Is This Real Growth?

 Financial FAQs

“Real gross domestic product (GDP) increased at an annual rate of 1.6 percent in the first quarter of 2026 (January, February, and March), according to the second estimate released today by the U.S. Bureau of Economic Analysis. Real GDP was revised down 0.4 percentage point from the advance estimate, primarily reflecting downward revisions to investment and consumer spending.” BEA.gov

FRED/Q1gdp

Economic growth this year is improving because corporations are making record profits—up 17 percent annually in Q1 2026 from an average 13 percent since the COVID-19 pandemic.

But it looks like much of the growth may be part of the tech bubble—such as massive overinvestments in chips and artificial intelligence (AI)—creating a bubble which by definition and past history will eventually deflate.

Why the sudden jump in corporate profits to 17 percent? It’s mostly from investing in the massive buildout of artificial intelligence centers and the infrastructure. How long can such GDP growth continue, especially if those future investments, such as in AI programs or the chips that power AI, may take years to turn a profit?

Republicans’ Big Beautiful Tax Cut Bill encouraged corporations to invest as much as possible this year because they could write it off in the same year, and those investments are generating serious profits in the buildout of AI data centers, for starters.

But the Biden administration’s $5trillion in investments to modernize the American economy—the CHIPS, Infrastructure, and Inflation Reduction Acts—are also contributing to the surge in growth.

Yet largely because of the Trump Administration’s mismanagement; even attempts to cancel or impede many of the Biden administration programs that would actually improve inflation, healthcare, environmental protection, and bring the manufacture of computer chips home; we are seeing those profits going into irrationally exuberant, overinvestment in future technologies with uncertain futures instead that is pushing major stocks and market indexes to record highs.

The announcements on the possibilities of AI are mind boggling. Zack Kass, Open AI pioneer and author of bestseller, The Next RENAISSANCE: AI and the Expansion of Human Potential, has said:

“If directed wisely, it will secure our needs, accelerate discoveries that serve human flourishing and unlike the products that commoditize our attention today, free us to invest in connections creativity and love.”

It will free whom, and what will they do then? It is causing massive layoffs at the likes of Amazon (30,000 employees to date) who hope that programs like Claude and ChatGPT can do much of the thinking and future planning for these corporations.

Consumers aren’t doing so well that actually make up most of the GDP growth equation. Their so-called Disposable Income (an economic term) declined to “slightly less than -0.1%” in April.

It resulted in a lowering of the personal savings rate to almost 2%, one-half of its more normal 3-4 percent rate in recent years. Consumers are stretched in other words; more than half of their incomes are now spent on the soaring costs of gasoline/energy products, household necessities, and food. This is another reason we may see slowing GDP growth ahead.

There is no question that AI has enormous potential for good, in what British economist JM Keynes made in a famous prediction in 1930, should there not be too many bumps in the promised road to a greater freedom from work:

“Thus for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.” JM Keynes

But Keynes said this in 1930. How long has it been since then?

Harlan Green © 2026

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

The Tariff Wars--Part II

 Financial FAQs

“Trump has called “tariff” the fourth most beautiful word in the dictionary behind “God”, “love” and “religion.” CNN

FREDdebt/GDP

On Saturday, President Trump, just 11 days into his second term, said he will impose a 25 percent tariff on Canadian and Mexican imports, and 10 percent on Chinese imports.

He has said it will raise revenue to correct the large trade imbalances with those countries, as well as induce Mexico and Canada to halt the flow of fentanyl into the U.S., and the flow of illegal immigration.

But immigration flows are already down to levels before even the Obama administration, while Mexico and Canada have already said they will work with Trump to stem the flow of illegal drugs.

So why is he doing what will badly harm the U.S. economy and that of our two best neighbors and trading partners? His real motivation is pure greed. He and his oligarch friends must decrease the massive budget deficit that has mushroomed to 121 percent of Gross Domestic Product (see graph), so that he can prolong the tax cuts that have transferred so much wealth from working adults to the wealthiest supporters and that has added $5 trillion to the national debt.

He must cut the huge budget deficit that has resulted because it is alarming bond investors and budget hawks.

Hedge fund manager Ray Dalio, founder of Bridgewater Associates, once the world’s largest hedge fund, has been sounding the alarm mostly recently in a Barron’s Magazine interview, in which he said our current budget deficit could give the world a “financial heart attack.”

