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The economy is the system by which goods and services are produced, distributed, and consumed within a society.
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- Personal Income and Spending Unexpectedly Decline…
Economists missed the boat by a mile on income and expenditures. Income and Outlays image top half from Bloomberg, bottom half from the BEA The BEA’s Personal Income and Outlays report for May 2025 was much weaker than economist’s consensus expected. Spending was a bit higher than I expected. To arrive at real numbers, subtract … Read more - The Road to Incoherence: Arthur Burns…
UPDATE: My concluding paragraph was inadverently deleted from my post, so even if you’ve already read the post, you may want to go back and read my concluding paragraph. Last December, Nathan Tankus wrote an essay for his substack site defending Arthur Burns and his record as Fed Chairman in the 1970s when inflation rose … Read more - Why the Tories’ “put people to…
What do you do when your economy is in the doldrums and you need to kickstart growth? Why, you put more people to work, that’s what you do. This has been the Tories’ strategy since 2010. The sustained attack on welfare benefits has all been focused on “making work pay” – encouraging, and at the … Read more - Risks to growth and inflation helping…
As I write this, the US 10-year Treasury bond is yielding 1.457%, well under the trading range it had established during this quarter. And there are a lot of theories as to why this is happening. I want to spell out how I’m thinking about the yields and what the risks and opportunities are going … Read more - Too many Superheros?
How much content should a franchise produce? A recent WSJ story indicates that the expanding Marvel Cinematic Universe (MCU) is approaching a deluge. The graph they created certainly indicates a huge increase in content, mostly on TV. How much to produce is an extent decision. On the one hand, the huge success of the Avengers … Read more
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Managerial Econ: Scale Determines Technology
The robotaxi business is getting another entrant, but also a
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Subject notes on behavioural economics –…
Each year I teach an undergraduate subject in behavioural economics.
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Winners and Losers – The Baseline…
By James Kwak I think it’s highly likely that the dust will clear eventually and that our economy will come back to life at some point in the next two or three years. I know there are certain disaster scenarios that can’t be ruled out, but I think they are unlikely. I’m not going to
US–Australia alliance wanes under Washington’s whims…
My latest in The East Asia Forum The May 2025 federal election campaign was characterised by a studious avoidance of the main issues facing Australia, most notably the country’s future relationships with the United States and China. Canberra should confront the quandaries redefining the US relationship, initiated by President Donald Trump’s second term. Washington’s radical
What economic model produces the Fed’s…
John Cochrane’s blog has always been a favorite of mine. It’s provocative. It’s entertaining. And it invariably leads me to reflect on a variety of notions I have floating around in my head. In his latest piece, he asks an interesting question: How does the Fed come up with its inflation forecast? What sort of
What’s your model on how real…
Quick note here to follow up on the macro crystal ball post I wrote a couple of weeks ago (link here for subs). Michael Msika over at Bloomberg had a piece out on the return of capex powering the next rally. And for me it connected a lot of dots. Let me outline my thinking
What is the ‘Law Of Diminishing…
As the quantity of a certain consumed goods increases in a specific term (when the consumption of other goods are fixed), marginal utility, which each additional unit of goods alter the total utility, gradually decrease. This is called the Law of Diminishing Marginal Utility. In a situation that the Law of Diminishing Marginal Utility is
Negative Nowcast – J. W. Mason
In recent days, there has been a good deal of discussion in the business press and on economics Bluesky about the Atlanta Federal Reserve Bank’s “nowcast” of GDP for the first quarter of 2025. The suggestion is that the US may already be entering a recession. The first quarter of 2025 is, of course, ongoing;
Repeat home sales through April confirm…
– by New Deal democrat Yesterday the existing home sales report showed continued deceleration in YoY price increases to 1.3%, along with an increase in inventory of houses for sale, indicative of the ongoing rebalancing of the housing market. This morning’s repeat home sales reports from the FHFA and S&P Case Shiller strongly confirmed that deceleration
The ‘funny math’ of top U.S….
The current reconciliation bill now before Congress won’t correct for the low tax rates paid by the richest Americans Overview Calculating the effective tax rate of the richest Americans can be complicated, but it is critical for ensuring tax policy debates—such as the one currently raging in the U.S. Congress about massive new tax cuts
The Brick Wall Economic Theory
What is inflation? Inflation is the process of a sustained, significant rise in the general price level over a period of time. Inflation thus lowers the purchasing power of money which means that the real value of the money decreases. For example, something will cost you $10 today but in 10 years, that same product
Bradley A. Hansen’s Blog: History’s Replication…
Anton Howes recently asked Does History Have a Replication Crisis? The question is one that Howes has been concerned with for some time, but the immediate impetus for the essay was the publication of Jenny Bulstrode’s Black metallurgists and the making of the industrial revolution published in the journal History & Technology. Bulstrode claims