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Declines in Bank Loans - Write-Downs or Pay-Downs?
by Paul Kasriel of Northern Trust, 4/29/10
The record decline in commercial bank loans/leases the U.S. experienced in 2009 was dominated by pay-downs (payments on loans) rather than write-downs (reductions in recognized value). Pay-downs have negative implications for new aggregate demand whereas write-downs are irrelevant with regards to new aggregate demand. Declines in capital limit the ability of banks to create new credit. The continued contraction in commercial bank loan/lease balances is cause for caution with regards to near-term growth in economic activity.

It's Been a While
by Paul Kasriel of Northern Trust, 4/16/10
Inflation is forecast to be 1.7%, rather than 2.5% as in Northern's previous forecast. Lack of credit creation in the private sector will result in a muted recovery, with GDP growing 2.8% in 2010. They are are in agreement with the Federal Open Market Committee that ?economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.?

Federal Deficit Reduction - Growth Helps at the Margin
by Paul Kasriel and Asha Bangalore of Northern Trust, 4/14/10
The Congressional Budget Office tell us that we cannot grow our way out of the long-term federal budget deficit. The acceleration in real and nominal economic growth the U.S. economy has experienced in the past two quarters, however, is helping to reduce the deficit in the short-term. When growth picks up, corporate profits and household income do too. Thus, tax revenues pick up, or at least do not contract as much, while expenditures such as unemployment insurance benefits and food stamps slow down, not to mention government capital injections into teetering financial institutions.

Employment Situation: Current Recovery vs. Other Jobless Recoveries
by Asha Bangalore of Northern Trust, 4/9/10
The economic recoveries following the 1990-91 and 2001 recessions have been coined as "jobless recoveries" and it is widely predicted that the current recovery will be "Jobless Recovery 3.0."

Interest Rates are Creeping Up
by Asha Bangalore of Northern Trust, 4/9/10
The Fed is on hold in the near term, with nearly all its emergency programs either closed or expired. The effective federal funds rate has moved up in recent weeks, to an average of 16 bps in March, as have yields on other Treasury securities. The upward trend of Treasury market yields places the Fed is a tight spot, because the objective of easy monetary policy is defeated if Treasury market yields continue to move up and raise the cost of credit. Northern Trust's best bet is that interest rates will decline somewhat in the weeks ahead as bearish economic news comes out.

Guess Hu's Coming to Dinner at the White House - Much Ado About Very Little?
by Asha Bangalore of Northern Trust, 4/6/10
Chinese President Hu Jintao will attend a summit in Washington, D.C. on April 12-13. His plans have set off speculation that the Chinese government is prepared to let the yuan appreciate versus the U.S. dollar. Some in Congress want to brand China as a currency manipulator and impose protectionist penalties against the country. Chinese central bank balance sheets from last year, however, do not suggest that China engaged in extraordinary foreign exchange intervention. Bangalore also comments on impending reflation, and the expiration of the home buyer tax credit.

Guide to Distortions of Payroll Numbers from Census-Related Hiring
by Asha Bangalore of Northern Trust, 4/1/10
The employment report for March will contain hiring related to data collection for the 2010 census. Hiring for the census should result in wide swings of headline payroll estimates during the March-September period. Hiring in the private sector will thus be the true indicator of whether labor demand improved in March, rather than the headline number. Year to date, private sector employment shows a significant improvement in the pace of declines versus a year ago. Bangalore also comments on the U.S. dollar's continued reserve currency status.

Central Banks in 2010 - The Cacophonous Sound of Exit Music
by Asha Bangalore of Northern Trust, 3/29/10
Recent developments suggest that the uncertainty of the past three years has left central banks skittish. Otherwise strong economies have been slow to normalize rates and central banks that are following inflation targets have been more willing to risk breaches than growth. The remainder of the year will be characterized by differing exit strategies and their intended and unintended consequences. As central banks around the world begin tightening before the Fed and the ECB, there will be further implications for global capital flows and exchange rates.

Macro Effects of Patient Protection and Affordable Care Act at 30,000 Feet
by Paul Kasriel of Northern Trust, 3/26/10
The macroeconomic effect of the Patient Protection and Affordable Care Act will depend on whether the $900 billion shift of resources from the private sector to the government over the next ten years it brings will adversely affect labor productivity and technical progress, and by how much. On one hand, PPACA could result in a healthier and more productive workforce. On the other hand, increased government spending associated with PPACA may also have been spent by the private sector on health care, only in a less efficient manner: in the emergency room rather than on preventative care.

