New durables-manufactured goods orders fell 1.3 percent in March, but excluding transportation, orders rose 2.8 percent. The overall drop was driven by a large decline in aircraft orders. The aircraft orders are volatile and not driven as much by overall economic trends. These results are consistent with our March forecast where we projected relatively strong… Read more

Dan Hamilton and Kjersti Framnes The California March unemployment rate increased to 12.6 percent from 12.5 percent in February. Since August of 2009 the unemployment rate has climbed 60 basis points, and there has not been any interim month of recovery. The unemployment rate would likely be even greater if not for net domestic out-migration.… Read more

United States retail sales data through February show that while the last three months have been positive they have not in fact been inspiring at all. We see that the volatility in total sales was driven by the motor vehicle and motor vehicle parts market during August, September, and October of 2009. I attribute this… Read more

Corporate bond spreads are returning to normal levels. The first chart below shows that the monthly spread between Baa bonds and Aaa bonds are close to what they were back in 2007 before the 2008 crisis. This is good because the rate on Baa bonds is declining. This indicates that the perceived risk in lower… Read more

We released our new United States and California forecasts today. As we note in our publication, available online HERE, we are pessimistic relative to consensus, particularly for 2010 quarters 2, 3, and 4. It appears that we see the negatives continuing longer than our forecasting colleagues at UCLA and across the nation. These negatives include… Read more

Some countries do not follow Milton Friedman’s freely floating exchange rate advice (see my recent blog). Instead, they peg their currency to the U.S. dollar. Sometimes they have logical reasons for doing so.  Usually, this is because their financial markets and banking systems are not yet developed enough to allow the hedging needed by enterprises… Read more

It has been 57 years since Milton Friedman wrote his paper “The Case for Flexible Exchange Rates” where he argued that the benefits from a market economy and a free trade system would be enhanced by flexible exchange rates. This implied a freely floating dollar, whose value was to be determined by the buying and… Read more

The February United States jobs report sent the equity markets up this morning while respected commentators like Edmund Phelps, (Columbia, Economics Nobel in 2006), remark that they worry that the “recovery” might not have legs. It always a bit odd to discuss growth that is less negative but that is the situation we are in… Read more

A lot of people who watch trade flows think that the United States is making a mistake by losing its manufacturing activities to other countries. They recognize that other countries can provide some manufactured goods at lower cost than the United States, lowering costs for consumers, and they recognize that free trade levels the playing… Read more

Data released today reveal a United States economy that remains unsettled. Mass Layoffs The Bureau of Labor Statistics’ report shows a 2 percent uptick in January seasonally-adjusted mass layoffs from December. The jump in mass layoff initial claimants for unemployment insurance was even larger at 19 percent over December. Gross Job Gains This report, which… Read more