Commentary

Dueling Economies

The United States consumes a large share of its GDP; China, not so much. The result is Yin and Yang. On net, China produces and the US consumes.

Commentary

Thoughts on Inflation

Back during the Financial Panic of 2008, clickbait media kept screaming “Hyperinflation.” We consistently pushed back against this theme, and argued inflation would not accelerate.

Commentary

GDP Up, Inflation Down

Conventional wisdom was that the tariffs imposed by the Trump Administration would cause higher inflation and slower growth – stagflation as far as the eye could see. But this past week brought economic news that defied this prediction.

Commentary

Debt Downgrade Drama and the Budget

Moody’s finally downgraded US government debt on May 16th to Aa1, its second highest rating. With the US $36 trillion (and rising) in debt, it’s not hard to see why. But Moody’s was late to the party with S&P and Fitch (the other two major ratings agencies) having done so long ago.

Commentary

Does Anyone Care that Keynesianism Doesn't Work?

Milton Friedman, Art Laffer and other market-believing economists had their long day in the sun during the 1980s and 1990s. Tax rates fell and government spending declined relative to GDP. But – ironically, in the long run, and long after he passed away – John Maynard Keynes got his revenge.

Commentary

Is The Dollar Really Dying?

Back on January 10, 2025, it cost $1.024 to buy one Euro. Last Friday, the $/Euro exchange rate was $1.125 – a drop in the value of the dollar of about 10%. Similar moves in the value of the US dollar versus the British pound, Japanese yen, and Canadian dollar also occurred.

Commentary

Awaiting Further Clarity

The Federal Reserve held rates steady today, while emphasizing that elevated uncertainty has clouded the path forward. If, when, and how much tariff policy will change in the months to come will play a large part in dictating the next move for the Fed.

Commentary

No Recession Yet, But Risks Remain

Noise about tariffs, business uncertainty, a constitutional fight, and a drop in stock prices had already created fear of a recession. When real GDP declined in the first quarter of 2025, some started to question if a recession is already here. Let’s take a deep breath and consider the facts.

Commentary

Don't Watch "Cash on the Sidelines"

As we have written…The Era of Easy Everything is ending. Part of this involves bringing inflation back to the Federal Reserve’s target of 2.0%. We could debate that number, but the Fed is getting closer.

Commentary

Near Zero Q1, Uncertainty Ahead

We’ve expected a recession for more than a year now. Simply put…the Era of Easy Everything is Over. Expanding deficits and easy money (that have lifted the economy since COVID) are no longer with us. At the same time, tariff negotiations have created an unbelievable amount of uncertainty.

Commentary

Three on Thursday: The Dollar Endures: Strength, Stability, and Global Trust

In this week’s installment of “Three on Thursday,” let’s explore some of the dynamics surrounding the United States dollar. In an era of inflation, massive debt, large deficits, and threats of tariffs, there are persistent rumors circulating that the dollar is at risk of losing its reserve currency status.

Commentary

Time to Cut Rates

We think it’s important for the Fed to move gradually. The US dollar has weakened lately, and, as a result, there is little case for a drastic loosening of monetary policy. The Fed could let up somewhat on bank regulations and capital requirements, which would help the struggling bond market.

Commentary

Tariffs, the Economy, and Stocks

The Federal Reserve started raising short-term interest rates three years ago and the M2 measure of the money supply – what Milton Friedman said to focus on – soon started declining, hitting bottom in late 2023.

Commentary

Inflation, the Fed, and the Markets

During the ten years prior to COVID, PCE inflation, the Fed’s preferred measure, averaged about 1.5% per year. Jerome Powell said it was too low and he wanted inflation to “average” 2% over time.

Commentary

Symptoms or Causes

In spite of severe polarization on so many issues, there is at least one thing that Americans agree on across the entire political spectrum, left, right, and center. That is: At some point in the past sixty years, or so, something major went wrong with the US economy and it is still causing problems today.