“Think of the credit flow like the blood flow that carries nutrients through the system to the body. Credit creates debt that builds up like plaque in those arteries, and like plaque, it grows and crowds out the nutrients because debt service crowds out other spending,” , said Dalio

“When does the heart attack come? When the constriction is enough that it squeezes out other spending, which in increasingly happening, or when investors see that happening, which leads them to sell bonds,” said Dalio.

Tariffs had become Trump’s way of paying down the deficit by taxing imports. He has said collecting what he believes will be “billions” in taxes from the tariffs on imports will help pay down the huge budget deficit that he helped to generate from the 2017 tax cut bill (Tax Cuts and Jobs Act) in his first term.

But that tax cut was just the latest by Republican administrations that have caused the massive national debt, which is expressed as a ratio of debt-to-gdp in the above FRED graph dating from 1980, when Republicans first began increasing the budget deficit.

It has been Republicans’ huge tax cuts since President Reagan in 1980 that have created the largest national debt since World War Two, and the trickle-down economy ever since. And renewing Trump’s 2007 Tax Cuts and Jobs Act when it expires this year could add another $5 trillion to the budget deficit, according to non-partisan analysts.

So who will be hurt most by the tariffs? Workers in all countries at a time when inflation is still too high, and preventing the Fed from making fewer rate cuts this year due to higher inflation.

The NAFTA trade agree between Mexico and Canada has made North America the largest trade-free zone outside of the Eurozone, enabling each country to produce what it does best, such as autos where many auto parts are manufactured more cheaply and shipped into the U.S. where they are assembled.

Trump has repeatedly (and incorrectly) said that “the tariff sheriff” former President William McKinley, ushered in an era of American prosperity at the end of the 19^th century by going all-in in tariffs, said CNN.

No, it was the result of the industries created in the first Gilded Age by the Robber Barons of that era—the oil, railroad, and banking magnates of that era. And Trump, a convicted felon, believes he can be another robber baron in this Gilded Age.

Harlan Green © 2025

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Why No Recession?

 Financial FAQs

I said last month we know why the US economy is still growing. Consumers keep spending, and the unemployment rate, though rising, is just 4.3 percent. The second revision of second quarter economic growth confirms this as well, jumping from 2.4 to a 3.0 percent growth rate.

But the downward revision of -818,000 nonfarm payroll jobs by the BLS from March 2023 to March 2024 showed not as many jobs were created as originally estimated, and it has begun to panic the financial markets.

And if consumers don’t keep spending where they spend the most—leisure and healthcare—what will keep US from a recession? It’s government spending via Bidenomics, President Biden’s legislation to modernize the economy. We should ignore the protests from conservatives of too much government spending and too much public debt for the moment. It’s what is keeping us at full employment.

Paul Krugman opined earlier in the year on the particulars of President Biden’s ‘New’ New Deal legislation, which is investing as much in the U.S. economy as Roosevelt’s New Deal.

“The fact, however, is that Biden has put in place a very ambitious agenda — major enhancements of Obamacare, student debt relief, big infrastructure spending, large-scale promotion of semiconductors and green energy that have led to a surge in manufacturing investment.”

FREDmanfacturing

It has led to a very big jump in Manufacturing investment, for starters, that is creating more high-paying jobs—800,000 manufacturing jobs to date. Although overall manufacturing activity has been shrinking per the latest surveys—even with investments in the construction of new Manufacturing facilities having soared from $78 billion in 2020 to $237 billion this July—it should means better days ahead for the manufacturing sector.

This is important because July’s BLS Job Openings and Labor Turnover Survey (JOLTS) report shows a weakening labor market. The number of job openings dropped to 7.7 million from its high of 11 million openings in 2022 as the economy rushed to recover from the COVID-19 pandemic. (That’s still a lot of jobs looking for workers.)

The number of job openings decreased in health care and social assistance (-187,000); state and local government, excluding education (-101,000); and transportation, warehousing, and utilities (-88,000). Job openings increased in professional and business services (+178,000) and in federal government (+28,000).

 BLS.gov

This is further evidence that growth will continue and perhaps keep consumers shopping for bargains, which is why inflation and rising prices should no longer be a problem, even as the Fed begins to cut interest rates this month.

Consumer confidence is rising again as well, which should help sustain the rally, as consumers seem to be worrying less about their job, per the Conference Board survey, even though personal savings have declined to dangerous lows.

