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Jobs Growth in U.S. Finally Takes Off
Department of Labor figures demonstrate that in July jobs growth in the U.S. has finally taken off. Specifically, the economy added 117,000 non-farm jobs. This compares to economist expectations of only 75,000 jobs created. By the way, in case you are wondering, the significance of the “non-farm” part is that farm work is seasonal. By stripping out agricultural jobs you get to a “permanent” jobs created figure. The creation of all those jobs caused the unemployment rate to fall to 9.1%, while economists had...
read moreAre You Scared of Stock Market Falls?
Today the Dow Jones Industrial Average fell 512.76 points, or 4.31%. This moment of market turbulence is similar to, though not as severe as, the Great Recession’s big market decline of early March 2009. The primary similarity is that the “mood of the market” is one of nausea and near panic similar in proportion to what it was then. The primary difference is that the global economy, especially from the standpoint of businesses and not governments, is much better off than it was in 2009. Governments are the primary...
read moreWhy the Stock Market is Falling
Here is an overview of some of the dynamics driving the sideways to down stock market this year: Job creation remains anemic in the United States. Without new jobs there cannot be incremental spending in our consumer driven economy. Without incremental spending there is no sales growth and therefore no profit growth. So this is downward pressure on the markets – duh! U.S. businesses continue to sit on huge piles of cash – by some counts up to $3 trillion. This is an indication of a lack of uses for that cash that exceed...
read moreConsumer Spending Slows
This morning the U.S. Department of Commerce reported that consumer spending fell 0.2% in June. Meanwhile, consumer incomes rose 0.1%, and savings rose 5.4%. Analysis: All of these data suggest that the economic “game of chicken” between businesses and consumers that I have been talking about for well over a year is in restoration mode – not a good thing. Even though consumer incomes are rising – a paltry 0.1% – consumer spending fell while savings rose. This combination is evidence of a consumer that...
read moreEvaluation of U.S. Debt Crisis Deal
Yesterday saw a deal reached to raise the U.S. debt issuance limit, potentially averting a fiscal crisis. Here is my evaluation of the U.S. debt crisis deal. Details: Amount of the deal: $2.4 trillion in debt ceiling rise and $2.4 trillion in spending cuts Debt ceiling is lifted in two stages: Stage 1: spending cuts of $917 billion over 10 years Stage 2: a Congressional committee of both 6 Republicans and Democrats must find $1.5 trillion of additional deficit reduction; will come from: Tax overhaul Changes to entitlement programs If...
read moreU.S. Economy Up or Down?
One month ago there were simultaneous indications of an accelerating, and slowing, U.S. economy. Yesterday and today we have a similar situation with an improving jobs situation and a tepid reading on gross domestic product (GDP). The question: is the U.S. economy heading up or down? First up, yesterday, the U.S. Department of Labor reported that weekly initial jobless claims fell by 24,000 to a level of 398,000. While the four week moving average fell 8,500 to to 413,750. Second up, this morning the U.S. Department of Commerce...
read moreWho Is More Responsible for the U.S. Debt?
For today’s post I wanted to review the evidence for that oft talked about issue: who is more responsible for the U.S. debt? If you ask a Republican it is “tax and spend” liberals that are responsible for the bulk of the U.S. government debt. But if you talk with Democrats they ardently disagree. So who is right? Well, like all things, it turns out that there are lots of ways to look at the data to answer the question. However, I will discuss my conclusion below. Let’s look at various methods for answering...
read moreDo Tax Increases Negatively Affect the Economy?
Continuing on with an examination of the U.S. debt crisis, let’s look at another oft talked about issue: that raising taxes leads to a decrease in gross domestic product (GDP). As I said yesterday, feel free to download the What My Intuition Tells Me Now U.S. Budgetary Data spreadsheet to see my sources and calculations. Does Raising Taxes Stifle Economic Growth? I cannot emphasize enough how very difficult a thing it is to use data to disprove or to verify whether raising taxes stifles economic growth. Why? Because there are...
read moreU.S. Taxes Lowest Since 1950
Since THE story of the moment is the U.S. budgetary crisis I plan on exploring this story’s many angles until this issue is no longer a crisis. Today I wanted to talk about the revenue-side of the U.S. budget deficit and total debt problem. That’s right let’s talk about revenues, alias (those dreaded) taxes. Right now Republicans are refusing to allow taxes to be raised to help resolve the budgetary problems of the United States. So I went out to gather data to see if their position on taxes makes sense. I am a big...
read moreU.S. Debt Crisis Enters Absurd Territory
House of Representative Speaker John Boehner, Republican from the state of Ohio, pulled out of U.S. debt ceiling/budget deficit talks over the weekend. His withdrawal has created anxiety in investors around the world and has punctured the hopes that a deal will be reached before the 2 August, 2011 deadline. I have written multiple pieces about the crisis, including: “Overview of the U.S. Debt Crisis,” and “Intuitive Assessment of U.S. Debt Crisis brief.” In the latter piece, written 15 July, 2011, I stated...
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