The consensus view is that lower oil prices are likely to assist the global economy. Quantitative greasing will augment quantitative easing, supporting economic activity. Oil Lottery… A US$40 fall in oil prices equates to an income transfer of around US$1.3 trillion (around 2 percent of global GDP) from oil producers to oil consumers. A sustained [...]
Post-Crisis Supply Constraints and Prevailing Mortgage Interest Rates have Severely Exaggerated True Demand and Distorted Prices. Housing prices have recovered over 54% of their dramatic 33% decline from peak 2006 levels to their nadir in early 2012. Yet underlying data indicates that the price recovery is not a recovery in the demand for owner-occupied homes. [...]
The oil price plunge since last June has been deemed, overall, as a boon for the global economy. However, that depends on where one stands as a producer or user, as illustrated here with the divergence of impacts on BRICS economies. Lower oil prices have come for long Brent crude oil prices fell to US$45 [...]
How Robust is the U.S. Recovery?
The U.S. appears to have decoupled from an uncertain global growth environment. What is going on under the hood of its economic engine?
Must ReadThoughts From Across the Atlantic
In an earlier post, (2013) we discussed the long term decline in the share of manufacturing in the US economy. In this post, we will analyze the relationship between long-term structural changes and transitory shocks that have taken place in the US economy since World War II. Total GDP has increased by a factor of [...]
Modern deflation seems more related to a structural weakness in domestic demand and investment associated with shifting demographic dynamics than it is to ongoing debt deflation.