“The Conference Board Consumer Confidence Index® rose in August to 103.3 (1985=100), from an upwardly revised 101.9 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 134.4 from 133.1 in July.”

So we still depend on consumers to carry most of the load to sustain the strong growth, but government has to give a hand to keep them “in the game,” as I’ve been saying.

We will know more come Friday’s unemployment report.

Harlan Green © 2024

Harlan Green on Twitter: https://twitter.com/HarlanGreen

Higher Economic Growth Ahead--Part II

 Financial FAQs

AtlantaGDPNow

US economic growth could be accelerating—with manufacturing as well as consumers. It was consumers that provided most of the 2.4 percent increase in Gross Domestic Product (GDP) in the ‘advance’ (first of three) estimates of second quarter economic growth, but the manufacturing and construction industries may be taking over in the next phase of this economic recovery.

The Atlanta Federal Reserve’s advance estimate of third quarter economic growth just jumped to 5.8 percent, thought to be an almost unbelievable growth rate just weeks ago. This will confound pundits and economists alike as all those capital infrastructure projects shift into high gear.

GDP growth is soaring because private capital spending has also picked up, proving that governments must kick start many of those projects that don’t promise enough profits to bring in private investment, i.e., long term projects like roads, bridges that pay for future growth. This is the truth that Wall Street doesn’t want to hear, until it meets a worldwide catastrophe like the COVID pandemic.

This has been the case since the Great Depression but never in the scale that has been spurred by the post-pandemic recovery.

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2023 is 5.8 percent on August 16, up from 5.0 percent on August 15. After this morning's housing starts report from the US Census Bureau and industrial production report from the Federal Reserve Board of Governors, the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth increased from 4.4 percent and 8.8 percent, respectively, to 4.8 percent and 11.4 percent,” said the Atlanta Fed.

The jump in housing starts was surprising in the face of higher mortgage rates as bond traders expect that more robust growth will push up longer term interest rates, like the benchmark 10-year Treasury yield now edging above 7 percent.

“With many homeowners choosing to stay in their existing home to preserve their low mortgage rate, demand for new home construction pushed up single-family starts in July even as builders continue to struggle with increased uncertainty stemming from rising rates,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB).”

And manufacturing companies have added 100,000 clean energy jobs in wind and solar energy, EV manufacturing and other clean energy sectors across the country since the Inflation Reduction Act became law,, according to a report by the nonprofit Climate Power.

As of January 31, 2023, there are over 90 new clean energy projects in small towns and bigger cities nationwide totaling $89.5 billion in new investments, said their study.

This is what it means to pay for the future—our future health as well as creating better-paying jobs.

Harlan Green © 2023

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No Job Losses Due to Coronavirus—Yet

Popular Economics Weekly

MarketWatch

The Labor Department’s February employment survey took place in the middle of February, before the coronavirus began its worldwide spread. So we will have to wait for March employment figures to know its impact on employment, and almost every business sector in the U.S. economy.

The services industries are booming at the moment, as the above MarketWatch graph shows. There were a cumulative total of 218,000 new jobs created in the service sector, with 54,000 Education and

Health service jobs leading the way. Health service jobs may continue to grow, if they can find workers, as the health care industry will certainly be kept more than busy treating the effects of the coronavirus in the U.S. with infection totals mounting daily.

 Wholesale and retail trade job totals fell slightly, but major grocery chains report emptying shelves as consumers stock up in anticipation of more school and business shutdowns in Washington and New York states, for starters.  This will boost retail sales al least temporarily.

Manufacturing also showed life with 15,000 new jobs, after consecutive 12,000 job declines in the past two months. The unemployment rate even inched back down to 3.5 percent from 3.6 percent.

Restaurants and bars filled 53,000 positions and government employment rose by 45,000, including 7,000 temporary Census workers. The federal government is expected to add up to 500,000 temporary workers for the 2020 Census and hiring is already underway.

But stock investors are already seeing the oncoming recession, as interest rates have plunged to new lows. The 10-year Treasury note yield fell 18.6 basis points to an unheard of yield of 0.739 percent on Friday morning, per the St. Louis FRED graph. This is a sure sign stock investors fear the worst.

FRED

It will certainly boost the housing market, however, as mortgage rates are sinking to more than 50-year lows. This will make even more homes affordable to prospective buyers, as long as employment holds up. For instance, the 30-year High-Balance, Super/Conforming fixed rate has fallen to 3.125 percent with no origination fees with the most competitive lenders.

