Economic Analysis

The "End of History?" Geopolitical Risk is Higher Now Than During Cold War France and Italy, two pillars of the European Union (EU), are facing constitutional changes and/or elections, which could bring more anti-EU sentiment to the forefront. If either one of these two countries pulls out of the EU,…

More than Ever, Geopolitics Is the Key to Understanding Financial Markets These days, you may have noticed, investment professionals and financial advisors have lost much of their clout to political scientists. Certainly, the next few years will require more political than economic analysis, given the proverbial "white elephant" in…

On Tuesday, June 2, 2015, auto manufacturers reported their sales in the U.S. for the month of May. In total, there were 1.64 million vehicles sold during the month, a 1.6% increase year-over-year. Annualizing the data, U.S. auto sales are at 17.79 million units, beating economists’ expectation of…

On Tuesday, June 2, 2015, a voting member of the Federal Open Market Committee (FOMC), Lael Brainard said that current economic data does not suggest that the U.S. will see a significant second-quarter rebound. She also stated that a strong dollar delays U.S. interest rates to nominal levels.…

On June 2, 2015, the U.S. Census Bureau reported on durable goods manufacturers’ shipments, inventories, and orders for the month of April. According to this data, factory orders have declined in eight of the last nine months. Data suggests that manufactures are struggling with the rising U.S. dollar…

On Tuesday June 2, 2015, Eurostat, the European Union’s statistics office, released the eurozone area’s inflation data for May, which is at an annualized rate of 0.3%. (Source: Eurostat, June 2, 2015.) All Components Increased Except for Energy The positive 0.3% inflation in May is an improvement from…

On Monday, June 1, 2015, the Institute for Supply Management (ISM) reported on economic activity for the U.S. manufacturing sector. In May, new orders, production, employment, and inventories grew, while supplier deliveries slowed. (Source: Institute for Supply Management, May 1, 2015.) According to the report, economic activities in…

Earlier this year in Profit Confidential, I wrote that I wouldn't be surprised to see the U.S. economy enter a recession in 2015. I got a lot of flak here from my fellow economists...even some of my customers thought that prediction was too far off. But, lo and…

Greece’s government officials and representatives of the International Monetary Fund (IMF), European Central Bank (ECB), and European Commission met on Thursday, May 28, 2015 to discuss Greece’s debt situation. When the meeting finally began, there was no start on drafting a deal because there was still too much…

Consumer confidence in the U.S. fell to a six-month low in May as Americans became less sanguine about the prospects for the economy. The University of Michigan reported on Friday May 29, 2015 that its final index of sentiment for the month decreased -5.4% to 90.7 from 95.9…

On Friday, May 29, the Bureau of Economic Analysis released the second estimate for first-quarter gross domestic product (GDP) of 2015. (Source: Bureau of Economic Analysis, May 29, 2015.) According to the report, U.S. GDP declined at an annual rate of 0.7% in the first quarter of 2015.…

For the week ending May 22, 2015, U.S. crude oil refinery inputs averaged about 16.5 million barrels per day. This was 237,000 barrels per day more than the previous week’s average. Refineries operated at 93.6% of their operable capacity last week. (Source: U.S Energy Information Administration, May 28,…

The Texas production index is the measure of the health of manufacturing. The index fell to a negative 13.5 in May—its lowest reading in six years. (Source: Federal Reserve Bank of Dallas, last accessed, May 27, 2015.) Texas is the second-largest producer of manufactured goods in the United…

In April, retail sales data were disappointing, with industrial production falling for the fifth straight month while new orders for manufactured durable goods also declined. When I look at all the data from the different segments, I don’t really see any signs of a growing economy. Durable Goods…

There’s a major problem in the U.S. housing market; the disparity between rent and disposable income growth has widened drastically and is making it harder for renters to become homeowners. Disposal Income Trend Negative in the Last Decade Before going into details, let’s look at the chart below.…

In Spain, the ruling People’s Party suffered the worst outcome in regional and municipal elections in more than 20 years. (Source: Reuters, May 25, 2015.) It used to be the case that the governing People’s Party and the opponent Socialist Party would get the most votes. In 2011,…

Earlier this year, the Federal Reserve hinted that it would raise the federal funds rate this year. On May 22, 2015, Federal Reserve Chair Janet Yellen stated, “For this reason, if the economy continues to improve as I expect, I think it will be appropriate at some point…

No matter how you look at it, the first-quarter earnings of S&P 500 companies do not look good. First-Quarter Earnings Explained Among the 447 companies that have reported first-quarter earnings for 2015, 71% beat their estimates. Moreover, 45% have sales above their estimates. (Source: Factset, May 8, 2015.)…

The U.S. manufacturing sector looks to be struggling. At the very least, U.S. manufacturing data suggests the U.S. economy is headed towards a slowdown. Industrial production in the U.S. fell for the fifth straight month in April 2015. According to the data from the Federal Reserve, industrial production…

On Friday, May 22, 2015, the Bureau of Labor Statistics released its report on the consumer price index (CPI) for April. The CPI increased 0.1% month-over-month in April. (Source: Bureau of Labor Statistics, May 22, 2015.) Meanwhile, the core CPI, which excludes food and energy (two of the…