Budget Deficits: The Challenge Ahead in a Picture
by Asha Bangalore of Northern Trust, 3/11/10
Congressional Budget Office projections indicate federal outlays as a percentage of GDP will consistently exceed revenues even after the peak in outlays associated with the financial crisis and the recession. The fundamentals of the economy offer little hope for strong performance in the years ahead. A graying population and associated social costs will continue to add to projected outlays. Bangalore also comments on January's record low in the inventory-sales ratio, indicating strengthening demand.

Protectionism: Not-So-Tall Cotton
by Asha Bangalore and Richard Thies of Northern Trust, 3/10/10
Brazil announced new tariffs on a wide range of U.S. exports totaling $591 million as part of an ongoing dispute over American cotton subsidies, and said it will announce an additional $298 million in tariffs focused on changes to intellectual property laws on March 23. These tariffs are sanctioned by the World Trade Organization, and may harm employment by U.S. exporters. Political prospects for reforms on cotton subsidies, however, may be unlikely. Bangalore also notes that equity prices have moved up significantly since their March 8, 2009 trough.

On Watch List among the Many Other Details
by Asha Bangalore of Northern Trust, 3/9/10
The employment report for February showed small improvements in the economy from the prior month, but with some worrisome aspects still in place. No inflationary threat seems to be around the corner. The growing balance sheet of the Federal Reserve will not pose a threat until excess reserves are converted into credit. Finally, it is unclear whether the rise in the effective federal funds rate to 17 basis points on March 5 from 11 basis points on February 24 was a one-off event, or the Fed's exit strategy in operation.

As Greece Goes, So Goes the U.S.?
by Paul Kasriel and Asha Bangalore of Northern Trust, 2/25/10
Greece's debt crisis may not make much of an impact on U.S. economic growth. In the third and fourth quarters of 2009, total U.S. exports increased at annual rates of 24.6 percent and 28.1 percent, respectively. South America and the Pacific Rim accounted for a combined 31.7 percent of U.S. exports in the fourth quarter of last year, while Europe accounted for just 23.1 percent. Kasriel and Bangalore also comment on the likely prospects for a low federal funds rate in the long term, and record lows for new home sales.

I Am Worried about the Government Debt My Descendants Will Inherit
by Paul Kasriel and Asha Bangalore of Northern Trust, 2/24/10
Each American was responsible for an average of $38,651 in gross federal debt in 2009. That figure will grow to $62,808 by 2020, according to Congressional Budget Office projections. Short of changing Social Security and Medicare, all we can do to alleviate the strain on our descendents is increase our current savings rate. Kasriel and Bangalore also examine slipping consumer confidence figures and a rising home price index.

Hey Big Spender?
by Paul Kasriel of Northern Trust, 2/23/10
The most serious fiscal challenge ahead is spending, not deficits and debt. And the most serious spending challenge the government will face relates to the diversion of productive resources to future retirees, which will build over the next 20 years are more baby boomers retire. The second spending challenge facing government is ballooning interest payments on prior debt issued. Prior federal policies that established retiree entitlement programs and funded rapidly rising spending with the issuance of debt are to blame for these problems.

Inflation is Contained, Fed Focus on Growth and Jobs Remains in Place
by Asha Bangalore of Northern Trust, 2/22/10
The January consumer price index report shows no inflationary pressures. The CPI rose 0.2 percent last month following similar gains in the previous four months. The Federal Reserve will continue to focus on economic growth and jobs, while eliminating emergency measures put in place as the economic crisis unfolded in August 2007.

Not So Fast!
by Paul Kasriel and Asha Bangalore of Northern Trust, 2/22/10
Annualized growth rates over the first three quarters of 2010 will be less than one half of the 5.7 percent growth rate in the fourth quarter of 2009. Consumer inflation showed signs of slowing in January. Other than a costmetic increase in the discount rate, the Fed will probably find no pressing reason to tighten monetary policy this year.

Net Interest Outlays in the U.S. Federal Budget - Let the Picture Speak for Itself
by Asha Bangalore of Northern Trust, 2/12/10
Asha Bangalore says in Northern Trust's daily global commentary that the U.S. federal government's debt service burden is a problem, but that it is not as bad Moody's recent warning made it out to be. The country's net interest outlays are projected to peak at 3 percent of GDP by 2017, from 1.3 percent in 2009.

Chairman Bernanke on Fed's Exit Strategy/ Trade Gap Widens in December
by Asha Bangalore of Northern Trust, 2/11/10
Asha Bangalore discusses the ?exit strategy? from quantitative easing, and notes that the interest rate on reserves could soon replace the federal funds rate as the Federal Reserve's main policy tool. The large volume of reserves in the current banking system and the resulting loss of activity and liquidity in the federal funds market have made the federal funds rate less reliable as an indicator. The Q4 trade deficit data are also discussed.