But the lack of substantial wage increases is becoming worrisome in a fully employed economy. The 3 percent average hourly wage rise in the report is barely above inflation, and so leaves no room for disruptions as I’ve been saying.

It may be the result of a service economy now able to employ only the lowest skilled, lowest paying jobs, as automation becomes a fact of American life and manufacturing continues to move overseas, in spite of the tariff raises.

Recessions begin when the economy, based on four major indicators such as the unemployment rate, manufacturing and trade, and personal incomes, have peaked that I spoke about in my last blog; and both manufacturing and personal incomes have definitely peaked. 

The NBER business cycle Dating Committee won’t wait as long this time to call a recession, in my opinion.  It was called in December 2018, 12 months after the Great Recession actually began. Let’s see what happens over the next four months—until the end of second quarter in June, when we will know more about effects of COVID-19—which may speed up the looming slowdown. 

Why should we know by then?  I say this because the Fed suddenly dropped their short term interest rates one-half percent last Wednesday, and are hinting at more rate cuts. The financial markets reacted in panic after a very short-lived rise. What does that tell us about business confidence? It tells us the Fed also sees a rocky economy ahead.  We don’t even yet know how COVID-19 is transmitted, much less how to treat it other than with quarantines and certain preventive measures.

The worldwide spread of the COVID-19 virus means a worldwide slowdown of economic activity. It’s now appearing in 92 countries at last count, with 101,781 cases of COVID-19, at least 3,460 deaths; 15 now in the U.S.  About 55,866 have recovered,  primarily in China's Hubei Province, according to the latest figures.

The greatest danger to the U.S. economy is a sharp cutback in consumer confidence and spending as we retreat to our homes to wait this out, while the slow response of our public health system will mean further disruptions, and even shortages of essential supplies needed to treat COVID-19.

Harlan Green © 2020

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Lowest Unemployment Rate In 50 Years

Popular Economics Weekly

MarketWatch

The unemployment rate dropped to a 50-year low, and there are still 6 million jobs available. Private payrolls expanded by 114,000 after an upwardly revised 122,000 advance the prior month, according to a Labor Department report Friday that missed the median estimate of economists for a 130,000 gain. Total nonfarm payrolls climbed a below-forecast 136,000.

This is the slowest pace of job growth in four months, as businesses grew more cautious about hiring, but employment gains for August and July were revised up by a combined 45,000. Such are the vagaries of a fast-changing, but still robust jobs market.

With manufacturing activity weak, most hiring in September was concentrated in the services sector. Education and health care providers filled 40,000 positions. Government added 22,000 workers in 
September, but only 1,000 of the jobs were due to federal hiring for the 2020 Census. Economists had expected a much bigger increase in census workers. Job growth has slowed from 223,000 per month in 2018 to 158,000 over the last three months.

@SteveRattner

Trump’s trade war has had the biggest impact on the manufacturing sector, which contracted for the second straight month (losing 2,000 jobs), and featured the biggest pullback in export activity since the depths of the 2009 crisis, according to economist Steven Rattner.
Foreign trade and exports, the biggest drivers of manufacturing activity, are slowing grinding to a halt, in other words.

And the WTO has just ok’ed $7.5 billion in tariffs on European exports to the US, in part because of EU government subsidies to their airplane manufacturer Airbus, but also French wines and other products considered to be government subsidized.

Washington plans to impose a 10 percent tariff on aircraft imported from Europe and apply a 25 percent import tax on other agricultural and industrial items on October 18, the Office of the US Trade Representative said in a statement.

However, "If the US decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same," European Commissioner for Trade Cecilia Malmstrom said in a statement.

This will further reduce world trade and economic growth, as the EU accounts for 25 percent of US exports, needless to say.

It’s a vicious circle of tit-for-tat retaliation that can only worsen the upcoming recession—which doesn’t look much like a recession at the moment—but stay tuned to what ultimately happens with China, as I’ve been saying.

Harlan Green © 2019

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

U.S. Wages At 9-Year High

Popular Economics Weekly

MarketWatch.com

Total nonfarm payroll employment rose by 250,000 in October, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in manufacturing, in construction, and in transportation and warehousing—in basically all sectors of the U.S. economy.

“The rapidly growing economy generated a sizzling 250,000 new jobs in October, keeping the unemployment rate at a 48-year low and pushing the increase in worker pay to the highest level in more than nine years,” said MarketWatch’s Jeffery Bartash.

