One Simple Policy to Simultaneously Strengthen Your Currency and Weaken Your Exports
If a policymaker wanted to simultaneously strengthen the foreign exchange value of a country’s currency and weaken the country’s exports, that policymaker would be advised to impose tariffs on the country’s imports.
Unless the Fed Changes Course, a 2019 Recession Collision Is the Most Likely Outcome
The current level of the federal funds rate is 1.92%. As of June 13, 2018, the median estimate of Federal Open Market Committee (FOMC) members of the appropriate federal funds rate by the end of 2081 was 2.40%.
Our Exploding National Debt: What, Me Worry?
In its April 2018 projections of the federal budget and economic performance based on current law out through FY 2028, the Congressional Budget Office (CBO) forecast the return of $1 trillion budget deficits by FY 2020 and budget deficits relative to nominal GDP of 5%+ by FY 2022.
Thin-Air Credit Growth Slowdown Augurs Poorly for 2018 Domestic Demand Growth
To paraphrase the motto of the former iconic Chicago department store, Marshall Field’s, give the customers what they want. To give the “customers” a preview of what they are going to get, let me state that thin-air credit growth has slowed to a rate that is low both from a long-run and short-run perspective.
As of this Past Fourth Quarter, the S&P 500 Remained Relatively Cheap
Now that the first quarter of 2018 has just ended, what could be more fitting than to look back at the relative valuation of the S&P 500 stock index as of last year’s fourth quarter? After all, isn’t that what we economists do best, look back?
The Expected Widening in the U.S. Federal Budget Deficit Has Trade Protectionist Implications
With the recent U.S. congressional passing and presidential signing of the Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018, the federal budget deficit is projected to increase in the next few years.
No Sugar High from Tax Cut Unless the Fed and Banking System Provide the Sugar
There has been chatter about whether the Tax Cuts and Jobs Act of 2017 (TCJA) will result in a temporary stimulus, or sugar high, to U.S. economic activity because of the increase in corporate after-tax profits and the increase in household disposable income that will flow from the tax-rate cuts.
An Alternative Explanation for Walmart’s Announced Employee Bonuses and Wage-Rate Increase
On January 11, Walmart announced that it was raising its starting wage rate to $11 an hour, giving a one-time bonus up to $1,000 to employees, expanding its parental/maternal leave policy and providing employees adopting a child up to $5,000 per child in fees associated with the adoption.
Festivus 2017 Airing of Grievances -- I Gotta a Lot of Problems with You, Taylor Rule
December 23rd is almost upon us. You know what that means. It’s time for me to work up my annual airing of grievances for Festivus 2017. Although I have myriad political-economic grievances for 2017, I am going to concentrate on only one in this annual Festivus epistle – the Taylor Rule.
Don't Expect an Investment Boom if the Corporate Tax Rate Is Cut
The S&P 500 Is Not Expensive According to the Kasriel Valuation Model
In each of the first three quarters of 2017, there have been double-digit year-over-year percentage increases in the quarterly average level of the S&P 500 stock-price index – 19.3% in Q1, 15.5% in Q2 and 14.2% in Q3.
At Least We Can Be Thankful for the 11 "Fair" Traders
Where Has All the Inflation Gone? When Will the Fed Ever Learn?
The Fed is dazed and confused (with apologies to Jake Holmes) about the lack of goods/services price inflation currently present in the U.S. economy. No matter how you slice or dice the Personal Consumption Expenditures (PCE) Chain Price Index, its annualized growth has not trended above 2% since 2011.
There Are No Silver Linings with Natural Disasters
In recent weeks, the U.S. has experienced two natural disasters – Hurricanes Harvey and Irma. Much real property was damaged or destroyed by these two hurricanes. There will be an increase in construction expenditures to repair and replace damaged/destroyed buildings and homes.
Consumer Spending – I’ll Bet that Q3 Real GDP Growth Will Be Closer to Q1’s than Q2’s
Have Bundesbank Agents Infiltrated the Fed?
Do You Want to Restore Manufacturing Employment? Smash the Robots!
If America wants to restore manufacturing employment to its former glory, the federal government should form a search-and-destroy task force with the authority to enter manufacturing facilities in the U.S. to smash robots, computers and any other labor-saving equipment the deputized task force deems appropriate. Then there will be a tremendous increase in demand for U.S. manufacturing employees.
If You Think the Pace of Economic Activity Is Weak in 2016, Just Wait Until 2017
Do Larger Deficits Stimulate Spending? Depends on Where the Funding Comes From
It is this conventional-wisdom notion that tax-rate cuts and/or increased federal government spending stimulate domestic spending on goods and services that I want to discuss in this commentary.