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Online sales growth now decelerating as well:NFIB small business sales Trump won largely because people couldn’t bring themselves to vote for Clinton, and not so much because anyone like him or his presumed agenda. And along the way he destroyed the Republican party, which may or may not sitso well with Republicans in Congress. So it’s not like he has a mandate to do anything or that he can rely on Republican support for anything. Regarding his proposed tax cuts, under...

When this chart heads lower as it’s doing it’s all over: The chart is well below what in the past were recession levels, and still looking like it can go a lot lower: Highlights The small business optimism index rose 0.8 points in October to 94.9, slightly exceeding expectations and extending a rebound from the 2-year low at 92.6 set in April. Of the 10 components of the index, 5 posted gains, 3 were down and 2 remained unchanged. The largest gain was recorded in plans to...

By David Orrell In a previous article for this newsletter, I wrote about the rather long and withdrawn grief process that the economics profession is working through, as it comes to terms with its role in what has become known as the Great Financial Crisis. Initial denial was followed by anger towards critics, which in turn was followed by a bargaining stage. The latter (I used Dani Rodrik’s book Economics Rules as an example) involved claims that there is nothing seriously wrong with...

One essential aspect of Minsky’s Financial Instability Hypothesis was the argument that there are two price levels in capitalism: consumer prices, which are largely set by a markup on the costs of production, and asset prices, which are determined by expectations and leverage. This argument originated with Keynes in Chapter 17 of the General Theory, when he noted that investment is motivated by the desire to produce “those assets of which the normal supply-price is less than the demand...

Best I can tell this is mainly about health care insurance premiums, which ‘count’ as personal consumption expenditures and have been adding support to GDP: Inflation adjusted: Not inflation adjusted: Looks like the support is starting to fade: The ‘one time’ adjustment for Obamacare may have passed, along with it’s supportfor GDP. And note the growth of employment was well below the growth in costs: Bank credit tends to tighten up as the economy slows, which slows lending...

Subject to an unregulated free market for labor, Polanyi believed that “workers would die as the victims of acute social dislocation through vice, perversion, crime, and starvation”. The US has the most “flexible” labor market of all OECD countries, meaning the freest market for labor, with the least intervention by government or social institutions, as defined by Polanyi. “Essentially, to get high ratings, a country must have low marginal tax rates, a low minimum wage, a high degree of...

Deirdere McCloskey should be freaking out. A man called Trump threatens her world. McCloskey is not just the most eloquent but also the most thorough defender of the idea that ‘the bourgeois ethic’ and bourgeois virtues were crucial to the unprecedented prosperity of modern men and women – and improved our ethical standards in the process: “Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become...

According to Eurostat, unemployment differences in the EU are still large (graph). Especially the euro countries do bad. The Netherlands and Germany seem to buck this trend but this must be ascribed to whopping surpluses on their current accounts. As not all countries can, by definition, run current account surpluses at the same time (my surplus is your deficit) this means that total domestic demand in the Euro Area is way to low. Another option: people are working too much and have to...

from David Ruccio Gabriel Zucman, in his article in the special issue of Pathways, “State of the Union: The Poverty and Inequality Report 2016” (pdf), reveals lots of scary numbers about wealth inequality in the United States.* The scariest is the percentage of wealth owned by the top 0.1 percent of households, which “has exploded in the U.S. over the past four decades.” The share of wealth held by the top 0.1 percent of households is now almost as high as in the...

As per the chart, the deceleration of employment growth continues in what’s now been a very steady decline going on 2 years. And with employment growth decelerating at this rate it’s likely the unemployment rate will remain elevated indefinitely: Highlights Solid payroll growth is not the whole story of the October employment report. Average hourly earnings are rising, up an outsized 0.4 percent in the month with the year-on-year rate, at 2.8 percent, suddenly near 3.0...