The key gauge to measure inflation is the PCE price index or PCEPI which stands for Personal Consumption Expenditures Price Index. Different equations are used to calculate the PCE price index: Based on GDP data from manufacturers, the BEA calculates how much is consumed. Manufacturer orders, utility sales, service receipts, and securities brokerage commissions are … Continue reading Inflation?
The IPO exchange traded fund which is represented by the likes of Zoom and Uber ... point to a bear...
A state of excess credit in the economy is the precondition of debt-deflation. There has to have been an inflation of debt before it can deflate. The chart below shows the level of U.S. non-financial corporate debt as a percentage of gross domestic product (GDP). Back in 1951 it hovered around 22%, but has increased … Continue reading Could debt deflation be just around the corner?
Unfortunately, the Greater Recession led to a L-shaped recovery which may lead to a "Greater Depression" later in this decade owing to seven risky trends. The first trend concerns deficits and their corollary risks: debts and defaults. The policy response to the Covid-19 crisis entails a massive increase in fiscal deficits at a time when … Continue reading The trends that will lead us
A buildup of an unsustainable amount of debt generally precedes devastating deflationary episodes. The last brush the world had with deflation was the 2007-2009 financial crisis, which was accompanied by a huge amount of bad debt in the mortgage market. That financial crisis was the most severe since the Great Depression of the early 1930s, … Continue reading Tipping point
The U.S. nonfarm payrolls for January came in with a gain of 49,000. Revisions to earlier months showed a decline for both November and December by a total of 159 thousand. Government payrolls rose 43 thousand vs. private payrolls up 6 thousand. Education workers grew. The unemployment rate (U3), however, fell to 6.3%, well below … Continue reading Employment points to an L shaped recovery for most
If you are a student of market history, you know GameStop is simply another manifestation of something that occurs time and again in cycles.Charles Dow found that primary uptrends in the stock market had three phases: accumulation, participation and distribution. The accumulation phase occurs at the very start of a bull market when, as Dow … Continue reading The market is topping
The 4% GDP headline masks the reality that output is still off 2.46% from a year ago and GDP is only 0.96% higher since the 3rd quarter.Output is obviously being held back because of the quantity and quality of work available. According to the December jobs report, the number of long-term unemployed—meaning without a job … Continue reading The real economic reality
The Federal Reserve was founded in 1913 in response to perennial liquidity crises — financial emergencies that caused cash to be suddenly unavailable. In addition to being the lender of last resort, its role evolved into managing inflation, and over the last 10 years the focus has been on staving off deflation. Deflation is a … Continue reading What to fear
Longterm inflation expectations should not be sensitive to a sudden move in either oil prices or equity prices as timely monetary policy adjustments from policymakers are supposed to offset those shocks. The main short-term leading indicator of inflation is labor unit costs, which is used as an indicator of inflationary pressure on producers. Interestingly, after … Continue reading There should be no concern about inflation