Tag: GDP

Liz Truss’ Disappointing Reversal

Liz Truss’ Disappointing Reversal

U.K. Prime Minister Liz Truss has reversed her tax cut plan that was announced several weeks ago. The markets feared such a plan would further stoke inflation flames. Political opponents cowered at the thought of having less taxpayer revenue to waste away. The problem with Truss' plan is that it did not go far enough. … Continue reading Liz Truss’ Disappointing Reversal

Prices Need To Decline To Kickstart Real GDP Growth. Don’t Hold Your Breath.

Prices Need To Decline To Kickstart Real GDP Growth. Don’t Hold Your Breath.

Prices need to fall across the economy to really kickstart economic growth to the point where Americans can feel it. Unfortunately this is not going to happen. Prices and interest rates will plateau, yet they will remain elevated as the economy stalls. We have a word for this economic condition - Stagflation. If you regularly … Continue reading Prices Need To Decline To Kickstart Real GDP Growth. Don’t Hold Your Breath.

Prices Up, Personal Consumption Down

Prices Up, Personal Consumption Down

The Federal Reserve Bank of Atlanta estimates Real GDP for Q3 at 1.4%. That is likely an optimistic outlook and 1% growth is certainly nothing to write home about. Get used to it however as Real GDP in the -1% to 1% range is likely our future for the next decade or two given elevated … Continue reading Prices Up, Personal Consumption Down

Yield Curve Inversion Implies Near-Term Risk

Yield Curve Inversion Implies Near-Term Risk

The Treasury yield curve continued to invert as short rates climbed higher and long rates fell. The 1-Year climbed to 3.14%, the 2-Year rose to 3.10% while the 7, 10, 20 and 30-Year Treasury yields all fell (see table below). The Treasury market is telling us that it expects a near-term recession by way of … Continue reading Yield Curve Inversion Implies Near-Term Risk

Inflation Is A Primary Driver Behind The Economic Slowdown

Inflation Is A Primary Driver Behind The Economic Slowdown

Whether it is the Wall Street Journal, Bloomberg or CNBC, the business press fails to mention price inflation as a primary factor behind the economic slowdown as measured by Real GDP of 2%. Supply chain bottlenecks and the Delta variant are not exclusively responsible for the stagflationary period we are about to embark on where … Continue reading Inflation Is A Primary Driver Behind The Economic Slowdown

Real GDP Growth Remains Muted

Real GDP Growth Remains Muted

The Atlanta Fed updated its model for Real GDP ("GDPNow"). The Atlanta Fed's 3.2% Real GDP estimate as of today is down from 3.7% as of September 21st. We have previously written that real GDP growth may very well be zero percent or even negative as we believe the Federal Reserve underestimates true price inflation … Continue reading Real GDP Growth Remains Muted

It Is Beginning To Look Like Stagflation

It Is Beginning To Look Like Stagflation

The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation

Rewarding Non-Productive Activities with New Money Leads to Price Inflation

Rewarding Non-Productive Activities with New Money Leads to Price Inflation

The punchline is that a significant percentage of new money creation over the past year was allocated to non-productive use cases. "Helicopter" money to individuals and non-performing firms are two examples. When capital is deployed for non-productive use (acquiring cryptocurrencies for example), that capital invariably bids up prices causing asset price inflation. Conversely, recipients that … Continue reading Rewarding Non-Productive Activities with New Money Leads to Price Inflation