Commentary

Near Zero Q1, Uncertainty Ahead

We’ve expected a recession for more than a year now. Simply put…the Era of Easy Everything is Over. Expanding deficits and easy money (that have lifted the economy since COVID) are no longer with us. At the same time, tariff negotiations have created an unbelievable amount of uncertainty.

Commentary

Three on Thursday: The Dollar Endures: Strength, Stability, and Global Trust

In this week’s installment of “Three on Thursday,” let’s explore some of the dynamics surrounding the United States dollar. In an era of inflation, massive debt, large deficits, and threats of tariffs, there are persistent rumors circulating that the dollar is at risk of losing its reserve currency status.

Commentary

Time to Cut Rates

We think it’s important for the Fed to move gradually. The US dollar has weakened lately, and, as a result, there is little case for a drastic loosening of monetary policy. The Fed could let up somewhat on bank regulations and capital requirements, which would help the struggling bond market.

Commentary

Tariffs, the Economy, and Stocks

The Federal Reserve started raising short-term interest rates three years ago and the M2 measure of the money supply – what Milton Friedman said to focus on – soon started declining, hitting bottom in late 2023.

Commentary

Inflation, the Fed, and the Markets

During the ten years prior to COVID, PCE inflation, the Fed’s preferred measure, averaged about 1.5% per year. Jerome Powell said it was too low and he wanted inflation to “average” 2% over time.

Commentary

Symptoms or Causes

In spite of severe polarization on so many issues, there is at least one thing that Americans agree on across the entire political spectrum, left, right, and center. That is: At some point in the past sixty years, or so, something major went wrong with the US economy and it is still causing problems today.

Commentary

Uncertain

The Federal Reserve held rates steady today, but downgraded the outlook for economic growth in the year ahead. Policy changes in Washington, looming tariffs, and a cautious consumer have made “uncertainty” the new favorite word in the Fed’s vocabulary.

Commentary

A Recession Wouldn't Help the Budget

Every so often we hear a theory that makes sense superficially but on closer examination doesn’t add up. The most recent one is that the Trump Administration wants a recession (or at least wouldn’t mind one) because interest rates would drop, making it easier to service the national debt.

Commentary

It's Not All About Tariffs

It is true that tariffs are a tax. It is also true that tariff policies have been volatile…on and off again…different carve outs…different countries…phone calls that change things. All of this clearly has an impact on the market. So, we are not surprised to see stock market volatility.

Commentary

Recession Alert?

Is the US already in recession? Probably not. But in the first quarter, real GDP is very likely to have a minus sign in front of it. Yes, a negative reading for real growth!

Commentary

Inflation and DOGE

We have called inflation “political kryptonite” because it is so damaging to politicians. Clearly, inflation played a role in the 2024 election. So now that President Trump sits in the Oval Office, his opponents have been trying hard to link anything and everything in his agenda to inflation.

Commentary

The Constitution at Work

The Framers of the Constitution designed our government to be small. Not so small and weak as the one under the Articles of Confederation, which the Constitution replaced, but small nonetheless.

Commentary

Data Games

The federal government gets a great deal of grief when it issues economic reports and it’s not hard to see why.

Commentary

Inflation, Tariffs, and the Fed

The Federal Reserve made it clear on Wednesday that it’s not about to cut short-term interest rates again anytime soon, which is good news if you’d like to see the Fed live up to its goal of bringing inflation down to 2.0%.

Commentary

Wait and See

Following 100 basis points in rate cuts through the back half of 2024, the Fed started 2025 with a pause, placing itself in wait and see mode for the foreseeable future.