Contributor: Stephen J. Douglass
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Markets Look Past Payrolls Miss, Remain Focused on War
Nonfarm payrolls declined by 92,000 in February, the largest monthly decline of the cycle if we look past the government layoffs from October. The unemployment rate rose by a tenth of a percent to 4.4% despite a decrease in the labor force participation rate. The payrolls figure was biased lower by something like 30,000-50,000 because…
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Energy Independence Shields U.S. Economy From Mideast War
The war in Iran will have significant impacts on the combatants involved, the people in the region, and global geopolitics. The impact on the U.S. economy, however, will be limited under most scenarios other than the tail risk of a wider conflagration. Defense spending will increase to replace munitions used in the attack, which will…
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SCOTUS Overturns IEEPA Tariffs
In one of the most economically consequential rulings in its history, the Supreme Court today held in a 6-3 decision that “IEEPA does not authorize the President to impose tariffs.” This decision invalidates around $175 billion in revenue raised last year, which is more than half of the total revenue raised by new tariffs issued…
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CPI Inflation Muted in January
Core CPI increased by 0.295% in January, slightly below consensus expectations. The release was consistent with our broader inflation outlook for 2026 and does not change our expectations for monetary policy. We anticipate continued disinflation in core services, with housing on a steady downtrend and non-housing core services on the noisier downtrend it has exhibited…
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Lookin’ for Love in All the Wrong Provinces
There will be a lot of frustrated bachelors in China this weekend (yes, China increasingly celebrates Western Valentine’s Day along with a host of traditional holidays devoted to love and relationships). Most people are now aware of China’s looming demographic collapse. The UN projects that China’s working-age population will be cut in half over the…
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The Labor Market Finds Its Footing
Like an Olympic skier recovering after a near crash, the labor market has regained its footing. Nonfarm payrolls increased by 130,000 in January, the fastest growth in 13 months, and the unemployment rate fell by a tenth to 4.3% despite an increase in labor force participation. This report confirms the hints of stabilization that we…
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The Warsh-ington Consensus
After much public deliberation, President Trump announced Kevin Warsh as his nominee to succeed Jerome Powell and become the 17th Chairman of the Federal Reserve Board of Governors. Relative to the wide range of candidates Trump has considered for economic policy positions in the past, Warsh is a conventional choice that reduces the tail risks…
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Labor Market Shows Hints of Stabilization
The December payrolls report released this morning represents the first clean view of the labor market since September. The BLS stated that the December figures were not impacted by the shutdown. The results suggest that the labor market is stabilizing, though not rebounding strongly. The establishment survey showed an increase of 50,000 jobs in December,…
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The Season of Giving
‘Tis the season of giving, especially in the United States. American individuals will probably donate more than $400 billion to charity this year, much of it in the month of December. If history is any guide, this will be many times more than any other nation gives in the absolute, and still the most generous…
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Heavily Distorted CPI Print Reveals Little Useful Information
The BLS today released a heavily distorted CPI report that included some information for both October and November. The BLS stopped collecting price data when the government shutdown began on October 1 and did not resume collection until November 14. Because the data are missing, the agency did not publish October index values for most…