The large increase in worker pay highlighted the unemployment report, as did government reports such as the BLS Job Openings and Labor Turnover Survey (JOLTS) that showed more than 7 million job openings, and a high Quits rate of voluntary separations that usually means workers are finding better jobs.

“The number of job openings reached a series high of 7.1 million on the last business day of August, the U.S. Bureau of Labor Statistics reported in October. Over the month, hires and separations were little changed at 5.8 million and 5.7 million, respectively. Within separations, the quits rate was unchanged at 2.4 percent and the layoffs and discharges rate was little changed at 1.2 percent.”

The 5.8 million hires really highlights the incredible jobs turnover rate each month in the $20.7 trillion U.S. economy. A major component of the unemployment report was the 32,000 new manufacturing jobs created in October that was highlighted in the BEA’s report on new factory orders.

Econoday.com

“Up a higher-than-expected 0.7 percent, factory orders in October added to September's very strong gain which is now revised 3 tenths higher to 2.6 percent,” said Econoday. “October's increase for durable goods, also at 0.7 percent, is revised 1 tenth lower from last week's advance report with orders for non-durable goods, which are the fresh data in today's report, up 0.6 percent reflecting gains for petroleum and chemical products.”

Why the lowest unemployment rate in many years? A major reason is the percentage of able-bodied Americans in the labor force from the ages 25 to 54 rose to 82.3 percent in October from 81.8 percent in the prior month. That marks the highest level since April 2010.

How about interest rates? The 10-year Treasury Bond yield rose to 3.15 percent once again, and the Fed is sure to raise their Fed Funds rate another one-quarter percent in December to 2.25 to 2.50 percent, which means the Prime rate will go to 5.50 percent. That hasn’t dented consumer spending yet, but it might in the New Year.

What with the election uncertainty, trade wars, jittery financial markets, and an administration fearful of its own survival, we don’t see how 2019 can be as good.

Harlan Green © 2018

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Q3 Economic Growth Jumps to 3.3%

Popular Economics Weekly

It looks like the U.S. economy is charging ahead for the next few quarters, as Q3 Gross Domestic Product was revised from 3 percent to a 3.3 percent growth rate, due to higher exports and capital expenditures.

Businesses are spending more on equipment such as robots to make up for the labor shortage, and we are exporting more manufactured goods, a sign that the manufacturing sector has finally recovered from the Great Recession.

Good economics says this is an opportunity to pay down our $20 trillion in federal debt. So why are Repubs cutting taxes, which will result in at least $1.5 trillion added to that debt; just when they have to raise the debt ceiling in 9 days, or risk a government shutdown?

Cutting taxes at this time reduces tax revenues, which will also increase the annual budget deficit, and make the debt ceiling negotiations more difficult. Responsible economics should mean finding more ways to pay down that debt, such as closing some of the huge tax loopholes with industries like oil and gas exploration ($6 billion), but one-half of congress that used to be budget hawks now want even more government debt to pay for their tax breaks?

Graph: BEA.gov

“The increase in real GDP in the third quarter reflected positive contributions from PCE, private inventory investment, nonresidential fixed investment, and exports that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP,” said the BEA.

Sad, there is no fiscal responsibility in DC at the moment. Monthly retail sales are helping to boost GDP due in large part to the hurricanes. An upward revision to September puts the monthly retail sales jump at 1.9 percent and a 2-1/2 year high, as consumers in Texas, Florida, Puerto Rico and the Virgin Islands replace autos and everything else lost in the storms. Sales in October understandably slowed but did remain in the plus column at 0.2 percent, said Econoday.

Graph: Econoday

What should have been done to bring some fiscal responsibility? Raise the national minimum tax from $7.25/hr where it has been since the last raise in 2009, for starters. This would boost consumer spending, which accounts for two-thirds of economic activity at present.

Across the country, 29 states and Washington, D.C., currently have wages above the federal floor, according to the National Conference of State Legislatures. California and New York are set to soon have the highest minimum wages in the nation, after deals were struck by their governors to raise them to $15 an hour by 2022 and 2018, respectively, with slower increases for smaller businesses.

It’s a simple bit of economics that many do not seem to understand, and it’s hurting economic growth. Henry Ford raised his workers’ daily wages to $5 per day in 1914 so they could afford to buy his cars. He could do this because he had reduced the time to build a Model A Ford from 12 hours to less than 1 hour with a better-designed production line.

