Inflation hysteria is back.  The better than expected July CPI (no change from June) led to expectations that August would decline since it was already known that gasoline prices had declined.  Gasoline prices did drop but the CPI increased by…

I am busy analysing the August employment report but wanted to immediately share some great news as America celebrates Labor Day The most encouraging item was a very large increase in the labor force (+786,000) which resulted in a big…

There has been a radical shift regarding inflation and the Fed.  Prior emphasis on core inflation (CPI or PCE) has increasingly shifted to the CPI for all items.  Part of the explanation is that there was no change in the…

The news that payroll employment increased by 528,000 and the unemployment rate declined to 3.5% in July led many to conclude that U.S. labor markets have fully recovered from Covid-19.  We do not share that opinion.  The Fed’s mandate for…

Our previous analysis of the Employment Cost Index (ECI) concluded that the 1.6% quarterly increase that occurred in the 3 months ending September 2021 was the peak.  Don’t think that we will be wrong, but we were certainly premature as…

A labor market puzzle is the weakness in household employment this year, including two declines, versus much more robust gains in payroll employment (see Chart 1).  For the first six months of this year, the average monthly increase in payroll…

  Our report of January 6 introduced the comparison of the current inflation episode with what occurred following World War II.  Our thesis was that the two episodes were very similar, i.e., the collision between pent-up demand and a dysfunctional…

  Defying expectations of weakness, payroll employment increased by 372,000 in June, in line with the average monthly gain of 383,000 in the prior 3 months.  An additional issue that challenges the pessimists is that wage inflation continued to moderate…

The May decline in retail sales brought forth the usual reactions saying that the consumer was played out.  That is clearly not the case.  Household money income remains robust. The monthly employment report is a rich data source regarding activities…

The markets very negative reaction to the May all items CPI (8.1% year-on-year) is puzzling as continued problems with food (see Chart 1) and energy (see Chart 2) should have been well recognized in advance.  Overlooked was a modest improvement…