Economic Commentary

Data delayed due to the government shutdown have begun to arrive, filling in the picture for 4Q18, and we’re also getting fresher data on the economy in early 2019. The figures have been mixed, and often surprising, which allows one to make about any kind of argument one wants. However the data are also consistent […]

In the next few weeks, economic reports that were delayed due to the partial government shutdown will continue to trickle in, helping to piece together the fourth quarter picture. That’s fine but investors are more interested in the future. Will stalemates on the budget and trade policy be resolved? In his Monetary Policy Testimony to […]

In his post-FOMC press conference on December 19, Fed Chairman Powell said that low inflation would allow the Fed to be more patient in adjusting rates. The stock market fell. He said essential the same thing in his January 30 press conference. The market rallied. Okay, that’s an over-simplification. The Fed’s tone has shifted, but […]

During an economic slowdown, the government often employs fiscal stimulus to “prime the pump.” In such cases a burst in aggregate demand boosts income, which adds to consumer spending, which adds to income, and so on. This process can work in reverse. A shock to aggregate demand hits income, which reduces consumer spending, further reducing […]