Paul Kasriel's Contributions

The Flattening Yield Curve – Is It Different This Time?

By Paul Kasriel – Back in mid-December 2016, the Fed started raising the federal funds rate by 0.25 of a percentage point per quarter. So, the federal funds rate has risen a cumulative 1.50 percentage points since then.

Unless the Fed Changes Course, a 2019 Recession Collision Is the Most Likely Outcome

By Paul Kasriel – The current level of the federal funds rate is 1.92%. As of June 13, 2018, the median estimate of Federal Open Market Committee (FOMC) members of the appropriate federal funds rate by the end of 2081 was 2.40%.

Our Exploding National Debt: What, Me Worry?

By Paul Kasriel – In its April 2018 projections of the federal budget and economic performance based on current law out through FY 2028, the Congressional Budget Office (CBO) forecast the return of $1 trillion budget deficits...

The Expected Widening in the US Federal Budget Deficit Has Trade Protectionist Implications

By Paul Kasriel – With the recent US congressional passing and presidential signing of the Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018, the federal budget deficit is projected to increase...

No Sugar High from Tax Cut Unless the Fed and Banking System Provide the Sugar

By Paul Kasriel – There has been chatter about whether the Tax Cuts and Jobs Act of 2017 (TCJA) will result in a temporary stimulus, or sugar high, to U.S. economic activity because of the increase in corporate after-tax profits and the increase in household...

An Alternative Explanation for Walmart's Announced Employee Bonuses and Wage-Rate Increase

By Paul Kasriel – OnJanuary11,Walmart announcedthatitwasraisingitsstartingwagerateto$11anhour,giving aone-timebonusupto$1,000toemployees,expandingitsparental/maternalleavepolicyand providingemployeesadoptingachildupto$5,000...

Festivus 2017 Airing of Grievances – I Gotta A Lot of Problems With You, Taylor Rule

By Paul Kasriel – December 23rd is almost upon us. You know what that means. It’s time for me to work up my annual airing of grievances for Festivus 2017. Although I have myriad political-economic grievances...

Don't Expect an Investment Boom if the Corporate Tax Rate Is Cut

By Paul Kasriel – It appears as though the rate on US federal corporate profits is going to be reduced. Although US corporations may be considered “people” in terms of the First Amendment, they are not “people” when it comes...

Have Bundesbank Agents Infiltrated the Fed?

By Paul Kasriel – Germany’s central bank is the Bundesbank. Prior to the commencement of trading of the euro in January 1999, the Bundesbank conducted Germany’s monetary policy. The Bundesbank has a reputation for pursuing general...

Although the Recent Weakness in Bank Credit Growth May Not Be a Concern to Others, It Is to Me

Starting around this past December, growth in commercial bank credit (loans and securities) slowed precipitously. Annualized 13-week growth in bank credit of late is the slowest since the summer of 2013. This weakening in bank credit...

Do You Want to Restore Manufacturing Employment? Smash the Robots!

There has been much public discussion about the demise of US manufacturing jobs and policies to restore manufacturing employment. Indeed, as shown in Chart 1, in absolute as well as relative terms, US manufacturing employment...

2017—Shades of 1937

As a result of some Fed actions taken in 1936 and 1937, the US economy, after experiencing a robust economic recovery starting in early 1934, slipped back into a recession midyear 1937, which lasted through midyear 1938.

If You Think the Pace of Economic Activity Was Weak in 2016, Just Wait Until 2017

As shown in Chart 1, the year-over-year growth in real and nominal Gross Domestic Purchases (C+I+G) in Q3:2016 was 1.4% and 2.4%, respectively. This compares with 2.8% and 4.7% year-over-year growth in real and nominal...

Do Larger Budget Deficits Stimulate Spending? Depends on Where the Funding Comes From

There may be rational reasons why the U.S. equity markets rallied in the wake of Donald Trump’s presidential election victory. But an expectation of faster U.S. economic growth due to a more “stimulative” fiscal policy is not one of them unless the larger...

The Fed Began Tightening Policy in October and No One Knew It, Maybe Not Even the Fed

I am so old that I can remember when the Fed tightened policy without any public announcements, often between FOMC meetings. Sometimes it took several days after the Fed implemented the tightening for a consensus to develop among...

The Imposition of Import Restrictions Is a Recipe for a Declining Standard of Living

Both 2016 US presidential candidates of the two major political parties are, to greater and lesser degrees, advocating the imposition of restrictions on US imports if foreign exporters engage in “unfair” trade practices. Regardless of

Who Are You Going to Believe—the Commerce Dept. or ISM, Autodata & the BLS?

This past July 29, the Commerce Department surprised the economic cognoscenti by reporting that its advance estimate of second quarter real GDP annualized growth was a paltry 1.2%. The consensus estimate of Street economists was...

July 26-27 – The Fed Will Put Us on Notice for a September 20-21 Rate Hike

The Fed was cocked and primed to deliver a 25 basis point increase in the federal funds rate on June 15. But on June 3, the BLS announced that nonfarm payrolls increased a paltry 38,000 in May. This monthly random number prompted the Fed...

A June Fed Funds Rate Hike Risks a September Economic Stall

Recent economic data, e.g., retail sales, housing starts and industrial production, suggest that the US economy has awoken from its winter slumber. In addition, growth in consumer prices has accelerated of late (see Chart 1).

NIRP—No Need to Go There

A new acronym has entered the lexicon of central banking in recent months – NIRP, which stands for negative interest rate policy. If ZIRP, zero interest rate policy, won’t stimulate faster growth in nominal spending and/or faster growth...

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