The Bureau of Economic Analysis released its first estimate of the United States 2010 second quarter Gross Domestic product growth rate today. Their estimated 2.4 percent growth rate was below most economists’ expectations, ours included. They estimate that consumption expenditures grew very mildly at 1.6 percent, investment expenditures grew massively at 29 percent, government expenditures… Read more

Bloomberg has a report on an IMF study.  Here is the key sentence: “The U.S. financial system remains fragile and banks subjected to additional economic stress might need as much as $76 billion in capital, according to the results of International Monetary Fund stress tests.” We at CERF have been long concerned about the strength… Read more

I just read paper The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks by Christina Romer and David Romer. It’s in the June 2010 issue of The American Economic Review (AER), the industry’s top peer-reviewed journal. Being in the AER is a guarantee that the paper is rigorous and… Read more

I discussed three stylized possible equilibria for the United States economy in a July 18 blog. The best equilibrium, one with rapid job and GDP growth and low inflation was relegated to an unlikely possibility at this time. The worst equilibrium of the three, the “bad-deflation” scenario, was one where debt-laden and cash-strapped consumers hold… Read more

Bloomberg has the following headline and article: “Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade.” Most will take this as bad news, and it is, but not for the reasons many will think.  Most will lament the decline in home ownership, as if it is somehow a slide away from the American… Read more

I hope we’re a bit farther along than this, but maybe not: “epidemiology in the nineteenth century was much like economics in the twentieth century: a subject of intense public interest and concern, in which theories abounded but where the scope for controlled experiment was limited”  Cooper

I was listening to Bloomberg radio this morning on the way to work.  They were a bunch of happy folks there.  The markets are up, and some earning reports are up.  Then, they came to the consumer confidence numbers, which came in worse than the consensus forecast.  Nothing here to disturb the Bloomberg team.  They… Read more

Previously published on on 6/19/2010 The most fanatical Keynesians are losing their composure. Brad DeLong, a prominent Berkeley economist and Keynesian, is virtually yelling that “We Need Bigger Deficits Now!”, emphasis his. Paul Krugman does DeLong one better, calling proponents of fiscal responsibility madmen. They are following the gospel of John Maynard Keynes, who… Read more

Previously published on on 7/11/2010 A year ago we were hearing all about green shoots. Analysts claimed to find them everywhere. Today, we never see the term. In fact, there seems to be a growing malaise. By the end of June the first quarter’s Gross Domestic Product (GDP) estimate was revised downward a full… Read more

The California Builders Association announced today that California’s new home sales fell 46 percent in May over the previous year.  This is a big decline from an already weak market.  The question, of course, is what caused the decline. The easy answer is the expiration of federal incentives on April 30th, but that is not… Read more