The Big Picture and the Fed. If you take a long hike up a mountain, there’s plenty to appreciate along the way. But, sometimes, you just have to stop and enjoy the view. With that in mind, let’s forget about the April employment report – which saw a combination of very fast payroll growth and moderate wage growth – and think about where the labor market stands in general.
Good-bye Recession Fears. Less than two months ago, conventional wisdom thought the US economy was in real trouble. Oops! The US economy accelerated in the first quarter, with real GDP up at a 3.2% annual rate for the quarter and from a year ago.
Our Resilient Economy. It wasn’t that long ago that some economists and investors were seriously concerned about US growth going negative for the first quarter.
The Dow Jones Industrials Average and S&P 500 are breathing down the neck of record highs set last Fall. Some take that as a sign to sell, time to shift out of equities and realize gains. We think that would be a mistake.
Last month many economists had pushed down their estimates for first-quarter economic growth to near zero. The Atlanta Fed’s “GDP Now” model was projecting real GDP growth at a 0.2% annual rate in Q1, which would have been the slowest growth since the weather-related negative reading in the first quarter of 2014. But this time it was seen as a new trend leading us toward a recession.
We’ve been “Comrades in Supply-side Arms” with Stephen Moore (now a Federal Reserve nominee) and Larry Kudlow (Administration Economist) for decades, with very few disagreements on economic policy. However, with both having called for a 50 basis point cut in short-term rates, we find ourselves in total disagreement with their conclusion.
It feels like we are living in the Land of Oz and the Fed is the “all-powerful” wizard in control.
The environment on Capitol Hill has made populism a bipartisan affair, with Republican Senator Marco Rubio now joining the fray with a call to tax corporate stock buybacks.
It’s March 8, 2009. The market’s down 56% from its all-time high, unemployment is over 8% and hurtling toward 10%, it’s just been reported that real GDP dropped at a 6.2% annual rate in Q4 of 2008, and it feels like the world is coming to an end.
Real GDP grew at a 2.6% annual rate in the fourth quarter, and while some analysts are overly occupied with this “slowdown” from the second and third quarter, we think time will prove it statistical noise.