Bonds have been in a "bull market" for the past thirty-seven years. Not every quarter, or every month, but bond yields have fallen consistently since Paul Volcker ended the inflation of the 1970s. And just like any long-term bull market or bubble justifications proliferate. The current 10-year Treasury yield is 2.46%, which equates to a [...]
One word that could describe Donald Trump's unexpected ascendancy to the presidency is – "revolt." Revolt against the "establishment." Revolt against the "status quo." After all, status quo bureaucracies, tax rates, institutions, regulations, and narratives promised prosperity, yet the economy was mired in slow growth and many felt it was hard to get ahead. Reliably [...]
Posted Under: Monday Morning Outlook The Bible story of the virgin birth is at the center of much of the holiday cheer this time of year. The book of Luke tells us that Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem [...]
Posted Under: Bullish • GDP • Government • Markets • Monday Morning Outlook • Interest Rates • Spending • Taxes • Stocks Last December we wrote "we finally have more than just hope to believe that this year, 2017, is the year the Plow Horse Economy finally gets a spring in its step." We expected real GDP growth to accelerate from 2.0% in 2016 to "about 2.6%" in 2017. Our optimism [...]
Posted Under: Government • Monday Morning Outlook • Productivity Models of the economy are pretty useful tools. And simple models are some of the most useful. They help people envision how the world works. They help organize thinking. For example, the model that says potential U.S. economic growth is determined by "population (labor force) growth" plus "productivity" is an [...]
Bullish • Government • Markets • Monday Morning Outlook • Fed Reserve • Interest Rates • Stocks The Federal Reserve has a problem. At 4.1%, the jobless rate is already well below the 4.6% it thinks unemployment would/could/should average over the long run. We think the unemployment rate should get to 3.5% by the end of 2019 and wouldn't be shocked if it got that low [...]
Bullish • GDP • Government • Monday Morning Outlook • Spending • Taxes We've called it a "Plow Horse" economy, which was our metaphor invented to counter forecasters who said slow growth meant a recession was on its way. A Plow Horse is always slow, but that slowness hides underlying strength – it was never going to slip and fall. Now, the economy is accelerating. [...]