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Peter Earle: Inflation to the Nines
Posted: May 24, 2024 at 10:00 AM (Friday)

Twice in the past few weeks President Joe Biden has claimed that when he took office in January 2021 inflation was "over nine percent." First on CNN's OutFront with Erin Burnett on May 8 and again on May 14 in a Yahoo! Finance interview, the bizarre comment was made. And as has become a routine with the gaffe-prone chief executive, White ...


Norbert Michel: The Federal Government Should Not Subsidize Second Mortgages
Posted: May 22, 2024 at 01:00 PM (Wednesday)

Last week, I submitted a very brief comment letter on the Biden administration's proposal to allow Freddie Mac to start purchasing second mortgages. It makes the very narrow point that the proposal doesn't address safety and soundness, a legal requirement enacted by the Housing and Economic Recovery Act of 2008. That flaw should disqualify ...


Mohamed El-Erian: The Fed’s Uniformity on Rates Comes With Risks
Posted: May 22, 2024 at 05:30 AM (Wednesday)

The high-for-long mantra recently adopted by US central bank policymakers raises threats for the economy and financial stability. Whether traditionally thought of as “hawks” or “doves,” Federal Reserve officials have recently converged to notable uniformity in their policy signaling of high interest rates for longer. This has come at a time ...


Avik Roy: How Drug Companies Stifle Competition With 'Product Hopping’
Posted: May 21, 2024 at 05:33 PM (Tuesday)

In 2014, drugmaker Forest Laboratories and its parent, Actavis, had a $28 billion problem. Actavis had spent that sum to acquire Forest and its portfolio of pharmaceutical products. The key patent for one of those drugs, a treatment for Alzheimer's disease called Namenda IR, was set to expire in July of 2015. Forest had been generating ...


E.J. Antoni: Biden pretends rising food prices are not a problem
Posted: May 21, 2024 at 02:47 PM (Tuesday)

If you’re having trouble affording groceries, don’t expect sympathy from the White House. In a recent interview, President Biden was told that food prices are up over 30% on his watch. But he casually dismissed this fact, claiming people have money to pay those elevated prices. This doesn’t just demonstrate Mr. Biden’s tone-deafness to the ...


Daron Acemoglu: Don’t Believe the AI Hype
Posted: May 21, 2024 at 06:16 AM (Tuesday)

BOSTON – If you listen to tech industry leaders, business-sector forecasters, and much of the media, you may believe that recent advances in generative AI will soon bring extraordinary productivity benefits, revolutionizing life as we know it. Yet neither economic theory nor the data support such exuberant forecasts. According to tech leaders ...


Steven Rattner: Biden’s Get-Tough-on-China Tariffs May Backfire
Posted: May 21, 2024 at 05:04 AM (Tuesday)

The tide of globalization is receding, at least from American shores. Two successive presidents have come down firmly on the side of tariffs rather than trade agreements as the preferred mechanism for managing international commerce. History shows that we should proceed with caution. While there are political and security reasons for ...


Greg Ip: The U.S. Finally Has a Strategy to Compete With China. Will It Work?
Posted: May 21, 2024 at 05:00 AM (Tuesday)

The strategy is a three-legged stool consisting of tariffs, security restrictions and tech subsidies. The new tariffs President Biden announced last week aren’t economically significant. Symbolically, they are huge.The U.S. buys almost no electric vehicles, steel or semiconductors—all targets of the tariffs—from China. But, by adding to, ...


Jim Geraghty: Trump vs. Biden, in One Simple Chart
Posted: May 20, 2024 at 10:10 AM (Monday)

If you look at Americans' household net worth, adjusted for inflation, you see two dramatically different stories for Trump and Biden. It's just a small chart, running alongside an article on page A5 of the weekend edition of the Wall Street Journal, but it says so much about why Donald Trump – after losing his reelection bid, after January ...


Conor Sen: The Cooling in Apartment Rents Won’t Last Long
Posted: May 20, 2024 at 05:00 AM (Monday)

The official data point to a slow easing in shelter inflation, but the country’s big landlords are seeing something else unfold. The consumer price data last week showed a gradual deceleration in housing inflation. Economists expect this will persist for a while as official statistics slowly catch up to moderating market rents. Before ...


