01 Feb 2008

Posted at 16:11h in The Friday Brief by
The title of last week’s Brief “It’s Not That Bad” rubbed a few of our readers the wrong way. It was insensitive at best to those in the real estate industry and I apologize.US mortgage foreclosures are set to top 1 million this year and home prices are falling at the fastest pace since the Great Depression. In the real estate industry it is that bad. While there is still mixed thought on whether it will drag the economy into recession, more industry leaders and economists are calling for dramatic government action. They say we need significant fiscal (tax cuts and relaxed mortgage rules) and monetary stimulation (further Fed rate reductions).

18 Aug 2006

Posted at 15:42h in The Friday Brief by
Back in mid July we suggested the Fed might pause at its August meeting. On August 8th they held their benchmark lending rate at 5.25%, while saying that consumer prices will “moderate over time” because of their 17 prior rate increases, surging energy prices and a cooling housing market. In the eyes of many the move was a bold one for new Fed chief Ben Bernanke. Inflation hawks (those who believe inflation is worse evil than slow economy) immediately criticized his decision as a gamble that could jeopardize the Fed’s credibility as an inflation fighter. Yet, as the data have come in, the decision seems all the wiser. Both the Producer Price Index and the Consumer Price Index showed that inflation unexpectedly dropped last month. Housing starts slid 2.5% last month for the fifth time in six months. And yesterday, Conference Board said its index of leading economic indicators dropped in July.

04 Nov 2005

Posted at 16:20h in The Friday Brief by
Indications are that a slowdown is in the cards for this quarter and for the first quarter of next year, but that does not mean recession must follow, as some more pessimistic economists suggest.  Indeed there are many reasons to expect a significant pickup.  Productivity, the driver of this powerful economy remains alive and well.  Productivity not only keeps our economy growing without inflation, it is vital for the U.S.to remain competitive in an increasingly competitive global economy.  Yesterday, the government reported that Non-farm Productivity was up a whopping 4.1% for the third quarter and well ahead of last quarter’s 2.1%.  The increase more than offset the 3.6% increase in hourly compensation, so unit labor costs fell 0.5% during the quarter.  

16 May 2003

Posted at 15:25h in The Friday Brief by
It has been easy to focus on the numerous hurdles our economy has endured over the past several years and to assume that new ones will continue to manifest themselves, keeping us in the doldrums.  But, what if things started going right, or even mostly right, for the next several years?  One might argue that conditions have never been better in history for growth than they are today.