Near-term Gains for the US Dollar?/Prospects for Japanese Recovery
by Asha Bangalore and James Pressler of Northern Trust, 2/9/10
In Northern Trust's daily global commentary, Asha Bangalore says speculation against the euro could result in a near term gain for the dollar. The dollar appreciated 5.6 percent against the euro in the four weeks ending February 5. James Pressler looks ahead to Japan's release of fourth quarter GDP data next week. He predicts a growth figure of 0.6 percent, despite the consensus estimate of 0.9 percent.

January Employment Situation - Mixed Report, Deduce Carefully
by Asha Bangalore of Northern Trust, 2/6/10
Although the jobless rate declined and the pace of job losses has slowed noticeably, the labor market situation remains a source of serious concern. A total of 8.4 million jobs have been lost since the recession commenced in December 2007 and the jobless rate is high. Consistent back-to-back gains in employment are necessary to declare the worst is behind us. One monthly decline of the jobless rate is adequate to act on; the FOMC is predicted to stay on hold for several more months.

Does Anyone in Washington Know What Needs to Be Done to Create Jobs?
by Paul Kasriel of Northern Trust, 2/3/10
?If what small- and medium-sized businesses need to increase their hiring is increased sales, then it would seem that fiscal stimulus coupled with Fed-created credit is the right medicine.? The current ($787 billion) stimulus has only been partially spent, and policy makers should not push for another stimulus until more of the remaining funds have been spent.

If M Does Not Pickup, Will V Save Us?
by Paul Kasriel of Northern Trust, 1/25/10
?To summarize, M2 growth currently is extremely weak. It likely will remain relatively weak through 2010 as credit creation by depository institutions will be impeded by capital constraints. If invest

Economic Overheating With Chinese Characteristics
by James Pressler of Northern Trust, 1/22/10
In the two weeks leading to this morning's Q4 GDP announcement, a variety of signals have been emanating from Beijing's policy centers, all suggesting the economy was running a little warmer tha

Financial Crisis Responsibility Fee - A Modified Proposal is Likely
by Paul Kasriel of Northern Trust, 1/20/10
?by 2013 the President should put forward a plan that 'recoups from the financial industry an amount equal to the shortfall in order to ensure that the TARP does not add to the deficit or national

Ballooning Treasure Deficits - It Takes both Outlays and Receipts to Tango
by Paul Kasriel of Northern Trust, 1/15/10
...although high growth in federal spending is contributing mightily to our record federal deficit, the rate of growth in that spending is slowing. What often is forgotten is that the rate of contract

Recent Fed Rhetoric and Highlights of Beige Book
by Asha Bangalore of Northern Trust, 1/14/10
In speeches late yesterday, Fed Presidents Plosser and Fisher of Philadelphia and Dallas, respectively, were of the opinion that unemployment rate is most likely to trend higher than the December jobl

Inflation Expectations Approach Pre-Crisis Range
by Asha Bangalore of Northern Trust, 1/11/10
Inflation expectations as measured by the difference between yields of the nominal U.S. 10-year Treasury note and the 10-year inflation protected security are now at levels seen prior to the onset of

December Employment Report: Hiring Freeze Yet to Thaw
by Asha Bangalore of Northern Trust, 1/9/10

Staggered Return to Global Growth
by Paul Kasriel of Northern Trust, 12/22/09

Q4 2009 May Be as Good as It Gets Until Q4 2010
by Paul Kasriel of Northern Trust, 12/21/09

Did Bernanke Get Grilled for the Sins of Others
by Paul Kasriel of Northern Trust, 12/10/09

Is the Fed Engaged in Quantitative or Qualitative Easing
by Paul Kasriel of Northern Trust, 12/3/09

While Pundits Play Gotcha, the Unemployment Situation Improves
by Paul Kasriel of Northern Trust, 11/30/09

Accumulated Musings
by Paul Kasriel of Northern Trust, 11/16/09

Inflation and Deficits ? What Might Milton Friedman Have to Say?
by Paul Kasriel of Northern Trust, 10/17/09

Increase Employment the Same Way You Increase Home Sales
by Paul Kasriel of Northern Trust, 10/13/09

?The Stimulus Didn?t Work? ? An Overlooked Fact that Needs Mention
by Asha Bangalore of Northern Trust, 9/18/09

If Inflation Is a Monetary Phenomenon, Is U.S. Hyperinflation a Clear and Present Danger?
by Paul Kasriel of Northern Trust, 8/24/09

The Passing of Billy Mays Will Boost My Personal Saving Rate
by Paul Kasriel of Northern Trust, 7/10/09

Greater Risk over Next Five Years - Inflation or Deflation?
by Paul Kasriel of Northern Trust, 6/6/09
Results 1,451–1,491 of 1,491 found.