Ed Yardeni: Market Call: From Dow 40,000 To Infinity & Beyond
Posted: May 19, 2024 at 11:14 AM (Sunday)

The Dow Jones Industrial Average closed above 40,000 on Friday for the first time. It's on track to rise 50% to 60,000 by 2030, in our opinion (chart). The S&P 500 should rise by as much to 8000. That target could be achieved with a forward P/E of 20 and forward earnings at $400 per share, up 60% from an estimated $250 per share this year. ...


John Tamny: Jared Bernstein’s 'Money Printing’ Critics Are Ridiculous As Bernstein
Posted: May 19, 2024 at 10:00 AM (Sunday)

"I mean, the government definitely prints money, and it definitely lends that money, which is why the government definitely prints money, and then it lends that money by, uh, by selling bonds." Words that launched seemingly thousands of Tweets. The individual behind the previous sentence, or stream of non-consciousness, is no less than ...


Komal Sri-Kumar: Too Soon For "Mission Accomplished!" - Don't Pop The Champagne Yet
Posted: May 18, 2024 at 07:15 AM (Saturday)

Last week was champagne popping time for financial markets. The Dow Jones Industrial Average touched 40,000 for the first time ever on Thursday and ended the week above that threshold. The Standard & Poor equity index hit a new record. The yield on 10-year Treasurys fell to 4.42% last night compared with 4.71% as recently as April 25. Reason ...


William Dunkelberg: Employment Costs And Inflation
Posted: May 17, 2024 at 10:42 AM (Friday)

Based on the Consumer Price Index, the cost of the basket of goods that (supposedly) we typically buy has risen by about 20% since 2020. To offset this "inflation tax," compensation must rise by at least as much. The government reports that real compensation has risen by -2%, meaning prices are rising faster than our incomes. And for ...


Michael Spence: Crunch Time for the Power Sector
Posted: May 17, 2024 at 09:06 AM (Friday)

MILAN – Making the power sector fit for the twenty-first century requires a "banker" that finances and coordinates relevant long-term investments, and an "architect" that guides the development of a complex, interconnected smart-grid system. National governments need to fill both roles. Many of us take electricity for granted. We flip a ...


Ken Roberts: Fastest-Growing U.S. Airport, Seaport, Border Crossing In 2024
Posted: May 17, 2024 at 08:36 AM (Friday)

Out of the gates in 2024, e-commerce, passenger vehicle imports and passenger vehicle exports – yes, exports – are fueling the growth at the fastest-growing U.S. airport, seaport and border crossing. The three are the Cincinnati/Northern Kentucky International Airport, the Port of Brunswick, Ga., and Eagle Pass, Texas. I started with the ...


Greg Ip and Rosie Ettenheim: Trump vs. Biden: How the Dow’s Performance Compares
Posted: May 17, 2024 at 05:00 AM (Friday)

Dow’s brief move above 40000 is welcome news to a president who is facing voter malaise over the economy. The Dow Jones Industrial Average’s first foray above 40000, though brief, is the latest sign the economy has shrugged off the threat of recession in the midst of retreating inflation and hopes for lower interest rates. It is one bit of ...


Preston Cooper: Is College Worth It? That’s The Wrong Question
Posted: May 17, 2024 at 02:30 AM (Friday)

Young people today hear over and over again that they need to attend college to be successful. But they also hear student debt has become such a problem that President Biden sees fit to cancel at least $870 billion of it by executive fiat. Unsurprisingly, this creates an apparent paradox: if college is such a good deal, why do so many people ...


Dan Katz: Janet Yellen’s Risky Debt-Management Business
Posted: May 16, 2024 at 06:12 PM (Thursday)

Her overreliance on short-term borrowing sets taxpayers up for a painful economic reckoning. The Biden administration’s profligate spending—driving unprecedented trillion-dollar deficits during a full-employment, peacetime economy—has naturally required an increase in borrowing. But the size of Treasury issuance is only one aspect of ...


Michael Strain: What the AI Pessimists Are Missing
Posted: May 16, 2024 at 11:00 AM (Thursday)

WASHINGTON, DC – The current debate about generative AI focuses disproportionately on the disruption it might unleash. While it is true technological advances always disrupt legacy industries and existing systems and processes, one must not ignore the opportunities they can create or the risks they can mitigate. Pessimism suffuses ...


