New High, Trump Tariffs Are Bad
The US trade deficit soared to a new record high in 2018 according to the latest Commerce Department report out last week. President Trump has promised that his trade tariffs on China and other trading partners would reduce the trade deficit. They have only made it worse.
Millions of Americans Getting Buried in Debt, Literally
Long-time clients and readers know I like to write about topics that interest me, and this week is no exception. I debated whether to write about today’s topic since it deals with death and debt. However, as you’ll read, almost three out of four Americans die with outstanding debt, and the average debt balance upon death may surprise you.
Americans' Approval of Economy at 18-Year High
A new Gallup poll released over the weekend showed 57% of Americans believe the US economy is either “excellent” or “good,”the highest reading in 18 years. That’s up from only 49% in January when the government was partially shut down and just following the stock market meltdown in December.