Category Archives: Economics

“Waffle House Index” Flashes Red as Unemployment Numbers Jump

Tuesday, 31 March 2020 08:55

This article appeared online at TheNewAmerican.com on Tuesday, March 31, 2020:

The “Waffle House Index” flashed red last week as the impact of the coronavirus shutdown really began to bite. The Waffle House restaurant chain is a cultural icon with 2,100 locations, mostly in the South. It is also a leading indicator of the health of the economy. The Federal Emergency Management Agency (FEMA) uses the health of the chain as an indicator for the health of the economy as a whole.

As Craig Fugate, the former head of FEMA, expressed it this way: “If you get there and the Waffle House is closed? That’s really bad.”

The Index has three levels: Green (the restaurants are open, full, and operating with a complete menu); Yellow (they are operating on emergency power, serving only a partial menu); and Red (they are closed).

The chain has closed nearly 400 of its 2,100 restaurants, reflecting what St. Louis Fed President Jim Bullard just announced:

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March Car Sales Down 36 Percent; Prepare for the worst

Wednesday, 25 March 2020 13:37

This article appeared online at TheNewAmerican.com on Wednesday, March 25, 2020:

There is simply no way to sugar-coat the numbers coming this week and next: They will be awful, ugly, frightening, “unprecedented,” “unparalleled,” and historical.

The early warning shot was the unemployment report last week that showed claims jumping by 50,000 over the previous month. Estimates are that March’s unemployment numbers will exceed two million.

Wednesday’s report from Edmunds showed that car sales dropped by a sickening 36 percent in March, compared to February.

The Federal Reserve estimates that

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Trump: Ending Shutdown on Easter Sunday To Be a “Beautiful Thing”; Pushback Immediate

Wednesday, 25 March 2020 10:40

This article appeared online at TheNewAmerican.com on Wednesday, March 25, 2020:

In an interview with Bill Hemmer of Fox News on Tuesday, President Trump said that he would love to announce the end of the shutdown in time for Easter Sunday: “I would love to aim it right at Easter Sunday so we’re open for church services on Easter Sunday.… That would be a beautiful thing.… You’ll have packed churches all over the country. I think that this will be a beautiful time.”

Ignoring the obvious parallel between Easter Sunday — for Christians it is the “Resurrection Day” of Jesus Christ — and the resurrection of the moribund U.S. economy, the pushback was immediate from both the Left and the Right.

Representative Liz Cheney (R–Wyo.) said,

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Morgan Stanley’s Good News Exceeds Its Bad News About the Coronavirus

Wednesday, 25 March 2020 10:35

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 25, 2020:

Analysts at Morgan Stanley predicted on Monday that the U.S. economy will shrink at a record-breaking pace of 30 percent (annualized) during the second quarter, and that the unemployment rate would surge to nearly 13 percent, up from the mid-three percent range.

This exceeds the pessimistic forecast from analysts at Goldman Sachs, who predicted a 24 percent decline in GDP in the second quarter.

The good news from MS assumes that

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Trump Wants to Reopen the Economy. Will the States Follow?

Tuesday, 24 March 2020 14:13

This article appeared online at TheNewAmerican.com on Tuesday, March 24, 2020:

The president’s insistence that “we cannot let the cure be worse than the problem” and that “we have to open our country” has turned the conversation to the possibility that that reopening could begin in weeks, not months: “I’m not looking at months, I can tell you right now” he said on Monday.

He added, “Our country wasn’t built to be shut down. America will again, and soon, be open for business. Very soon. A lot sooner than three or four months … a lot sooner.”

He then suggested that the remedies implemented to contain the coronavirus might have been excessive: “We have a very active flu season, more active than most. It’s looking like it’s heading to 50,000 or more deaths. That’s a lot. And you look at automobile accidents, which are far greater than any numbers we’re talking about [from the coronavirus]. That doesn’t mean we’re going to tell everybody: no more driving of cars. So we have to do things to get our country open.”