Alexander William Salter: April’s Disinflation Delivery
Posted: May 16, 2024 at 10:28 AM (Thursday)

Although inflation remains high,disinflation continued in April. The Bureau of Labor Statistics reported the Consumer Price Index (CPI) increased 0.3 percent last month, for a year-over-year change of 3.4 percent. The Core CPI, which excludes volatile food and energy prices, also rose 0.3 percent on the month and 3.6 percent year-over-year. On ...


Veronique de Rugy: No, Politicians Can't 'Fix' Prices—and That's OK
Posted: May 16, 2024 at 12:01 AM (Thursday)

Price controls lead to the misallocation of resources, shortages, diminished product quality, and black markets. Prices are threads stitching together the fabric of our economy. They guide countless producers, here and abroad, to meet the most urgent demands of countless consumers. Prices enable the economic coordination of millions ...


Nathan Sheets: Investors should not tear up their playbooks over geopolitical risks
Posted: May 16, 2024 at 12:00 AM (Thursday)

Current international tensions are concerning for markets but not unprecedented. Geopolitical pressures have posed unrelenting challenges for the global economy in recent years. Activity has been restrained by the Russia-Ukraine war, hostilities in the Middle East, and ongoing tensions between the US and China. In tandem, populist ...


Peter Earle: AIER Everyday Price Index Rises for Fifth Consecutive Month
Posted: May 15, 2024 at 03:14 PM (Wednesday)

The AIER Everyday Price Index rose for a fifth consecutive month in April 2024. The 0.59 percent increase brings our proprietary inflation measure to 290.9. AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)

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Kathleen Hays: Mester: April CPI Doesn't Change Outlook, More Evidence Still Needed
Posted: May 15, 2024 at 02:43 PM (Wednesday)

Cleveland Fed President Says Need to See Progress on Sticky Services Prices. Welcome to Central Bank Central. I'm Kathleen Hays. I am here today at the Federal Reserve Bank of Cleveland with a very special guest. They don't come much more special than the president of Cleveland Fed. And of course, I'm referring to Loretta Mester, someone I ...


Bryan Cutsinger: Is The Fed Manipulating the Market?
Posted: May 15, 2024 at 02:06 AM (Wednesday)

Some critics of the Federal Reserve argue that central bankers manipulate the market whenever they adjust interest rates. For example, in an article in the Wall Street Journal, monetary economist Judy Shelton writes, "When the Fed tightens by raising interest rates, its goal is to increase borrowing costs." She contends that the Fed's approach ...


Jeanna Smialek: Fed Chair’s Confidence in Slowing Inflation Is 'Not as High’ as Before
Posted: May 14, 2024 at 02:40 PM (Tuesday)

Jerome H. Powell, the Federal Reserve chair, reiterated Tuesday that policymakers were poised to hold interest rates steady at a high level as they waited for evidence that inflation is slowing further. Fed officials entered 2024 expecting to make interest rate cuts, having lifted borrowing costs sharply to a more than two-decade high of ...


Peter Morici: American exceptionalism on full display in financial markets ... or is it?
Posted: May 14, 2024 at 11:44 AM (Tuesday)

Washington has several options if public debt skyrockets, but none of them are compelling. The U.S. economy has confounded forecasters’ dour predictions, but not the optimism of financial markets. A recession appears less likely as businesses keep adding jobs. Labor markets are absorbing more immigrants without threatening native-born ...


Jed Graham: The PPI Has Good News For The Fed; S&P 500 Rises Ahead Of CPI
Posted: May 14, 2024 at 11:10 AM (Tuesday)

Producer price index data out Tuesday showed that inflation ran hotter in April, but downward revisions to earlier data assuaged concerns. Meanwhile, health care prices, the biggest input to the Federal Reserve's primary core inflation rate, moderated a bit as airfares fell. After the PPI data, the S&P 500 edged higher in morning stock ...


Nick Timiraos: Fed Chair Jerome Powell Maintains Wait-and-See Posture on Inflation and Rates
Posted: May 14, 2024 at 10:46 AM (Tuesday)

‘We’re just going to have to see where the inflation data fall out,’ says central bank leader. Federal Reserve Chair Jerome Powell affirmed the central bank’s plans to hold interest rates at the highest level in more than two decades as it awaits evidence that a slowdown in inflation will resume after setbacks this year. Powell said he ...


