The Fed’s “soft landing” hopes are likely overly optimistic. Such was the context of the recent #BullBearReport, which discussed the long record of the Fed’s economic growth projections. To wit: “However, there is a problem with the Fed projections. They are historically the worst economic forecasters ever. We have tracked the median point of the Fed projections […]
Powell’s recent Jackson Hole Summit speech was mainly as expected. Well, except for the part where Powell obfuscated the truth behind the surge in inflation. More telling was the misunderstanding of the impact of fiscal and monetary policies on long-term outcomes. Let’s begin with Powell’s assessment of the cause of inflation. “The ongoing episode of […]
Part one of this article discusses the potential ramifications related to policy actions that China and Japan might take. These large U.S. Treasury bondholders could temporarily upset the Treasury market, but as we opined, we do not think they threaten our forecast for lower yields. Like China and Japan, inflation, deficits, and QT are stories […]
Fitch’s recent downgrade of the U.S. debt rating alarmed investors as the deficit and debt steadily increased. The downgrade sent 10-year Treasury bond yields above 4%, causing concern about America’s deteriorating financial condition. The problem is that if radical steps aren’t taken to curb spending, such will cause interest rates to rise. To wit: “The […]
Since the beginning of 2022, the media has regularly warned a recession is coming. As we suggested previously, if a recession DID occur, it would be the most well-forecasted recession ever on record. “While the ‘probabilities’ of a recession in 2023 seem far more significant, what bothers us with the recession/hard landing view is that everyone thinks […]
Tax receipts are falling, which has historically preceded economic recessions. In a recent #MacroView post, we discussed the issue of rising debt levels on economic growth and increasing debt levels. To wit: “While Washington continues a seemingly unbridled spending spree under the assumption ‘more spending’ is better, debts and deficits matter. To better understand the […]
While Washington continues a seemingly unbridled spending spree under the assumption “more spending” is better, debts and deficits matter. To better understand the impact of debt and deficits on economic growth, we must know where we came from. The chart shows the 10-year annualized growth rate of the economy over time. What should immediately jump […]
Millions of young Americans will face the end of the student loan payment moratorium this summer. Why is this happening now, after a three-year break from payments? It is the result of the recent passage of the “Fiscal Responsibility Act” to raise the debt ceiling. Under that act, the Biden Administration is prohibited from extending […]
How does the minimum wage affect the Fed’s biggest fear? I touched on this subject previously as the Fed began its rate-hiking campaign. However, while the issue of the “millions of people” who aren’t paid a “living wage” for work makes headlines, the actual numbers are pretty underwhelming. As of the end of 2021, there […]