The Fed's current projections are more realistic than those made in September but continue to reflect a degree of wishful thinking. Unemployment Rate & Real GDP. It is difficult for me to believe that Real GDP Growth will be flat in 2023 at 0.5% as the Unemployment Rate increases from 3.7% to 4.6% over the … Continue reading Fed Projections: Too Optimistic
Tag: Real GDP
No Soft Landing Ahead
The soft-landing narrative that has started to make a comeback in recent weeks does not make sense. The damage is done. The economic slowing will continue. The global economy is a slow-motion car crash in the making with the U.S., Western Europe and China all suffering the consequences of radical fiscal spending policy combined with … Continue reading No Soft Landing Ahead
The debt crisis is America's greatest threat. Not China. Not nuclear war. Not identity politics. Larger than the U.S. Economy and growing. Public Debt outstanding is approximately $31.4 trillion, significantly larger than the U.S. economy as fiscal spending far outpaces Real GDP growth. Public Debt outstanding will almost certainly continue to grow as fiscal deficits … Continue reading Debt Crisis
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.
GDP, Inflation, Yields, Currency & 2023 Earnings
Real GDP: If the Atlanta Fed is correct, Q3 will be the third consecutive weak GDP quarter given the bank's Q3 Real GDP estimate of 0.3%, which follows two consecutive negative Real GDP quarters.Inflation: We expect inflation to be sticky when the CPI is reported on October 13th. Core CPI will remain elevated largely due … Continue reading GDP, Inflation, Yields, Currency & 2023 Earnings
The Fed: Death By A Thousand Cuts
We had a saying on the sell-side to describe companies that would continually lower guidance each quarter rather than get all of the dirt out in the wash at once (this was pre-2005 before companies mastered the art of guidance). The Federal Reserve did not get the memo. The Fed raised its policy rate by … Continue reading The Fed: Death By A Thousand Cuts
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
Debt Addiction Strangles GDP Growth
The "spend at all cost" fiscal policy of the past number of decades subsidized by dovish monetary policy has led to decades of anemic Real GDP growth. It's about to get worse. Our expectation is that the new "normal" for Real GDP will be zero percent over the next decade. Thank the genius triumvirate of … Continue reading Debt Addiction Strangles GDP Growth
Rate Hikes Are Not Perfectly Priced In
The Financial press has pushed a variety of narratives around interest rate hikes. One narrative is that four 25 basis point increases are priced into the market. Maybe, maybe not.A second narrative that was pushed yesterday was that a 50 basis point increase for the Fed's March meeting was priced in. Unlikely so in our … Continue reading Rate Hikes Are Not Perfectly Priced In
Consumer Prices Have Upside Risk From Here
Last month we wrote that peak inflation as measured by the CPI was not in sight. We saw further evidence in today's reported 7.5% CPI figure. Producers have yet to fully push through price increases for goods and services for calendar year 2022 across categories. In addition, we keep harping on the BLS' owners' equivalent … Continue reading Consumer Prices Have Upside Risk From Here
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