Allison Schrager: Higher for Longer? Rates Could Be Higher Forever
Posted: May 14, 2024 at 05:30 AM (Tuesday)

If borrowing costs remain elevated, there will be greater downside risk for investments. But it's not all bad. Our holiday from history has come to an end. I am referring not to world peace but to the zero-interest-rate environment so many people expected would last forever. Despite all the talk about when the US Federal Reserve will cut rates ...


John Cochrane and Amit Seru: Preventing Bailouts Is Simple, but It Isn’t Easy
Posted: May 13, 2024 at 04:32 PM (Monday)

The Fed could simply stop blocking run-proof banks from emerging. But that would take political will. There was a financial crisis in 2008. The U.S. government responded with bailouts. If people know they will be bailed out in the next crisis, they take too much risk. Recognizing this danger, the government vastly expanded financial ...


Kathleen Hays: Fed Faces Communication Challenge as Prices Stay High: George
Posted: May 13, 2024 at 02:21 PM (Monday)

Former K.C. Fed Chief Says Transparency Not Same as Clarity. Welcome to Central Bank Central. I'm Kathleen Hays, a very special edition of Central Bank Central. I'm at the Federal Reserve Bank of Cleveland, a very important conference today. Central Bank challenges on communication, theory and practice. Loretta Mester has been president of the, ...


Oren Cass: It’s conservatives that should be storming the ivory tower
Posted: May 13, 2024 at 10:59 AM (Monday)

Universities depend on taxpayer money to survive, and they are wasting those funds. In America today, there are three interlocking crises that may finally collapse “Big Ed”, the nation’s dysfunctional higher education cartel. The latest headlines focus on moral collapse, as campuses that aggressively policed so-called microaggressions now ...


Wayne Crews: Confronting A Surge In Costly Federal Rules
Posted: May 13, 2024 at 09:42 AM (Monday)

As of Monday, May 13, there have been 1,148 rules and regulations finalized among the 41,830 pages published to date in the 2024 Federal Register. Law, Rules, Standards, Agreement, Contractgetty Page tallies of over 800 per day have suddenly become routine. Last week's 4,225 pages represented nearly double 2024's weekly pace so far. At any ...


Barry Eichengreen: The Dilemmas of the Dollar
Posted: May 13, 2024 at 07:24 AM (Monday)

ISTANBUL – The dollar's strength, particularly against major Asian currencies, has triggered a wave of skittishness in financial markets. Can anything be done to stem the greenback's rise, and even if something can be done, should it? The dollar has strengthened sharply in recent months, against Asian currencies in particular. A rising ...


Javier Blas: Nevermind Those EVs — Oil Demand Keeps Growing
Posted: May 13, 2024 at 12:00 AM (Monday)

Fuel efficiency and green initiatives haven’t slaked the world’s thirst for crude. Like clockwork, the commodities market worries in May about the strength of oil demand heading into the northern hemisphere summer holiday. Nervousness about the seasonal pickup in oil consumption abounds. It happened in 2023, and it’s happening again this year. ...


Mickey Levy: The Dilemmas Facing the Fed, BoE, ECB, and BoJ
Posted: May 12, 2024 at 05:00 PM (Sunday)

Inflation in the U.S., Europe, and the UK has fallen from very high levels but remains above the central banks' goals of 2%. Following the Fed's, Bank of England's (BoE's) and European Central Bank's (ECB's) painful experiences of failing to forecast their higher inflations and then being forced to raise rates aggressively, they look forward ...


Ed Yardeni: The Week Ahead
Posted: May 12, 2024 at 03:02 PM (Sunday)

The week ahead is jampacked with economic indicator releases. The big ones are for inflation, retail sales, and production. They may be somewhat stagflationary on balance, showing inflation remains too high while economic growth is slowing. Nevertheless, we still expect to see inflation moderate with solid economic growth over the rest of ...


John Tamny: Every So Often Ben Bernanke Reminds Us Why Economists Are So Dangerous
Posted: May 12, 2024 at 10:00 AM (Sunday)

What would happen to Apple, Google, and Nvidia if the State of California defaulted on its debt? It's not an unrealistic question given the state's occasional fiscal lapses, plus the question becomes more reasonable in light of the size of California's economy: if it were a country it would be the fourth largest economy in the world. In which ...


