Blogs

Camp’s Tax Reform Plan

It is too bad that Dave Camp’s (Chairman of the House Ways and Means Committee, R-MI) tax reform plan doesn’t have much chance (and that is putting it optimistically) of surviving a Senate vote after it clears the House.  I think it should receive serious consideration because it has some benefit for most groups and some pain for most groups.  It reminds me of the essentially even-handed approach taken by the Ryan-Murray budget.  In my opinion the plan does not simplify the tax code nearly enough, but I favor the Fair Tax over all other tax plans.  Nevertheless, Camp’s p

A Tough January in the Housing Industry

January was a tough month in the housing industry, both in terms of new construction and sales of existing homes.   The decline in the Housing Starts annual year-over-year comparison (12/12 rate-of-change) is a clear leading indicator that not only the housing industry is slowing now, but that the entire economy is likely to slow in the second half of the year.  Admittedly, the polar vortex may have contributed to steeper-than-normal December-to-January decline of 14.96%.

Report on the Minimum Wage Increase

The Congressional Budget Office, CBO, issued its report on the President’s plan to boost the minimum wage from $7.25 to $10.10.  The impact of such a move has been a popular question while talking to groups around the country.  The CBO report is consistent with what I have been saying: it will help some and hurt others in that it will keep some people from getting a job at all.

Troubles on the Job Horizon

The Stock Market has rebounded of late, the US Congress agreed to lift the debt ceiling for a year, and January Retail Sales were solid.  Life seems good on the surface.  Underneath the surface, things are not looking nearly as rosy.  It appears that job growth will be slowing in the future, and the US economy along with it. 

Don’t Be Misled by Headlines

In a recent article, the headline said that the January drop in retail sales bodes ill for GDP reports.  That is certainly an attention-getting headline, especially because it suggested that GDP may we be weakening, and a macroeconomic problem is imminent.  This is another case where reality is much different than the headline. 

Economy Larger Factor than Weather

We have looked at manufacturer, distributor, and retail sales over decades and have found that the economy is a significantly larger factor than the weather.  We have looked at pool covers, yard tools, air conditioners (central air and window units), and other similar series, and they all have a stronger relationship to the economy, despite the fact that many people feel it’s the weather.

Looking Past the Doom and Gloom Headlines

The stock market is moving lower and headlines are filled with bad news. We are reading about jittery markets, manufacturing decline in the US and China, the decline in the Purchasing Managers Index, and investor fears, to name a few recent phrases I have come across.

GDP is UP

Fourth-quarter 2013 GDP was released by the government recently, and the data looks good. GDP (adjusted for inflation) is at a record high. The “record high” comment is for anyone who still thinks the recovery from the Great Recession is incomplete. The fourth quarter came in 2.7% higher than one year earlier. The average year-over-year growth rate for the past decade is 1.8%, so the posted gain is really pretty good.

Exuberance!

A recent article stated that “Companies around the world are starting to share the exuberance that inspired investors” and that there is “increased confidence in the durability of the expansion”. First, perhaps we should question whether it was exuberance or a lack of options that inspired investors last year.

It might easily be that a lack of options led to the beginning of the rise and then a herd mentality took over. The stock market can be very emotional and perhaps that did play a role, especially if that emotion was fueled by the ‘feel good’ of quantitative easing.

The Declining Unemployment Rate

The unemployment rate fell to 6.7% in December. The decline was welcomed by most, and to those who think it matters, it was a harbinger of better days ahead. A frequent question at presentations involves the question of those people who have given up looking for a job or who are working at part-time jobs because they cannot find a more-desirous fulltime job.

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