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Tag Archives: Economics

Too Many Dollars, Too Few Dollars

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What is the real rate of inflation? The official Consumer Price Index (CPI) is calculated with a basket of goods that are supposed to reflect the economy as a whole. There are over 200 categories of consumer goods that make their way into the CPI, including health care, airline travel, clothes, education, and so on. The price of this basket of goods is checked from one month to the next and it’s all added up to produce the CPI.

There is one big problem with this, however – not everyone buys the same goods. On average, over the whole economy, it’s about right. But people who have very little money don’t fly, go to the doctor as often, pay for school, and so on. Charles Gave of GaveKal Dragonomics came up with his own measure of inflation, modeled for the poor, and found some surprising results – and a correlation that spells trouble for the nation’s poor for a long time to come.

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Yellen’s Dashboard

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How will we know when the economy is turning the corner towards real growth? Everyone has their own answer, but Fed Chair Janet Yellen told us last March what she has on  her “dashboard”. As the most powerful person in the financial world, and probably the whole world, her opinion counts more than most. With the arrival of another piece of data on where we stand right now in the second quarter of 2014 (2Q14), it’s time to check in on how we’re all doin’.

What we see is that we’re making some substantial progress, but we still have an awfully long way to go before we can say we’re close to the last time everyone felt remotely flush, which is before the arrival of what Barataria calls a “Managed Depression”  at the end of year 2000.

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Wealth is How You Feel

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With Brazil hosting the World Cup and clearly looking for more from their economy and society, this is a good piece to re-run from last year.

Around the world, two stories have been consistent since 2008 – the developed world is struggling with a depression while the developing world largely charges ahead.  The two worlds have never been so far apart as the careen towards similarity.  But in this hemisphere, three stories have come to show where it all comes together – how “wealthy” is what a nation feels more than how it is.

Forget how Japan and Europe are wallowing in desperation for a while – on this side of the big ponds things are happening.  It may be slower than anyone wants, but change is happening.  The reactions to that change show that my favorite saying is still true – that while people are people, cultures are cultures.  Wealth, or at least the feeling of wealth, is a state of mind.

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Greed Beats Fear – For Now

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The the sun beats out beads of sweat and the kids laze at home without school to worry about. It’s summer, the season of loafing. Typically this is the time of year when there’s work to be done and jobs are plentiful but the stock market takes a gentle pause.

Not last year, and not this year. The stock market is hitting new highs as investors find US securities the safest and most promising investment on the planet. But just like last year, the pace of job growth is still not accelerating beyond the roughly 190k jobs created every month. It’s a decent pace, but not what we need to claw out way out of the six year hole and bring back the boom. Barataria called that one completely wrong.

It’s past time to get serious about income inequality – or really the lack of opportunity for those who don’t have money to invest.

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Better News Ahead?

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It’s a new month, which is as good of a time as any to look around to see how the ongoing stories of the year are progressing. For an election year it’s been very dull, with Congress clearly running on their record of getting nothing done. As we slip into the daze of summer, there hasn’t been good news on the biggest stories running, the economy and Ukraine. But both stories have a chance of improving in the near future.  Here’s what to look for.

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