Komal Sri-Kumar: Economy Slowing. Inflation? No! Markets Run Ahead of Reality
Posted: May 11, 2024 at 09:24 AM (Saturday)

It was a winning week for equities and fixed income. The common factor behind the rally was the second signal in less than a week that the US economy is slowing. The employment report for April released on May 3 recorded job creation of only 175,000, far less than had been anticipated. The increase in the unemployment rate from 3.8% in March ...


Review & Outlook: Why Biden Is Losing on the Economy
Posted: May 10, 2024 at 06:13 PM (Friday)

The average annual inflation rate during his Presidency is 5.5%. Under Trump it was 1.9%. Democrats and the press keep telling Americans that they don’t know how good they have it. The U.S. economy is great, Bidenomics is the reason, and don’t worry, be happy. Yet the voters, those numbskulls, keep telling pollsters they don’t feel the boom ...


Kathleen Hays: Plosser, Levy Urge Return to Pre-Emptive Fed Rate Moves
Posted: May 10, 2024 at 03:35 PM (Friday)

Hoover Paper Puts Coming Fed Framework Review in Spotlight. Welcome to Central Bank Central. I'm Kathleen Hays. We're going to take a look at the Federal Reserve. What a surprise on Central Bank Central. But, you know, as the debate rages on over what the Federal Reserve should and will do on its interest rate path this year, there's a ...


Steven Malanga: Gimme (Government) Shelter
Posted: May 10, 2024 at 12:09 PM (Friday)

States and cities spend billions on housing projects that are costly, cumbersome to build, and won’t solve the affordability crisis. For the last two years, many potential American homebuyers have found themselves priced out of the market. Soaring interest rates and prices for construction materials, along with a sharp decline in supply from ...


Liz Peek: Will the economy slow or fall off a cliff?
Posted: May 10, 2024 at 08:00 AM (Friday)

Unemployment claims surged this week, suggesting the economy, and the jobs market, is weakening. The question is: Will growth slow, or is the economy about to fall off a cliff? Will there be a soft landing or a recession? Americans continue to give President Biden low marks on the economy, despite incessant assurances from the White House ...


Steven Greenhut: California's Leaders Still Ignoring State Pension Debt
Posted: May 10, 2024 at 07:30 AM (Friday)

California has just 72 percent of the assets needed to make payments to retired public workers, many of whom get to collect six-figure annual payments. When arguing about whether the Treasury needed to take urgent action to deal with soaring federal debt in the 1980s, the late former chairman of the Council of Economic Advisers Herb Stein ...


James Bianco: The total return strategy in bonds is far from dead
Posted: May 10, 2024 at 12:01 AM (Friday)

The end of the historic bull market in the asset class just means a different approach is needed from investors. With the end of the bond market’s historic bull run, is it all over for a particular type of active bond manager — those who pursue returns unconstrained by market benchmarks? Investor Bill Gross certainly thinks so. He penned one ...


Ed Yardeni: The Recession Claim
Posted: May 9, 2024 at 05:24 PM (Thursday)

One of our competitors claims that we are in a recession. Another claims that we will soon be in a recession. The most widely anticipated recession of all times is turning into the longest widely anticipated recession of all times. One day, the diehard hard-landers will be right. Was today the day? We're sure that their heartbeats quickened ...


Jeb Hensarling: The FDIC’s Campaign Against Fintech Companies
Posted: May 9, 2024 at 05:16 PM (Thursday)

With no authorization from Congress, the bank regulator tries to suppress these innovative firms. Congress created the Federal Deposit Insurance Corp. during the Great Depression to protect Americans’ hard-earned money and restore confidence in the financial system. Today the FDIC regulates more than 5,000 banks for safety and soundness, ...


Steve Rattner: Rate Cuts, A Dream Deferred
Posted: May 9, 2024 at 09:00 AM (Thursday)

As expected, the Federal Reserve left interest rates unchanged at its meeting last Wednesday. That's because of a mix of good news and bad news. The good news is that the economy has been growing more briskly than most analysts expected (though April's jobs report came in slightly softer than expected). The bad news is that the stronger growth ...