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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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Gold joins bonds in being bought…
Today we see that a topic we look at from time to time and try to figure out is back in the high life again as Steve Winwood would say. Via Barchart on Twitter (X). As you can see not only has there been quite a move recently the changes since the Bretton Woods announcement
If it’s crypto it’s not money…
It appears to be official now. According to the U.S. Department of Justice, when illicit activity is routed via crypto infrastructure, then it no longer qualifies as money laundering. Earlier this week the Department of Justice’s deputy attorney general Todd Blanche sent out an internal staff memo saying that the digital asset industry (read: crypto)
Unexpected Huge Negative Revisions to First-Quarter…
The BEA revised GDP lower by 0.3 percentage points. The details are worse. Evolution of 2025 First Quarter GDP Data from the BEA chart by Mish Today the BEA released the Third Estimate of First-Quarter GDP. Changes in Contributions to GDP GDP down 0.2 from the first revision and down 0.3 from the second revison.
Stochastic Trend: Annual Review 2024
I’ve been doing these annual reviews since 2011. They’re mainly an exercise for me to see what I accomplished and what I didn’t in the previous year. AJARE; Last year, I took on the editor-in-chief role at AJARE together with Yu Sheng and Johannes Sauer. This was the first full year that we were editors.
The human benchmark is typically unimpressive…
If you ever read a claim of an AI outperforming a human, dig into the performance data to check out the human benchmark. The mediocrity of the human is often more salient than the competence of the AI. The AI has an easy job. Here’s an example from a paper by Ayers and friends (2023).
Reserves and Where to Find Them
Gara Afonso, Marco Cipriani, JC Martinez, and Matthew Plosser Banks use central bank reserves for a multitude of purposes including making payments, managing intraday liquidity outflows, and meeting regulatory and internal liquidity requirements. Data on aggregate reserves for the U.S. banking system are readily accessible, but information on the holdings of individual banks is confidential.
Why Tariff Inflation Won’t Be Just…
I am a Tariff Man,” declares Donald Trump. But what about inflation? In his 2025 State of the Union, he admits There mightl be “a little disturbance, but we are OK with that. It won’t be much. I’m less optimistic. To understand why, we need to look at the inflation that followed the end of
Supply of Post-discharge Care: A Key…
Background The days and weeks after being in the hospital are a vulnerable period, sometimes followed by readmission. High hospital readmission rates in an area can be influenced by factors like socioeconomic status or lack of community support systems. Health system-related failures can also contribute to patient readmission. For instance, gaps in post-discharge care, poor
MacroMania: Constrained efficient inflation
I haven’t had time to do much blogging lately. But I have been studying the recent burst of inflation and thinking of how to interpret what we’re experiencing. As is my way, I decided to write down a little model (a dynamic general equilibrium model) to help organize my thinking on this question. Below, I
A Better Stablecoin on a Perp…
Creating a stablecoin position on a perp exchange is hard, but it should be easy. It not only caters to demand, but it also adds liquidity to perp markets that are perpetually short shorts. Here is how to do that. CEX Stablecoins Good But Risky The new rapidly growing stablecoin Ethena is built on the