Tag: recession

Inflation surged in June and Americans should be furious at the Axis of Idiocy that created it

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July 13, Michael L. Davis, economics professor at the Cox School of Business at SMU Dallas, for an explanatory piece about the failures of our government economic advisors to tamp down inflation and avoid a likely recession. Published in Fox News Business under the heading Inflation surged in June and Americans should be furious at the Axis of Idiocy that created it: https://fxn.ws/3Ol9HFf

​By now you’ve seen the news that June inflation hit an annualized rate of 9.1%. And you know that’s bad—not just bad, epically bad, the highest in 41 years. What you may not know is that right now a small army of economists are trying to figure out how best to react. Should they talk about whom to blame or worry about whom to warn?

I say, why choose? Let’s warn about the people who are to blame.

Start with the Federal Reserve. They had one job—ONE JOB! They were supposed to keep inflation from ever getting started. Wednesday’s numbers are yet more evidence of how miserably they failed. And it’s not like they weren’t warned about the consequences of needlessly expansive monetary policy, they just thought they knew better.

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Tough times are ahead in Biden’s economy. Here’s your recession checklist

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July 11, Michael L. Davis, economics professor at the Cox School of Business at SMU Dallas, for an op-ed recommending a checklist of strategies to navigate a recession predicted later this year. Published in Fox News Business under the heading Tough times are ahead in Biden’s economy. Here’s your recession checklist: https://fxn.ws/3o7N9NT

​If you haven’t been paying much attention to the small army of economists droning on about the threat of a recession, that’s OK. It’s summer. It’s hot. Nobody, not even me, one of those economists, wants to dig through the mountain of boring economic data detailing things like consumer confidence and retail inventories. But the warning signs are there. Nobody can know for sure but it seems very likely that sometime before the end of the year the economy is going to get worse. Maybe much worse.

And of course, there’s nothing you can do to prevent a recession. Why worry about things you can’t change?

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Is the economy making the Fed an offer it can’t refuse?

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April 20, Michael Davis, economics professor at the Cox School of Business, SMU Dallas, for a commentary that points out the perilous path of attempting to reduce inflation without bringing on a recession. Published in the Austin American-Statesman under the heading: Is the economy making the Fed an offer it can’t refuse?: https://bit.ly/3EtLjOE 

Since this is the 50th anniversary of the movie The Godfather, it’s worth remembering that great scene where a gang war is about to break out and the Don’s trusted capo, Clemenza, explains to the young Michael Corleone, “These things gotta happen every five years or so…It helps get rid of the bad blood.”

Any similarities between Federal Reserve Chairman Jerome Powell and Michael Corleone are purely coincidental. Still, I wish Powell had Clemenza whispering in his ear.

The Federal Reserve has two problems. First, it has to figure out how to reduce the highest inflation rates we’ve seen since the early 1980’s. Anyone who buys gas or groceries understands that problem. And anyone who knows much of anything about economics and finance understands that the Fed has to raise interest rates and tighten monetary policy in order to deal with that problem.  It’s already started. After the last meeting the Fed raised their target interest rate by ¼ percent and promised more increases to come.

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The shock and impact of instant 11 percent unemployment is just the beginning

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April 6, Michael Davis, Cox School of Business at SMU Dallas, for a piece warning about the impact of sudden 11 percent unemployment on the U.S. economy. Published in the Orange County Register and affiliates in the Southern California News Group: https://bit.ly/3e0bvTh

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Not sure you’re worried enough about the economy? You’ve come to the right place. As bad as the numbers look right now, I’m about to show you the reality is even worse.

This isn’t going to be pretty but if you think you can handle the truth, stick with me while I take you through the data.

Start with the news that the U.S. unemployment rate has risen to 4.4 percent. Sure, you might think, that’s a huge one-month increase. But, so what? Let’s look on the bright side. The unemployment rate was at an historic low of 3.5 percent. Until recently most economists would tell you that the “natural” rate of unemployment was around 5 percent. The U.S. does fine with a 4.5 percent rate of unemployment. Don’t worry, be happy. . .

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