The economic cost, estimated by Goldman Sachs last Friday at a 24-percent decline in the nation’s economic output in the second quarter, has been dwarfed by that from the banking firm Morgan Stanley. On Monday the international banking and investment firm expects the economy to shrink by an annualized rate of 30 percent in the second quarter and the unemployment rate to jump to nearly 13 percent.

The keys to keeping the patient alive are timeliness, sufficiency of the external financial support being offered by Washington, and the cooperation of the states.

As The New American suggested on Monday, the economy is like a patient on life support: small businesses that make up more than half of it can only survive without oxygen (cash flow generated by customers) for a very short period of time. For a human it’s four to six minutes without oxygen before he expires. For a small business it’s more like a month or perhaps two before becoming insolvent.

The sufficiency of the financial support being offered, already in place and being debated in the Senate at the moment, is estimated to top six trillion dollars. Not having travelled down this road before, it’s pure speculation about whether that’s enough to keep the patient alive until the customers return.

If Morgan Stanley is right — that the coronavirus outbreak peaks in late April — “a sharp rebound would begin in the June-August quarter, leading to solid growth in 2021.”

What would that rebound look like? And what would be the long-term effects of the coronavirus scare?

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How Will the U.S. Look After the Virus Is Contained?

Monday, 23 March 2020 11:05

This article was published by The McAlvany Intelligence Advisor on Monday, March 23, 2020:

If one reads and believes the media, the impact of the shutdown of the economy to fight the COVID-19/coronavirus is going to be severe and long-lasting. Some are suggesting that America will be unrecognizable after the virus has been contained.

For example, Goldman Sachs, the international banking behemoth, said Friday that it was revising downward its best estimate of the impact the COVID-19/coronavirus shutdown was likely to have on the U.S. economy: from a negative five percent in the second quarter (April-May-June) to a breathtaking 24 percent decline. This would be the largest contraction the economy has seen since the first quarter of 1958 when the GDP declined by 10 percent.

The investment banking firm also estimated that filings for unemployment insurance benefits would soar to a record 2.25 million this week, more than triple the prior record of 695,000 claims in 1982. This would push the unemployment rate from the middle three-percent range to nine percent, or even higher. That would reflect more than 10 million people being forced to file for benefits after being laid off.

Goldman’s economists wrote: “Why such an extreme forecast … in Q2? The sudden stop in U.S. economic activity in response to the virus is unprecedented, and the early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway.”

Some commentators are predicting a recession, usually considered to be two back-to-back quarters of negative growth (shrinking). But the National Bureau of Economic Research (NBER), the private non-profit research organization tasked with determining when recessions begin and end, defines a recession differently:

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Goldman Sachs Predicts 24% GDP Drop; It’s Not All Bad News

Sunday, 22 March 2020 20:13

This article appeared online at TheNewAmerican.com on Sunday, March 22, 2020:

Goldman Sachs, the international banking behemoth, said Friday that it was revising downward its best estimate of the impact the COVID-19/coronavirus shutdown was likely to have on the U.S. economy: from a negative five percent in the second quarter (April-May-June) to a breathtaking 24-percent decline. This would be the largest contraction the economy has seen since the first quarter of 1958, when the GDP declined by 10 percent.

The investment banking firm also estimated that filings for unemployment insurance benefits would soar to a record 2.25 million this week, more than triple the prior record of 695,000 claims in 1982. This would push the unemployment rate from the middle three-percent range to nine percent, or even higher. That would reflect more than 10 million people being forced to file for benefits after being laid off.

Goldman’s economists wrote: “Why such an extreme forecast … in Q2? The sudden stop in U.S. economic activity in response to the virus is unprecedented, and the early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway.”

Some commentators are predicting a recession, usually considered to be two back-to-back quarters of negative growth (shrinking). But the National Bureau of Economic Research (NBER), the private non-profit research organization tasked with determining when recessions begin and end, defines a recession differently:

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.

