The economy continues to recover in a number of key areas, but it’s still not obvious that the labor market has joined the party. Yes, the latest nonfarm payrolls report was encouraging, but today’s labor market news on new filings for unemployment benefits leaves us wondering (again) if the recent end of job destruction will quickly bring job creation.
INFLATION? DEFLATION? OR SOME OF EACH?
Today’s update on consumer prices for March suggests that inflation remains tame. Is it too tame?
Some analysts think so. In fact, worries over deflation are again popping up in economic discussions. Didn’t we thrash the deflation beast last year? Maybe not. One reason for thinking that inflation is the bigger threat in the years ahead is the massive reflation program that’s been job one at the Federal Reserve, aided and abetted by the profligacy of fiscal policy.
DEBATING THE DATING OF THE BUSINESS CYCLE
Is the recession over? No, or at least not officially, according to the National Bureau of Economic Research, the non-profit group that makes the official pronouncements on business cycle dates. In a statement yesterday, NBER said it was too soon to mark the end of the contraction that began in December 2007.
HOUSING: THE OTHER BIG PROBLEM
The hefty 8-million jobs lost during the Great Recession won’t easily or quickly return, as Robert Reich reminds in today’s Wall Street Journal. But at least there’s hope that the March gains in the labor market signal that recovery has begun. Maybe. Even if that’s true, questions still abound for the other elephant weighing on the economy—housing.
DEBATING THE ECONOMIC RECOVERY: IS IT REAL?
Since the Labor Department released the March employment report, which delivered the first substantial gain in nonfarm payrolls since the recession began in December 2007, the debate about the strength of the economic recovery has gone into overdrive. A selective sampling of the conversation…
BACK TO THE FUTURE OF ASSET ALLOCATION
The FT’s Gillian Tett reported yesterday that the “Harvard model” of investing is under the microscope at the Government Investment Corporation of Singapore (GIC), a sovereign wealth fund. The internal debate at the fund carries ” fascinating implications for investors round the world.”
NEW JOBLESS CLAIMS RISE; CONTINUING CLAIMS FALL
A FRESH LOOK AT THE RED INK CHALLENGE
It’s all about debt from here on out, and probably will be for many years. That’s old news, of course, but it’s still relevant, as we’ve been discussing, including here and here. A new research paper from the Bank for International Settlements is the latest contribution to the literature that rings the warning bells.
THE COMPLICATIONS OF REBALANCING
The lessons tied to rebalancing a portfolio’s asset allocation should be simple, but they aren’t. Like every other investing topic, this one too comes with baggage. Although there’s a large body of research suggesting that rebalancing is productive, not everyone agrees. Some of this is about the details, although the basic question of whether rebalancing is worthwhile in concept is debated as well.
CYCLICAL THOUGHTS
It’s now clear that the Great Recession is not (was not) the Great Depression 2.0. A deeper crisis appears to have been averted. That’s not to say that all’s well. But given the dire expectations of late-2008 and early 2009, the view from early April 2010 looks like a gift from heaven. The question is whether this is a free lunch? Or, as we expect, there’s a price to pay, even if the price isn’t obvious yet, in either the details or magnitude.
Of course, we know that there’ll be lots of debt to deal with. We’ve known that for some time. But it seems as though the market, so far, has accepted this price. In fact, the market doesn’t appear extraordinarily upset, to the extent that we can glean such sentiments from things like bond prices and the associated yields.