Deficit Archive

macro update

Let’s look at the Saudi price cuts in the context of the accounting identity that states that for everyone who spent less than his income, another must must have spent more than her income or that much output would not have been sold. ;) The price cut itself shifts income from producers ...Read More

Housing starts, Japan discussion, China, US pmi, store sales

Looks bad to me. Remember, for GDP to grow at last year’s rate, all the pieces on average have to contribute that much. And, as previously discussed, hard to see how starts and sales can grow with cash buyers and mtg purchase apps declining year over year. The charts look like we ...Read More

Article on tax receipts, labor markets

Good quick read and charts on tax receipts, ‘labor markets’ etc. A Matter, It Seems, Of Faith By Jeffrey P. Snider ...Read More

personal income and consumption charts and comments, and a word on oil

This is after tax personal income not adjusted for inflation. Note that there was anticipation of an acceleration from the first quarter, but now it looks like the growth has slowed and rolled over: Here you can see how it was growing steadily, then shifted down when my payroll tax holiday expired, ...Read More

State and local govt charts

The bulk of the boost is coming from state and municipal governments. After tightening their budgets for three years following the end of the recession, they began stepping up spending in 2013 and continued to do so this year Except state taxes are growing faster, a headwind for the private sector. But ...Read More

There is no right time for the Fed to raise rates!

There is no right time for the Fed to raise rates! Introduction I reject the belief that economy is strong and operating anywhere near full employment. I also reject the belief that a zero-rate policy is inflationary, supports aggregate demand, or weakens the currency, or that higher rates slow the economy and ...Read More

Who’s ‘we’?

And they still are? The idea that the deficit is too small remains a non starter for the mainstream. In the face of all evidence to the contrary, including over 2 decades of it in Japan, they continue to believe ‘monetary policy’/low rates and QE supports aggregate demand. Full size image ...Read More

Case-Shiller housing price index

Looks to me like this business cycle is over? This is a lack of demand story. The FICA hike in Jan 2013, followed by the sequesters in April, and the aggressive automatic fiscal stabilizers doing their thing to reduce govt net spending add up to the walls coming in on the economy: ...Read More

The first L shaped US ‘recovery’

Some 5 years ago when the talk was about whether the US recovery was going to be V shaped or U shaped, I suggested that it would be more L shaped, as a 0 rate policy requires a larger deficit, etc. That is, after a sharp fall it would go sideways. Here ...Read More

Producer prices chart and other news

Remember all that ‘hyper inflation’ talk surrounding 0 rates and QE? No sign of it here. Or anywhere else I’ve looked: Nor do you hear any more talk about ‘credit acceleration’ since its post winter growth fizzled: And wage growth (NOT adjusted for inflation) remains next to nothing: And you only hear ...Read More