I have a student in Afghanistan. He reports that capital flows are disrupting business there. He says that foreign and domestic money is leaving the country. The most important thing he tells me is that businesses are not paying wages. Many businesses have not paid wages in the past 3 months. He says that many […]

Doug Short has an insightful article out today… The Civilian Labor Force, Unemployment Claims and Recession Risk. I want to highlight one graph from that article, where he plots the % ratio of initial unemployment claims to the civilian labor force. He explains the graph…

The Good, The Bad and The Ugly on ukuleles.

Let’s compare 2012 to 2013. From 4th quarter 2011 to 4thQ-2012, real GDP rose $294 billion. During that time, capital income fell $225 billion, while labor income grew $519 billion. From 4thQ-2012 to 4thQ-2013, real GDP rose $432 billion. During that time, capital income grew $444 billion while labor income fell $12 billion. Granted there […]

The stock market is rising again on some positive earnings being reported. One reason for the nice earnings could be found in another number… the labor share index. The number for the labor share index, 4th quarter 2013, came out today. It dropped to 95.5… its lowest level since the 1940’s. So if we see […]

Across the Curve has a post about pressure to lower prices… The culprit is the weakness of labor’s income to bolster prices. So now many companies are maneuvering to do whatever to cut prices. The last half of 2013 made this clear. Yet, some companies are not going to be successful at this game. These […]

The stock market is going down and some say it is a correction, and that stocks will be back up in spring. Well, not so fast. There are concerns that the economy is genuinely slowing down. Here is a tweet from Edward Harrison… Lower equities, lower oil, lower copper, lower bond yields, flattening yield curve […]

Stocks were up a bit in the morning and when I just check now, wow, they have gone down quite a bit. Remember my post from a few weeks ago… Fun analogy for investing in stocks. I was giving warning.

There was an insightful article by Nelson Schwartz in the New York Times on how the hollowing out of the middle class is affecting business. He brought up some great points… “The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even […]

I started blogging last March. Since then, one of my most visited posts presented a model to show the progressive death of the Fed rate. Basically, the effective zone of the Fed rate is being pushed lower and lower as effective demand declines due to the decline in labor share. In the following graph, I […]