iOS app Android app

Labor Market

Irrational Exuberance?

Michael Farr | Posted 05.22.2015 | Business
Michael Farr

I've stated repeatedly that a massive amount of stimulus has been required to generate GDP growth of just 2.0%-2.5% annually since the end of the Great Recession (June 2009). We have further said that the removal or reversal of some of these stimulants will be a tough hurdle for the economy to overcome.

Poking Holes in the Strong-Dollar Thesis

Michael Farr | Posted 05.11.2015 | Business
Michael Farr

The dollar began its ascent against other major world currencies in mid-2014. The move higher was fast and furious, but the greenback ran into some resistance beginning in the middle of March.

Fed Near the Cliff

Michael Farr | Posted 04.09.2015 | Business
Michael Farr

The incessant parsing and analysis of each and every Fed utterance is becoming quite comical. God love Steve Liesman and Mark Zandi, but are they really adding much value by trying to read between the lines of each statement from each Fed member?

March Jobs Report: First Impressions

Jared Bernstein | Posted 04.03.2015 | Business
Jared Bernstein

While I think it's very unlikely that the 126,000 payroll gain marks a new, much slower trend in job growth, there are reasons for caution, especially at the Federal Reserve. This job market has fooled us before, with more head fakes then an NCAA point guard.

Why Do Interest Rates Keep Decreasing?

Michael Farr | Posted 05.27.2015 | Business
Michael Farr

The market's response to Wednesday's economic data was somewhat perplexing at first blush.

Will The Fed Kill The Recovery Again?

Robert Kuttner | Posted 05.08.2015 | Politics
Robert Kuttner

For most of its history, the Federal Reserve has been dominated by bankers and orthodox economists, who kill the recovery at the first sign of inflationary risks. Happily, the Fed today is led by Janet Yellen, a very uncharacteristic Fed chair who spent most of her career as a labor economist, of all things. Yellen is aware of the changes in the structure of labor markets and is unlikely to jump the gun on raising rates, though it's always possible that she could be outvoted. The risk today is not that an improving jobs picture will set off inflation. It's that even tight labor markets, by themselves, will not generate enough pressure for wage increases, because workers have lost so much bargaining power.

The End of the Gravy Train?

Michael Farr | Posted 04.25.2015 | Business
Michael Farr

In the summer of 2013, a sharp spike higher in interest rates caused by the "taper tantrum" (fear that the Fed will soon end monetary easing) reduced both housing affordability and the opportunities to lower mortgage rates through refinancing.

The Taxman Cometh

Michael Farr | Posted 04.19.2015 | Business
Michael Farr

Triggering capital gains taxes is just one of the risks associated with market timing, but it is a very important one. Whimsically selling out of positions and paying capital gains taxes can cause dramatic damage to your portfolio's long-term performance.

A Race Against Time

Michael Farr | Posted 04.01.2015 | Business
Michael Farr

The year 2015 may yet produce solid returns for investors in US stocks. However, it's looking more and more likely that TINA ("There Is No Alternative"), more than any other factor, will be responsible rather than strong earnings growth.

Fed Upgrades The Economy, But Will Be 'Patient' Raising Rates

Reuters | Posted 01.28.2015 | Business

WASHINGTON, Jan 28 (Reuters) - The Federal Reserve on Wednesday said the U.S. economy was expanding "at a solid pace" as it largely looked through wea...

Bold Action Plan or Delusional Rant?

Michael Farr | Posted 03.23.2015 | Business
Michael Farr

Wherever you stand on the political spectrum, I think there are some undeniable truths regarding our economy that need to be addressed before we reach the next phase of robust and sustainable economic growth.

Taking Stock

Michael Farr | Posted 03.17.2015 | Business
Michael Farr

There are many positive signs in the US. Gross Domestic Product (GDP) for the 3rd quarter was up 5% on an annualized basis compared to the 2nd quarter (adjusted for inflation).

Time to Get Excited?!

Michael Farr | Posted 02.28.2015 | Business
Michael Farr

Surging stock prices will likely increase rather than decrease the costs of saving for retirement for most folks. Why? Because most people, including baby boomers who are inching closer to "retirement age", remain vastly underprepared for retirement.

Freelancers, Children of a Lesser God

Maria Grazia Pozzi | Posted 02.18.2015 | World
Maria Grazia Pozzi

There is a fundamental contradiction between the constant call for flexibility in the labor market and the fiscal structure to support it, as if this policy trend continues we, in Italy, will be shortly witnessing a further evolution that will generate a new category: the "Vanishing iPros."

Should the Fed Be Worried About Deflation?

Michael Farr | Posted 02.17.2015 | Business
Michael Farr

For an economy heavily dependent on consumer spending, this is not a trivial consideration.

The Squeeze of the Middle Class

Michael Farr | Posted 02.04.2015 | Business
Michael Farr

The median household income in 2013 was only slightly above that reported for 1995 (after adjusting for inflation), while costs for necessities like housing (rent), health care, and education are making it much more difficult for middle-class folks to get by. 

What Is Causing the Drag?

Michael Farr | Posted 01.21.2015 | Business
Michael Farr

Using inflation-adjusted numbers, we indexed each component of GDP to 4Q07 levels, beginning with a value of 100 for each. We graphically display the results below, followed by some commentary.

Deleveraging Has Not Yet Run Its Course

Michael Farr | Posted 01.06.2015 | Business
Michael Farr

I've argued for some time that the process of deleveraging has yet to run its course. The aggregate level of debt in our economy currently stands at a record high, even though many pundits continue to say that debt levels are much more manageable now as compared to the pre-crisis days.

What Oil Is Telling You

Michael Farr | Posted 12.31.2014 | Business
Michael Farr

The drop in oil (and corresponding drop in energy stocks) is causing much consternation throughout the investment world because it is inconsistent with the narrative articulated by most economists.

Should You Sell???

Michael Farr | Posted 12.15.2014 | Business
Michael Farr

The growth of the American and global economies are the underlying drivers for most all equity investments. A clear discipline, dogged research, and dispassionate assessment are an investor's best friends.

The U.S. Labor Market: Recovery?

Douglas Holtz-Eakin | Posted 12.16.2014 | Business
Douglas Holtz-Eakin

The top-line numbers may appear promising. But a closer look under the surface of the labor market shows that the U.S. has a long way to go to really recover from the Great Recession.

Smart Fiscal Policy Will Help Jobs

Vitor Gaspar | Posted 12.08.2014 | Business
Vitor Gaspar

In some countries, particularly in Europe, reform of labor markets may be necessary to remove persistent rigidities. Fiscal policy cannot substitute for such reforms. But fiscal policy can work in tandem with broader structural reform efforts to support job creation.

The Buyback Binge

Michael Farr | Posted 12.02.2014 | Business
Michael Farr

Remember, markets go down from time to time, and it's normal. Cool heads and steady hands make money over time.

Another Flash Crash or Market Shutdown?

Michael Farr | Posted 11.11.2014 | Business
Michael Farr

Technology seems to have solved the trade execution issue, so I don't foresee an overwhelming market shutdown. Fidelity now offers an amazing 1 second trade confirmation guarantee.

Loan Me $250,000. Please!

Michael Farr | Posted 11.04.2014 | Money
Michael Farr

I want to buy a house. Would you be willing to loan me $250,000 for 30 years at 4.25 percent? Your answer is crucially important. Before you answer, keep in mind that you will be taxed on the interest you receive.