Accordingly, the shutdown, if it is short, isn’t likely to result in a full-blown recession. Instead history is likely to record not only that it was short in duration but that the economy’s reaction to it was overblown.

And its end is likely to have many remarkable ameliorative and positive effects, some of which are already occurring.

Consider, for example,

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In One Month, Wall Street Has Taken Back All of Trump’s Gains

Thursday, 19 March 2020 09:56

This article appeared online at TheNewAmerican.com on Thursday, March 19, 2020:

On January 19, 2017, the day before President Trump was inaugurated, the Dow closed at $19,804. On February 12, 2020 the Dow closed at $29,551. One month later, on March 18, the Dow closed at $19,500.

In two weeks, millions of Americans will be receiving statements showing the balances remaining in their 401(k)s and their IRAs. Others will be opening their brokerage account statements.

Those not paying attention are in for a shock. Those who have been paying attention are also in for a shock. For those who thought they’d put away $10,000, their balances are now $6,600. For those who had $25,000 socked away, they now have $16,500. For those with $50,000, their balance is now $33,000. For those who thought they had $100,000 parked safely away, they now have just $66,000.

After recovering from the shock,

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Coronavirus Is Far Less Virulent Than the Flu, Say Experts

Wednesday, 18 March 2020 13:30

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 18, 2020.

Please note the disclaimer from the editor.

[Ed. Note: Opinions vary regarding the coronavirus and its inherent danger. What’s clear is that the REACTION is extremely dangerous – perhaps necessarily so, but dangerous nevertheless. It is in the process of destroying most of the First and Second Worlds’ GDPs; threatening income for individuals, families, businesses, organizations, and governments; and cutting supply lines for basics the world depends on for sustenance. However many may die from the disease, many others are likely to die from the severe social and economic disruptions caused by trying to combat it.]

Suspicion that the panic over the spread of the COVID 19/coronavirus is media-generated grows by the day. Most obvious is the comparison of its death rate compared to the common flu.

Joe Hoft, founder of The Gateway Pundit, crunched the numbers from the Centers for Disease Control (CDC) and the Worldometer Coronavirus website, and found that the popular media has greatly exaggerated the fatality rates of the virus when compared to the seasonal flu numbers from 2019-2020. The death rate of the coronavirus is “much less deadly than [that of] the common flu from the 2019-2020 season,” wrote Hoft.

The seasonal flu that year infected 222,000 Americans and 22,000 of them died, a death rate of 10 percent. Using data presently available, 94 American citizens have died from the coronavirus out of 5,243 total cases reported so far, a death rate of less than two percent.

Worldwide there are 189,572 reported cases of the coronavirus, of whom 7,513 have died – a death rate of under four percent. “In summary,” wrote Hoft, “the coronavirus is not as deadly as is being portrayed in the lying liberal media. In fact, it is not as deadly as the flu.”

Hoft’s numbers and conclusions were confirmed by Heather Mac Donald, a senior fellow at the Manhattan Institute. Writing in the literary journal The New Criterion, Mac Donald did the math as well, calculating that the present number of deaths of Americans compared to the nation’s population reveals a death rate of .000029 percent. She noted that the “fear of the disease and not the disease itself” is the real concern:

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The President’s Message on Friday Was Masterful

Monday, 16 March 2020 10:33

This article was published by The McAlvany Intelligence Advisor on Monday, March 16, 2020:

Most commentators reviewing and summarizing the president’s message delivered from the Rose Garden at the White House on Friday focused on his declaration of a national emergency and his response to it with the help of private industry leaders. Even his detractors could find little to criticize.

Missing from much of that conversation, however, was just what the president accomplished when he announced that he had instructed his Energy Department head to replenish the SPR, or the U.S. Strategic Petroleum Reserve. He promised to “fill it right up to the top, saving the American taxpayer billions and billions of dollars, helping our oil industry [and furthering] that wonderful goal – which we’ve achieved, which nobody thought was possible – of energy independence.”

