The budget shenanigans in Washington so far haven’t had an effect on the recovery, but an extended period of lower government spending and job cuts will quickly lead to economic stagnation. The economy is a self-reinforcing mechanism, a small dip in growth will be followed by further declines, even if the first dip was...
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Home construction rarely matches the actual demand for new homes, which can change quickly – there’s often too much or too little. Because the US population grows one percent per year about 1.5 million new homes are needed every year. During the boom of the mid-2000s, two million homes were built per year; at...
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It’s becoming clear to me that what we’ve been thinking of as a stage in the recovery actually is the recovery. Job growth at a 1.5 percent annual rate is well below our hopes from previous cycles but its getting hard to imagine faster growth unless the government starts spending more money (ha-ha) or...
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Let’s do the jobs math. In August, as in the preceding months, the number of jobs was 1.4 percent higher than last year. We’re probably stuck at this growth rate which translates to 1.8 million new jobs per year. Unemployment is at 8 percent but it rarely gets below 5 percent, so the “excess”...
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Why has this economic recovery been so sluggish? In a normal recovery, job growth would be accelerating at this point, rather than dragging along at the same modest level month after month. One culprit, off course, is the housing boom that left many homeowners with more debt than their home is worth. Another is...
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Why has this economic recovery been so sluggish? In a normal recovery, job growth would be accelerating at this point, rather than dragging along at the same modest level month after month. One culprit, off course, is the housing boom that left many homeowners with more debt than their home is worth. Another is...
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The Wall Street Journal this week said, Grim Job Report Sinks Markets. The bold headline suggests an economy in retreat. After all, it’s an election year. But the May job numbers look like more of the same moderate growth we’ve been getting in recent months. Overall, jobs were up 1.4 percent in the past year,...
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Although the overall health of the economy is of interest to everyone, if you’re a banker you particularly want to know when people will start borrowing money again. Very roughly speaking, banks typically hold equal amounts of commercial loans, commercial real estate loans, home mortgages, consumer loans, government securities, and cash. With commercial, mortgage,...
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Although the overall health of the economy is of interest to everyone, if you’re a banker you particularly want to know when people will start borrowing money again. Very roughly speaking, banks typically hold equal amounts of commercial loans, commercial real estate loans, home mortgages, consumer loans, government securities, and cash. With commercial, mortgage,...
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Read the newspapers and we’re at the brink: Global Gloom, Deepening Pessimism, Markets Drop Sharply. Is another Great Depression just around the corner? Is the US slumping to a decade of stagnation a la Japan? Is China now eating the lunch we thought we had bought cheap? Is our financial system just a Vegas vacation,...
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