There are three types of people involved in the prognostication business these days. The “end of the world” types, the “it’s a slower, post-apocalypse world” types, and the “everything is going to be OK” types.

For a long time now, we have been saying that the “end of the world” types are over-doing it. This is actually a dangerous stance for us to take because the “end of the world” types can be very nasty to people who disagree with them. The “it’s a slower world” types are more cerebral and …

Three months ago, we added up the major components of real GDP for the third quarter and predicted a solid annualized growth rate of 3.5%. Instead, the advance report came in at 2.5% and was later revised down to a tepid 1.8%.

We were too high on inventories as well as government purchases, and that made our overall forecast too high. However, our estimates of consumer spending, business investment, home building, and the trade balance were all pretty darn close to the mark. Final sales (GDP excluding …

The year (2011) started on a high note, and apparently, will end on one, too. What happened in the middle was frantic, noisy and bothersome.

A year ago, in late 2010, the bears had seemingly gone to sleep. The Dow Jones Industrial Average (DJIA) finished 2010 at 11,576, up 15.6% in the final four months of the year. Real GDP grew 3.1% in 2010, its fastest expansion since 2005. The unemployment rate was still high (9.4%), but private sector job growth had been positive for 10 …

The Bible story of the virgin birth is at the center of much of the holiday cheer at this time of the year. The book of Luke tells us Mary and Joseph traveled to Bethlehem because Caesar Augustus decreed a census should be taken. Mary gave birth after arriving in Bethlehem and placed baby Jesus in a manger because there was “no room for them in the inn.”

Over the centuries, people have come to believe that because Jesus was born in a stable, and not in a hotel …

Given his advisers’ track record, you would think President Obama would be very cautious when making predictions about the unemployment rate. Back in January 2009, fresh off his inauguration, his economic team forecast that the $800 billion “stimulus” bill would keep the jobless rate below 8%.

As we all now know, even though the “stimulus” bill was fully implemented, the jobless rate kept heading north, peaking at 10.1% in October 2009 and never once falling even remotely close to 8%. Nevertheless, President Obama is doing it again …

Something got lost in translation. Cable television told the American consumer to burrow deep in a hidey hole…a double-dip recession was on its way. After all, we have no stimulus bill, the Super Committee failed and there is about to be a complete collapse of Europe. But the bazillion people in those shopping mall lines decided to ignore the pouting pundits of pessimism. They came out in numbers that make Occupy Wall Street look like a bunch of amateurs.

As they have over the past two years, …

So far this year, inflation has been much higher than the Federal Reserve has expected. Back in January, the Fed expected the PCE Deflator (a broad measure of consumer prices calculated for GDP accounts) to rise 1.5% in 2011. But so far this year, these prices are up at a much faster 3.2% annual rate. A better known measure, the Consumer Price Index, is up at a 4.1% annual rate in the first nine months of the year.

The Fed argues that it really hasn’t …

The $41 billion bankruptcy of MF Global, led by CEO Jon Corzine, is obviously front page headline news these days. It has been, and will continue to be, a circus-like atmosphere. Rumors and innuendo will mix with facts and emotion as pundits and investors attempt to divine a meaning or message.

There are many who want to make this about Wall Street and Capitalism. They will say, “the subprime crisis, Bernie Madoff, the flash crash, market volatility, and now MF Global all show how out of control, or …

If US consumers could speak as one, they would paraphrase Mark Twain and announce “the reports of my death are greatly exaggerated.”
Not a day goes by where we don’t hear a talking head say something like, “the consumer is not spending” or “the consumer is weak.” A weekend headline from the Wall Street Journal was more specific. It said, “Spenders Become Savers, Hampering Growth.” The WSJ based its theory on some interesting anecdotes, but the authors missed some very basic facts.
Retail sales in September were up 7.9% from …

When real GDP growth barely budged in Q1 (0.4%) and sputtered in Q2 (1.3%), conventional wisdom became convinced that a recession was on its way. Many argued that unless the US “stimulated the economy” with more spending, temporary Keynesian tax cuts, or another round of quantitative easing, it was in for another recession.

We had a very different view. We suspected weakness in Q1 was overstated – after all, real GDI (gross domestic income) showed 2.4% growth in Q1. GDI and GDP are supposed to be equal. …