James Pethokoukis

Looks like the Fed is taking its foot off the gas pedal

July 6, 2009

From Gluskin Sheff economist David Rosenberg:

At the same time, it looks as though the Fed is now in the process of snugging monetary policy. We don’t hear from the inflation-ists that the central bank has actually been allowing its bloated balance sheet to lose some weight in recent weeks and that the growth rate in the once-red-hot monetary aggregates is shrinking and the monetary base is also shrinking. Over the last 13-weeks, the monetary base has contracted at a 23% annual rate (!), M2 growth has softened to a 1.4% annual rate and MZM has slowed to a mere 4.6% annual rate.

Unemployment a leading indicator?

July 6, 2009

No, says economist Mike Darda of MKM Partners:

At no time in history — from the deflationary wipeout of the 1930s to the inflationary recessions of the 1970s and early 1980s, to the balance sheet downturn of 1990-1991, to the bursting equity bubble and the 2001 recession — was the labor market or the unemployment rate a leading indicator of either the business cycle or stock market trends.

The politics and economics of a second stimulus plan

July 6, 2009

I would doubt whether the WH thinks a second stimulus works for them politically or economically:

Palin explained, kind of …

July 4, 2009

I think this hunk by Mark Halperin on Sarah Palin’s resignation is pretty good:

Deflation nation

July 4, 2009

From David Goldman at Inner Workings:

An aging population increases its purchases of securities and decreases its purchases of goods as it saves for retirement. Americans have saved nothing for the past ten years, and the capital gains that they considered savings-substitutes have vanished. That means that an enormous savings deficit accumulated over more than a decade has been exposed, and that Americans must attempt to correct it quickly and under the worst of circumstances. That creates a deflationary shock that a few trillion dollars’ worth of stimulus cannot begin to mitigate. America may have the worst of both worlds: currency devaluation AND price deflation, as in the 1930s.

Obama will do ‘whatever it takes’ to boost the economy? Really?

July 2, 2009

On CNBC today, WH economist Christina Romer said the president is committed to “doing whatever it takes” to turn around the economy. And she did not rule out a second stimulus plan. Yet the president will not cut corporate taxes or investment taxes —  even temporarily much less in a permanent way that would boost confidence and certainty. I think the WH believes it can pretty much ride this out, 2012 being a long way a way and Dems have structural advantages in 2010.

This is how bad that jobs report was …

July 2, 2009

Economist David Rosenberg thinks the jobs report was, in effect, a boot heel stomping all over the green shoots:

Bill Gross: America’s dark economic future … Happy Independence Day!

July 2, 2009

Pimco bond guru — and occasional White House economic adviser –  Bill Gross paints a really depressing economic future

Unemployment in June at 9.5 percent … or is it 10 percent?

July 2, 2009

According to the Labor Department, the economy lost 467,000 jobs and the unemployment rate ticked up to 9.5 percent in June.  But lots of workers have stopped looking for work and that skews the unemployment rate. If workers were looking for jobs in the same numbes as they were in June 2008 (we are talking about the labor force participation rate which was 66.1 percent then and 59.5 percent now), the unemployment rate would be at 10 percent.

Wal-Mart and rent seeking

July 1, 2009

Government intrusion into the marketplace has so many unintended and unforeseen consequences — like Wal-Mart (!) coming out in favor of government mandate that employers provide health insurance. Why? Here is how a flabbergasted Heritage Foundation explains it: