If you haven’t had a classical, and I emphasize the word classical, macroeconomics course, you likely haven’t been exposed to the equation that is used to calculate gross domestic product.
You are missing one part to that equation- BS- plenty of that to go around over the last 120 years. The unwind of our unconstitutional federal spider web of agencies and hangers-on is going to be initially painful of course. But the graft, and the absolute waste of money that is D.C., nothing takes in dollars and spits out pennies better than D.C. needs to be brought to and end and it won't be pleasant in having the band aid ripped off all at once.
NX going hypernegative as we get the pushmepullyou effects from businesses trying to front run tariffs will of course drive expectations negative. Jim Bianco explained this very nicely, recently.
On the tariff side, Spencer Morrison offered a fairly concise overview on the real impact of tariffs, vs what's "explained" in what remains of the handwringing, politicized
Our host and I have a standing argument on the impact of tariffs, so I'll not scratch off that scab.
If you want to see what "Bad tariffs" are and look like, look what Quebec imposes on its fellow Canadian provinces, so as to protect its shibboleths from other Canadians. Our founders wrote that into the Constitution as a No-No. Canada? Not so much. More later on that.
Canadian "Engineered Lumber" is a fun one to look up, also, the 248% Canadian tariff on foreign butter is another, just to protect the Quebec dairy herd against all comers. Canadian interprovincial inflation is insane, because of this stuff.
My favorite illustration of incompetency and ineptitude in that Administration was the admitted downward revision of employment numbers by 828,000, a damn near record if not a record, and the Secretary of that Department being asked about it the following day and she had no clue.
So, yes the books were cooked, because they were corrupt in so many other areas that's not even in the top five or ten of most concerning unethical and corrupt things they did.
I would like Lutnik to address the nation tonight with Trump or in the next 48 hours and explain to them the benefits to the greater good of America where one company and one group of consumers might pay more but it creates jobs in Ohio or Pittsburgh etc and that the greatest benefits will probably not be seen for 2 years.
One upside is the 10 year bond, at around 4.24%...down from a year high in Jan at around 4.7 (as high as 5% Oct 2023).
For sure Biden was playing games with the economy--not just "adjusting" jobs numbers either (such short term moves as releasing most of the strategic petroleum reserve, for ex).
That said, unwinding the combination of huge federal spending on such idiocies as the USAID capers, payments to illegal migrants, etc will take time to be effectuated and show results. OTOH, announcements such as Honda building its new hybrid Civic in Indiana (as opposed to Mexico) and the Taiwan Semiconductor announcement of a large new AZ plant are examples of the positive affect of tariffs.
Moreover unless one is a very active day trader, where are the other sound economies to invest in? China and Europe not in good shape at all.
Government spending is a drain on the economy in the same way as private sector lawyer and accountant fees are. Some of it is useful, some of it is not. The DOGErs can't even compute their "savings". DOGE has little/no ability to fix the issues with "mandatory" programs. The actual gum of the system (NEPA etc) requires a lot of input from the legislative branch.
JPM this morning: "The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine."
Lawyer and accountants are productive since they are hired by people to do stuff......they pay taxes....they create things. I'd agree, changing the tax code to a consumption tax will put a lot of them out of business. Ironically many lawyers are on the grift via government NGOs, lobbying etc. DOGE is doing the right stuff by cutting spending. I don't see stagflation like the 1970s. Remember, 20% short term rates!
The overall running of our government would improve by 100%, if we implemented my proposal to ban anybody with a law degree from running for elected office in alternate elections!
I have spent untold hours contemplating "professional services" like CPA firms and Law firms provide and what would happen if giant sweeping legislation changes their valued "tribal knowledge".
I can tell you with certainty, that there are very large concerns in these communities about their futures. Some believe they can become even more productive with AI, and other synergies. However, most have their heads in the sand because they cannot innovate. They've been taught not to innovate in fact.
The chart shows transfer payments still high.....When the government is funding NGOs to do its dirty work, when the US Navy can't account for 12 B, we got problems. Eventually some Democrats will get the message. I saw the very liberal Ro Khanna out saying we need to cut government waste....he's Silicon Valley's guy
You are missing one part to that equation- BS- plenty of that to go around over the last 120 years. The unwind of our unconstitutional federal spider web of agencies and hangers-on is going to be initially painful of course. But the graft, and the absolute waste of money that is D.C., nothing takes in dollars and spits out pennies better than D.C. needs to be brought to and end and it won't be pleasant in having the band aid ripped off all at once.
ha! The BS factor...
Highly underrated component of this calculation. When someone calls BS on this number, the folks who calculate it in DC respond with, "Exactly".
"Never catch a falling knife but somewhere in here there will be a buying opportunity."
The danger isn't in the catching, it's in the trying.
NX going hypernegative as we get the pushmepullyou effects from businesses trying to front run tariffs will of course drive expectations negative. Jim Bianco explained this very nicely, recently.
On the tariff side, Spencer Morrison offered a fairly concise overview on the real impact of tariffs, vs what's "explained" in what remains of the handwringing, politicized
"financial press": https://amgreatness.com/2025/02/25/no-trumps-tariffs-will-not-cause-inflation/
Our host and I have a standing argument on the impact of tariffs, so I'll not scratch off that scab.
If you want to see what "Bad tariffs" are and look like, look what Quebec imposes on its fellow Canadian provinces, so as to protect its shibboleths from other Canadians. Our founders wrote that into the Constitution as a No-No. Canada? Not so much. More later on that.
Canadian "Engineered Lumber" is a fun one to look up, also, the 248% Canadian tariff on foreign butter is another, just to protect the Quebec dairy herd against all comers. Canadian interprovincial inflation is insane, because of this stuff.
one smart thing America did was make sure that the commerce between the states is relatively unregulated
I once had a very smart economist tell me in answer to a question, “There is no such thing as ‘macroeconomics.’”
In other words, he believed that microeconomics explained everything.
A favorite joke about economics:
Q.: How can you tell if an economist has a sense of humor?
A.: He uses decimal points in his forecasts.
It will help if gas prices start to drop. Fuel touches everything in the economy. Drill, baby, drill!
https://www.tradingview.com/chart/?symbol=NYMEX%3ACL1%21 They have dropped over the last month.....
Ladies and germs, this is a nice refresh on macro-econ; more importantly to re-focus on Keynesian disciple idiocy. Always good to see Uncle Milty..
From out here in the hinterlands... Tractor-trailor sorties are up like 2017-18 so folks are betting.
Whew. Thanks. Reassuring.
"Did the Biden Administration cook the books?"
My favorite illustration of incompetency and ineptitude in that Administration was the admitted downward revision of employment numbers by 828,000, a damn near record if not a record, and the Secretary of that Department being asked about it the following day and she had no clue.
So, yes the books were cooked, because they were corrupt in so many other areas that's not even in the top five or ten of most concerning unethical and corrupt things they did.
I would like Lutnik to address the nation tonight with Trump or in the next 48 hours and explain to them the benefits to the greater good of America where one company and one group of consumers might pay more but it creates jobs in Ohio or Pittsburgh etc and that the greatest benefits will probably not be seen for 2 years.
One upside is the 10 year bond, at around 4.24%...down from a year high in Jan at around 4.7 (as high as 5% Oct 2023).
For sure Biden was playing games with the economy--not just "adjusting" jobs numbers either (such short term moves as releasing most of the strategic petroleum reserve, for ex).
That said, unwinding the combination of huge federal spending on such idiocies as the USAID capers, payments to illegal migrants, etc will take time to be effectuated and show results. OTOH, announcements such as Honda building its new hybrid Civic in Indiana (as opposed to Mexico) and the Taiwan Semiconductor announcement of a large new AZ plant are examples of the positive affect of tariffs.
Moreover unless one is a very active day trader, where are the other sound economies to invest in? China and Europe not in good shape at all.
Hi Jeff - I noticed a lot of $ 25 dollar hotel rooms in Vegas during midweek. Is this cyclical to the spring or an indicator of problems?
Depends on the hotel. Luxor and other dives no. Bellagio/Wynn/Cosmopolitan/Caesars yes.
Government spending is a drain on the economy in the same way as private sector lawyer and accountant fees are. Some of it is useful, some of it is not. The DOGErs can't even compute their "savings". DOGE has little/no ability to fix the issues with "mandatory" programs. The actual gum of the system (NEPA etc) requires a lot of input from the legislative branch.
JPM this morning: "The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions. Other than that, they’re fine."
Get ready for some 1970s stagflation!
Lawyer and accountants are productive since they are hired by people to do stuff......they pay taxes....they create things. I'd agree, changing the tax code to a consumption tax will put a lot of them out of business. Ironically many lawyers are on the grift via government NGOs, lobbying etc. DOGE is doing the right stuff by cutting spending. I don't see stagflation like the 1970s. Remember, 20% short term rates!
The overall running of our government would improve by 100%, if we implemented my proposal to ban anybody with a law degree from running for elected office in alternate elections!
It can't hurt to ask 🤣
I have spent untold hours contemplating "professional services" like CPA firms and Law firms provide and what would happen if giant sweeping legislation changes their valued "tribal knowledge".
I can tell you with certainty, that there are very large concerns in these communities about their futures. Some believe they can become even more productive with AI, and other synergies. However, most have their heads in the sand because they cannot innovate. They've been taught not to innovate in fact.
Here's a good point. Government component of GDP is at a modern low point. https://x.com/jmhorp/status/1895595623526904198
The chart shows transfer payments still high.....When the government is funding NGOs to do its dirty work, when the US Navy can't account for 12 B, we got problems. Eventually some Democrats will get the message. I saw the very liberal Ro Khanna out saying we need to cut government waste....he's Silicon Valley's guy
Transfer payments are not part of GDP since they merely move money from one source to another without producing anything.