The SPR is the world’s largest reserve of crude oil, with a capacity of more than 700 million barrels stored in salt caverns along the Texas and Louisiana coasts. It was created back when the U.S. was vulnerable to foreign interference, which vulnerability was exposed during the 1973-1974 oil embargo.

It currently holds about 635 million barrels, and the president’s order to “top it off” will

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Don’t Panic: the Fed’s Offer to Stabilize Bond Markets Is not “QE-4”

Friday, 13 March 2020 10:59

This article appeared online at TheNewAmerican.com on Friday, March 13, 2020:

Headlines from major financial sources virtually shouted that the Federal Reserve was suddenly employing “QE4” — quantitative easing — in a massive way to calm the bond markets roiled by the coronavirus. The Wall Street Journal declared: “Fed to Inject $1.5 Trillion” into the bond market while CNN shouted: “NY Fed to pump in $1.5 trillion to fight coronavirus-linked ‘highly unusual disruptions’ on Wall Street.”

London’s Financial Times, usually an island of calm in an ocean of panic, said that virus fears “prompted the US Federal Reserve to announce a sweeping package of measures … including pumping trillions of dollars into the financial system.” CNBC announced that “the new moves pump in up to $1.5 trillion into the system in an effort to combat potential freezes brought on by the coronavirus.” The Fed would do this, said CNBC, by “dramatically ramping up asset purchases amid the turmoil created by the coronavirus.”

The articles behind the headlines reflected the panic felt elsewhere over the coronavirus. Said the Journal,

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OPEC Cartel Failure Drops Oil Prices, Rattles Markets

Monday, 09 March 2020 14:36

This article appeared online at TheNewAmerican.com on Monday, March 9, 2020:

Following the failure of a meeting by members of the oil cartel known as OPEC (Organization of the Petroleum Exporting Countries) in Vienna last week to extend its production cuts, Saudi Arabia’s oil company, Aramco, announced price cuts across all markets and an increase in its production.

The failure came on the heels of an announcement by the International Energy Agency (IEA) that it had reversed its previous estimate that demand for oil would increase in 2020 and predicted that worldwide oil demand would drop by 700,000 barrels a day instead. That announcement was historic, the biggest drop in demand in a decade.

It also occurred at a time when the concerns over COVID 19/coronavirus had reached panic proportions, leaving hotel rooms, airlines, and tour companies facing sharp declines in passenger bookings.

In other words,

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China’s Economy Taking Massive Hit From Coronavirus Measures

Friday, 06 March 2020 18:40

This article appeared online at TheNewAmerican.com on Thursday, March 5, 2020:

Estimates from the International Monetary Fund (IMF) show the impact of measures mandated by the Chinese communist government to staunch the spread of the COVID 19/Coronavirus. In January, the IMF reduced its growth outlook from 6.4 percent for 2020 to 6.1 percent. On Thursday it reduced that outlook further, to 5.6 percent, thanks to what the IMF’s managing director Kristalina Georgieva called the “sheer geographic spread” of the virus.

And the group’s forecast could be reduced further: “We are already looking at adverse scenarios … in which the impact on growth for China is more significant.… The Chinese authorities themselves are recognizing that there would be lower growth this year.”

The IMF noted, for example, that

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The True National Debt of the United States Is a Quarter of a Quadrillion Dollars

Wednesday, 26 February 2020 11:26

This article was published by The McAlvany Intelligence Advisor on Wednesday, February 26, 2020:

Patrick Henry was right: the first step towards solving a problem is learning just how large that problem really is: “For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth, to know the worst, and to prepare for it.”

But even Patrick Henry might not be prepared to learn the real size of the “fiscal gap” – the difference between promises and projected taxes – facing the United States government and its citizens.

The first thing would be for him to learn a new word: quadrillion. In mathematics, it’s 10 to the 15^th power. In dollars, it’s unimaginable.

