August 2019

Giving Credit Where It’s Due

The US economy is probably going into recession. Manufacturing production is down from the late-2018 highs, retail spending growth, wages and payroll gains have slowed. Most importantly, nominal GDP growth has slowed while markets have taken a bearish turn, sending the NGDP outlook below 2%. While it is true that the S&P 500 is near an all-time high, the index has oscillated around the current level for more than a year, and stocks by themselves are only a noisy indicator of the near-term NGDP growth. TIPS, and conventional bond spreads are in the toilet, with spreads between the long and… Read More


An Avoidable Recession

The 2007-2009 recession was a disaster. Some lives were ruined while far more were disrupted. An entire generation endured a half-decade of underemployment in the pathetic pseudo recovery that followed. The Great Recession didn’t have to happen, the Fed could have followed the Greenspan playbook and “got out ahead of the markets” (even Trump got it at the time). The Fed could have done more than expected and reshaped expectations. It could have done its job. We can at least say that 2008 was a relatively challenging period. The subprime housing crisis stressed an over-optimized financial system. Strong growth in… Read More