8/27/13 – The Boiled Frog Effect

August 27, 2013

In what I really hope is an apocryphal story, it is said that frogs don’t notice small temperature changes. You can, therefore, put a frog in a pan filled with cold water, and, as long as you heat it very slowly, you can actually boil the frog without it jumping out. If you keep the temperature changes slow enough, it will never realize that the heat is rising to harmful, and then fatal, levels.

I have, obviously, never tried this, but something similar has been happening in the U.S. economy. I am pleased to find, however, that people appear to be somewhat smarter than frogs. The heat I’m referring to is the pending debt ceiling crisis.

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7/30/13 – Why the Economy Should Get Better

July 30, 2013

We can expect the announcement of GDP growth for the second quarter to be lousy—around 1 percent or so if we’re lucky, less than that if we’re not. Why is this, and what does it say about the rest of the year?

The short answer is that we got what we asked for at the start of the year. If you remember, back then we had the fiscal cliff and a record, uncontrollable deficit. Some wanted higher taxes, others wanted reduced spending; everyone wanted a lower deficit.

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6/17/13 – An Updated Look at the Long Term

June 17, 2013

Many of my posts over the past several weeks have focused on immediate, here-and-now issues—or, at most, ones we’ll be seeing over the next couple of months. With summer here (finally!) and sunshine cheering me up, I thought I’d take another look at the medium- to long-term future—which was good the last time I looked, about two years or so ago, and which has since gotten even better.

Two years ago, when I first gave a presentation on the longer-term outlook for the U.S., I identified several key issues: capital, raw materials/resources, manufacturing, energy, geography, markets, and labor. The U.S. was in a relatively superior position compared with its competitors in all of those areas, except for capital.

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4/30/13 – Perception Vs. Reality on the Deficit

April 30, 2013

The deficit has dropped off the radar for a bit, what with the agreement to postpone debate about the debt ceiling and the generally improving economy, but recent events make it a good idea to check in and see where we are.

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4/5/13 - Market Update for the Quarter Ending March 31, 2013

April 5, 2013

U.S. stock markets continue a bull run

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4/3/13 – Second-Quarter Slowdown?

April 3, 2013

For the past couple of years, we’ve seen a strong first quarter followed by a much weaker second quarter. Initial signs suggest that the pattern may continue this year as well. Should we expect that—and, if so, what would it mean?

First, the good news: the first quarter was very strong. Economists are estimating that growth could have been as strong as 3 percent, which is well above expectations. Private employment continued to grow, with signs of an increasing growth rate over the past year, while government employment recovered somewhat after a tough fourth quarter, as shown in the chart below.

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3/4/13 – The First Day of the Sequester

March 4, 2013

Despite the dire warnings, the sun rose today and people went to work. Planning shifted, if it hadn’t already, from avoiding the sequester’s spending cuts to implementing them. Entrepreneurs launched t-shirts and tchotchkes based the sequester and furlough.

Politicians, who had been warning of the disastrous consequences of the spending cuts, haven’t exactly backed off. Instead, they’ve adjusted the time frame—much like the doctor who had given his patient six months to live but then granted him an extension when he couldn’t pay off the bill during that time.

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