CERF Blog

A few days ago, I attended a presentation on by David Flaks. David is the Los Angeles Economic Development Corporation’s (LAEDC) Chief Operating Officer, and he was discussing LAEDC’s new LA County Strategic Plan. A few hours later, I was called by a Ventura County Star reporter, Stephanie Hoops. She asked for my thoughts on… Read more

Global population is estimated to reach 7 billion this year.  The United Nations is projecting that global population may reach 15 billion by the end of the century.  This projection is based on population growth continuing at its current growth rate of a shade under 1% per year.  However, extrapolation of the current growth rate… Read more

Today’s jobs report indicates our labor markets remain in the doldrums. The unemployment rate fell slightly from 9.2 percent in September to 9.1 percent in October, but jobs increased by only 80,000. The 80 thousand job gain was the result of private gains of 104 thousand that were offset by government sector losses of 24… Read more

The initial estimate of United States third quarter GDP was released today. The economy grew at 2.5 percent, driven mostly by consumption growth of 2.4 percent and investment in equipment & software of 17.4 percent. Growth was slightly augmented by investment in structures and the improvement in net exports. The government sector’s impact on GDP was… Read more

“Value at Risk is like an air bag that works well all the time except when you have an accident” David Einhorn Value at Risk (VaR) is a well-accepted measure of market risk.  It is defined as the minimum loss that could be expected to occur over a specified (short) horizon with a specified (low)… Read more

The October 29, 2009 issue of Time Magazine had an article titled “Why California is America’s Future.”  I sure hope not.  California is fast becoming a post-industrial hell for almost everyone except the gentry class, their best servants and the public sector. We only need a few numbers to demonstrate that California is clearly on… Read more

Thomas Sargent and Christopher Sims were awarded the Nobel Price in Economics today. When Robert Lucas won the Nobel Prize in 1995 I wondered if Professor Sargent and Professor Sims could win the prize. Certainly, their contributions were important. Professors Sargent and Sims, along with Professor Lucas, published in the Macroeconomics field, an area I… Read more

Weakness in housing activity and housing prices continues to be a major drag on the overall economy.  My colleagues at CERF have long maintained that the homeownership rate (HOR) needs to fall back to its historical norm of 64% before housing can recover.  Their view has been that the attempt to increase the HOR by… Read more

Previously published September 28 in the “California Economic Forecast”: The saga of the Great Recession continues. Over six million people have been unemployed for more than 27 weeks, and job growth may be slow enough in the next few months that the unemployment rate rises again. Major revisions to GDP, released in late July, show… Read more

In the 1960s, the Federal Reserve attempted to conduct an operation to lower longer term yields and raise short-term yields.  This maneuver was called “Operation Twist” and the purpose was to stimulate private sector borrowing and spending.  It is generally agreed that the policy was modestly successful in temporarily pushing long-term rates lower. There are… Read more

Europe has been in the news a lot lately. One day it has a plan to, temporarily at least, deal with the debt problems of delinquent members, and markets climb. The next day there is a glitch and markets fall. What is going on here? Why are markets so spooky? We’re witnessing what are almost… Read more

Interest rate spreads are returning to higher levels, levels that indicate financial and economic instability. This could indicate that an economic regime shift may occur this year. The normalized TED, which is the 3 month LIBOR minus the 3-month Treasury divided by the 3-month Treasury, has reached a level not seen since the fall of 2008.… Read more

In a widely read NYT editorial, famous investor Warren Buffett has proposed tax increases for the rich, like himself.  Although one of the richest men in the world, Mr. Buffett claims that he pays a lower tax rate than the secretaries in his office.  That seems really strange.  The data put forth by Warren are… Read more

A bank’s capital ratio is a ratio in which the numerator is a measure of capital (like common equity) and the denominator is a measure of assets (usually risk-weighted assets). Bank executives sometimes take the reciprocal of this ratio and call it “leverage.” More commonly, leverage is defined to be the ratio of debt to… Read more

In a newsletter about three months ago, I acknowledged some improving economic conditions in Oregon, but counseled that it was no time to become complacent. That turns out to have been right on. Since then, seasonally adjusted job growth has dramatically slowed, and seasonally adjusted unemployment has increased. When Oregon had some good job numbers,… Read more