Angst Down, Calm Up

In the relatively short period of a few weeks the mood here has changed from somewhere between gloom and panic, to somewhere between calm and optimism. For several reasons, first among them the President’s tweets that progress is being made in negotiations to end the trade war with China. Indeed, so promising are the results […]

Jobs Boom, Markets Stagger, Fed Remains Flexible

The jobs boom rolls on. In December the economy added 312,000 jobs, almost twice as many as forecasters expected. Good prospects converted so many couch potatoes into job seekers that the unemployment rate rose from 3.7% to 3.9%. Average hourly earnings rose, and are now 3.2% over last December, with much of the increase coming […]

The Year of Dichotomies Winds To Its End

‘Twas the night before Christmas and all through Asia America increased its exports – of panic. President Trump, whose tariffs many Asian policymakers feared would derail their economies, attacked the Federal Reserve’s chairman, blaming him for turning the man who appointed him into “another Hoover”. Another Great Depression in store? This, after treasury secretary Steven […]

The Fed Raises Interest Rates and Hackles

“Everybody says don’t … it isn’t right; Don’t, it isn’t nice,” wrote Stephen Sondheim for one of his musicals. A diverse chorus sang those lyrics to Federal Reserve Board chairman Jay Powell. From the center-left of the choir Powell could hear Larry Summers, Bill Clinton’s treasury secretary, “I do think that there are more risks […]

The Big Danger to the Trump Economy Is Trump

The fundamentals are still strong. But the stock market collapse is on the president’s thumbs. Share-price volatility is the price we pay for a tweet-driven, rather than a performance-driven, stock market. Especially when the tweeter is capable of a triumphant announcement one day that his tariff war might be ending because he has brought Xi […]

Trump vs. General Motors

The president has elected himself to GM’s management team. Jawboning: “to attempt to persuade or pressure by the force of one’s position of authority.” Lyndon Johnson did it when Bethlehem Steel raised prices. He denounced the firm’s executives as unpatriotic for feeding inflation during the Vietnam war and they rescinded the increases. Inflation rose anyhow. […]

The Politics of Inflation

Unless political peace breaks out, the only way Democrats and Republicans can meet interest payments is to let inflation rip, devalue the dollar. If you think America’s fiscal mess-a deficit in excess of $1 trillion every year for as far ahead as the budgeteer’s eye can see-is no concern of yours, think again. Democrats about […]

Trump, the Economy, the Midterms, and the Road Ahead

If things can’t get better, does that mean they have to get worse? The economy grew at annual rate of 3.5 percent in the third quarter, following an even more robust second-quarter rate of 4.2 percent, the best six-month performance in the past decade. There are more job openings, 7.1 million, than there are unemployed […]

Trump’s Debt

Trump said he would erase America’s debt in 8 years. It’s now bigger than ever. As a candidate, Donald Trump promised to get rid of the entire national debt “over a period of eight years.” When this promise was made, the national debt stood at $19 trillion; it has since risen to $21.7 trillion. In […]

Trump, Inflation, and the Fed

Donald Trump wants Jay Powell to stop raising rates. Like, now. Donald Trump wants fewer and later. Jay Powell, chairman of the Fed, more and sooner. He is confident that his plan is what the booming economy needs: raise the Fed’s benchmark interest rate from its current range of 2 percent to 2.25 percent by […]