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

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

The power of faith is always impressive, and few demonstrate more faith than those who truly believe that California’s economy will always recover boundless economic prosperity regardless of policy. The true believers’ faith persists in spite of years of contrary evidence. California’s share of national jobs peaked in 1990. Domestic migration has been negative for… Read more

Jeff Speakes Volatility in financial markets has jumped sharply in recent weeks, thanks to the U.S. debt ceiling debate and ongoing financial crisis in Europe. For most investors this has been a period of great consternation. But for some “Black Swan” investors, it has been a period of extraordinarily positive return. A Bloomberg article1 notes… Read more

Jeffrey Speakes Downgrade On Friday, August 5 after the market close, Standard and Poor’s (S&P) announced a downgrade of U.S. Treasury debt from AAA to AA+. This announcement followed Congressional approval of a debt limit increase and ten year plan to cut projected deficit relative to baseline by $2.1 trillion. Evidently, the debt deal was… Read more

Michael Puente and Dan Hamilton The BLS’s July Employment Situation was released today. Non-farm jobs grew by 117,000, highly focused on healthcare, (31,000), retail, (26,000), manufacturing, (24,000), and mining (9,000). Despite the increase in jobs, the measured employment level, an alternate measure of workers, decreased. That decrease was met by a larger decrease to the… Read more