Our Weakening Economy Is Getting Harder To Ignore

We had two decent GDP quarters in mid-2014, and that’s about it. The 4th quarter reverted back to a 2.2 percent growth rate. The first estimate of the 1st quarter 2015 was up only 0.2 percent, but that will almost certainly be revised down into negative territory because of weak March exports. We came into […]

Productivity Is Down: Are U.S. Workers Slacking Off?

U.S. labor productivity fell at a 1.9 percent annual rate in the first quarter, the second quarterly decline in a row and the first back to back drop since 2006. According to the official release, over the past four quarters, productivity has risen at a 0.6 percent rate, just one-fourth the nation’s average since the […]

The FOMC’s Cacophony

When Buddy Holly was little, he insisted on getting on the stage with his uncle’s band and playing along with his fiddle. The unpleasant screeching caused the uncle to wax Buddy’s bow. Buddy could still play, but it didn’t bother anybody. Alan Greenspan used to wax my bow and the bows of the other Reserve […]

More on the Euro-Dollar Exchange Rate

Nineteen countries now use the Euro as their currency. Fifty states use the Dollar as their currency. While that comparison is correct, it is a bit misleading for various reasons. U.S. states are more homogeneous than Euro-zone countries. Our states share a national government, including fiscal policy. We speak a common language, sort of. We’ve […]

Dollar-Euro Parity? Let the Market Figure It Out

In recent years, in response to those who complained about our “weak” dollar and longed for “King” dollar, I have frequently paraphrased Saint Augustine on the topic of chastity. He reportedly prayed for the Lord to make him chaste, but not just yet. Likewise, I said I wanted a stronger dollar, but not just yet. […]

Let ‘Er Rip, Janet; Let’s Get It Over With

“Let ‘er rip, let it fly; Come on baby, say it, do you think I’m going to cry? .   .   . Why the drama? We don’t have to drag out this situation.” Natalie Maines of the Dixie Chicks was anticipating her boyfriend’s breaking up with her, but she could have been referring to the end […]

Current Monetary Policy: A Keynesian Distortion

One amusing thing about watching financial TV these days is that no analyst wants to be identified as Keynesian even as they use the Keynesian framework almost exclusively in their analysis. One example is their treatment of monetary policy exclusively in terms of interest rates. They never acknowledge a direct impact of the money supply […]

Inflation Targeting or Deflation Avoidance?

Back in the day when I served on the FOMC (February 1991-November 2004) under Alan Greenspan, the subject of inflation targeting came up from time to time. I never liked the idea, but a few of my colleagues expressed an interest. Fortunately, from my point of view, Chairman Greenspan didn’t like it and never scheduled […]

A Strong Dollar Doesn’t Attract Foreign Capital–Expectation of a Stronger Dollar Does

Whether the dollar is strong or weak matters for our exports and imports because their prices change in foreign currencies. Many people on the financial news networks appear to believe that similar reasoning applies to capital flows, i.e., that a strong dollar attracts foreign capital. Not so! Think about it. If a foreigner wants to […]

Fourth Quarter GDP Reverts to the Weak New Norm

Real GDP increased at only a 2.6 percent annual rate from the third to the fourth quarter 2014, about half the 5 percent increase in the third quarter. Without inventory accumulation, the increase would have been 1.8 percent, down from 5 percent in the third quarter. Consumption added 2.9 percent to the growth (more than […]