When Epoch Times‘ Mark Tapscott checked the U.S. Treasury’s “Debt to the Penny” website on Monday, he reported that the U.S. national debt just ticked over to

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National Debt Is $122 Trillion, Not $23 Trillion, Says Non-profit Group

Tuesday, 25 February 2020 13:34

This article appeared online at TheNewAmerican.com on Tuesday, February 25, 2020:

When Epoch Times’ Mark Tapscott checked the U.S. Treasury’s “Debt to the Penny” website on Monday, he reported that the U.S. national debt just ticked over to $23.3 trillion. That’s four times what it was 20 years ago.

Tapscott then checked in with the Chicago-based nonprofit advocacy group Truth in Accounting (TIA) to get a more accurate reading. Said Bill Bergman, the group’s director of research, the Treasury misses the real national debt by $100 trillion, explaining that “the U.S. Treasury does not include the unfunded obligations for Social Security and Medicare.”

That’s because those obligations can only be counted when they become liabilities. And because Congress can change the law at any time, said Bergman, the Treasury gets to hide the real numbers. Said Bergman, “The reasoning has been that the government controls the law, and can change it any time.”

An actuary from Social Security spelled out the deception at a public hearing in 2007:

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President’s Report Shows U.S. Economy Continues To Exceed Expectations

Friday, 21 February 2020 12:27

This article appeared online at TheNewAmerican.com on Friday, February 21, 2020:

The Economic Report of the President, released on Thursday, touts the remarkable performance of the U.S. economy under the current administration. The good news is that the good news is likely to continue well on into the future.

Said the president, “Over the past three years my administration has championed policies to restore the United States’ economic strength, propelling growth to levels far exceeding preelection expectations.”

Those expectations were prepared by the Congressional Budget Office (CBO) just before the president was inaugurated, and the performance of the U.S. economy since then has beaten those projections every year since. For instance, the economy added more jobs last year than the CBO estimated would be created during the President’s entire first three years in office.

Nearly seven million jobs have been created nationwide, including 500,000 in the manufacturing sector. The unemployment rate reached its lowest rate in 50 years in 2019, and remains near that record low. Nearly 2.5 million Americans have been lifted out of poverty, while wages for the bottom 10 percent of earners are rising faster than for the top 10 percent. The net worth of the bottom half of U.S. households has increased by almost 50 percent in just the last three years. And the energy revolution is saving the average American family $2,500 a year in energy and transportation costs.

Thanks to the Tax Cuts and Jobs Act (TCJA), deregulation and the reduction in energy costs, the U.S. economy is now in its 11th year of expansion. The stock market continues to hit record highs while the number of IRA and 401(k) millionaires has hit all-time highs.

If the president’s report is right,

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One More Reason to Reelect Trump: Federal Judge Dolly Gee

Wednesday, 19 February 2020 09:39

This article was published by The McAlvany Intelligence Advisor on Wednesday, February 19, 2020:

Judge Dolly Gee’s denial of relief from California’s anti-freedom, anti-gig economy SB 5 law illustrates perfectly the need for President Trump to be reelected in November. With any luck at all, he’ll have the opportunity in his second term to replace with her with a clear thinking constitutionalist instead.

Gee, who holds two degrees including a JD from UCLA’s School of Law, denied relief last week to Uber and Postmates drivers from California’s onerous and likely unconstitutional law called AB 5.

The bill was supported by unions and the state of California for obvious reasons. The unions hated the competition, and the state needed the tax revenues that would be generated by turning freelancers into employees.

Proponents said gig workers would benefit from minimum wage laws imposed on employers; they would now have sick leave coverage and unemployment insurance; along with other benefits. And the state would gain an estimated $8 billion from payroll taxes that gig operators like Uber and Postmates and their independent contractors would be forced to pay.

Opponents pointed out the obvious: most gig workers don’t want to be employees. Most like the freedom associated with the gig economy, such as setting their own hours. And customers and consumers enjoy the better service and lower costs associated with services like Uber and Postmates when compared to taxi drivers and FedEx, UPS, and the U.S. Postal Service. They predicted that once the law became effective on January 1, many of those freelancers would be out of work.

It’s already happening.

As Michael Tennant pointed out in The New American, Vox Media (which interestingly supported AB 5) has canceled its contracts with about 200 freelance writers and replaced them with just 20 new part-time and full-time employees.

Thomas Cushman, a commercial fisherman, has seen the law force his business to stop paying his crew:

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Obama Judge in California Rules Against Gig Economy

Wednesday, 19 February 2020 05:07

This article appeared online at TheNewAmerican.com on Tuesday, February 18 , 2020:

The ruling denying injunctive relief to Uber and Postmates and their drivers from California’s onerous, and likely unconstitutional, law AB 5 by Obama-appointed judge Dolly Gee last week illustrates why such judges holding for unions and the state need to be replaced.

The bill was supported by unions and the state of California for obvious reasons. The unions hated the competition, and the state needed the tax revenues that would be generated by turning freelancers into employees.

Proponents said gig workers would benefit from minimum-wage laws imposed on employees, and they would now have sick-leave coverage and unemployment insurance, along with other benefits. And the state would gain an estimated $8 billion from payroll taxes that gig operators such as Uber and Postmates and their independent contractors weren’t currently paying.

Opponents pointed out the obvious: Most gig workers don’t want to be employees. Most like the freedom associated with the gig economy, such as setting their own hours. And customers and consumers enjoy the better service and lower costs associated with services such as Uber and Postmates when compared to taxi drivers and FedEx, UPS, and the U.S. Postal Service. They predicted that once the law became effective on January 1, many of those freelancers would be out of work.

It’s already happening.

As The New American pointed out, Vox Media (which interestingly supported AB 5) has canceled its contracts with about 200 freelance writers and replaced them with just 20 new part-time and full-time employees.

Thomas Cushman, a commercial fisherman, has seen the law force his business to stop paying his crew:

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House Set To Pass “Worst Bill,” the PRO Act

Thursday, 06 February 2020 17:55

This article appeared online at TheNewAmerican.com on Thursday, February 6, 2020:

The National Retail Federation (NRF) is calling the Protecting the Right to Organize (PRO) Act, H.R. 2474, “the worst bill in Congress”. It’s a “compilation of dozens of extreme labor policy proposals from the past several years lumped into one disastrous bill,” according to Lizzy Simmons, NRF’s Vice President.

Not only does the bill have the support of Democrat presidential candidates Bernie Sanders, Elizabeth Warren, Amy Klobuchar, Pete Buttigieg, and Joe Biden, it has 218 cosponsors in the House. This means that the bill, expected to be voted on on Thursday, will easily pass over Republican resistance.

The bill threatens all of the gains the president talked about during his State of the Union message on Tuesday, including wage growth among lower-paid workers and a thriving economy pushing unemployment down to levels not seen in 50 years.

This summary includes the most egregious of the 30 provisions of the bill:

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ADP Says 291,000 New Jobs in January; It’s More Like 336,000

Wednesday, 05 February 2020 17:05

This article appeared online at TheNewAmerican.com on Wednesday, February 5, 2020:

The jobs report from ADP on Wednesday understated job growth in January. Based on its own payrolls, the growth of private employment in the United States wasn’t 291,000. It was actually 336,100 when new jobs created by franchises were included.

The new jobs appeared in every sector of the economy, from small businesses to large and from goods-producing to service-providing. Small businesses added 94,000 new jobs; medium sized companies added 128,000 while large companies (500 employees and up) added 69,000. Those running franchise operations hired 45,100 new people in January.

Construction and manufacturing added 55,000 jobs, while professional and business services hired 49,000. Education added 70,000, while the leisure and hospitality sector brought on 96,000 new people.

The president didn’t need this information Tuesday night. He already had more than enough to fill his State of the Union speech before Congress. He took credit for

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