Corporations are making record profits, with Q3 profits up 10 percent annually. So raising their workers’ incomes today will do the same thing—allow workers to buy more products, which increases company profits, which grows our economy!

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Boom Times for Manufacturing

Popular Economics Weekly

A measure used by economists to track investment, known as core capital orders (minus defense and aircraft), rose 4 percent in the 12 months ended in September. It has risen 1.3 percent for three consecutive months, according to the Commerce Department.

Core orders are spent domestically for the most part, so this is happening just when it’s needed—to rebuild the hurricane and wildfire damaged states of Florida, Texas, California, as well as U.S. Territories of Puerto Rico and the Virgin Islands.

Graph: FRED

It will also boost economic growth, since it boosts labor productivity, one of the two components that determine GDP growth. The other component is population growth, but the U.S. population is barely growing, as is immigration that supplies the majority of new workers.

The main beneficiary of higher capex spending will be manufacturing, which is already showing improvement with a cheaper dollar exchange rate that has boosted exports.

And today we have durable-goods orders that rose 2.2 percent in September, beating forecasts. Durable goods are all goods that last three or more years—including auto vehicles, defense and aircraft. These orders have climbed 7.8 percent in the past year, the fastest pace since early 2012.

“Strength in the manufacturing sample is centered in new orders and employment,” says Econoday. “Of special note are unusual delivery delays, which help lift the composite indexes and are the result of lingering disruptions and stretched workloads following Hurricanes Harvey and Irma.”

So we are seeing effects of the hurricanes in boosting economic activity. The role of capital expenditures is especially important, as it means the replacement of much of our aging infrastructure as well.

And don’t forget at least 1 million motor vehicles were destroyed by the hurricanes that will need to be replaced. But buyers shopping for used replacement vehicles should be aware of the pitfalls of those storm-damaged cars that are put back on the market.

Consumers should take precautions like getting a history of repairs and checking the VIN number in the National Insurance Crime Bureau and National Motor Vehicle Title Information System databases, reports Fortune Magazine. Even without a database, strange stains and smells can be a red flag that a car has weathered a flood. Consumers buy a used car should check for signs of water damage — mineral deposits, mildew and the smell of mold or overpowering scents of cleaning supplies that may be trying to mask it.

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Cheaper Dollar Will Help GDP Growth

Popular Economics Weekly

The U.S. Dollar foreign exchange value is falling due to a number of factors. And it's already showing benefits, as Q2 GDP growth was just revised upward to 3 percent, and economists predict third quarter growth will also approach 3 percent.

That's because a cheaper dollar boosts  the export of manufactured goods, as our goods will now be less expensive overseas, which adds to GDP growth. It will hurt imports, which become more expensive (even imported oil), but that’s a good thing because domestically produced consumer goods become cheaper, boosting domestic jobs.

The euro now costs $1.20, when it was almost 1:1 to the Dollar last fall. Is the Dollar decline due to the latest North Korean missile launch, or Hurricane Harvey? Time will tell, but the U.S. factory sector is now doing very well because of the cheaper dollar.

Graph: Econoday

Durable goods orders of goods that last more than 3 years, such as autos and appliances, are booming since the Dollar’s decline and this will help GDP growth. The boost to exports is a plus for our balance of payments problem and the budget deficit.

Graph: Econoday

Consumer confidence to date isn’t being hurt by either North Korean saber rattling or the Charlotte riots, according to the Conference Board. The Conference Board Consumer Confidence Index®, which had increased in July, improved further in August. The Index now stands at 122.9 (1985=100), up from 120.0 in July, said their press release. The Present Situation Index increased from 145.4 to 151.2, while the Expectations Index rose marginally from 103.0 last month to 104.0.

“Consumer confidence increased in August following a moderate improvement in July,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence, with the Present Situation Index continuing to hover at a 16-year high (July 2001, 151.3). Consumers’ short-term expectations were relatively flat, though still optimistic, suggesting that they do not anticipate acceleration in the pace of economic activity in the months ahead.”

All in all, a continuation in the dollar’s decline will also be beneficial to manufacturing jobs, which tend to pay higher wages. And higher wages are needed to boost worker productivity and get us out of the slow growth syndrome the U.S. has been living through since the end of the Great Recession.

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

A Gangbusters Jobs Report Tomorrow?

Financial FAQs

It looks like tomorrow’s unemployment report could be the best of the New Year.  That’s because ADP's February private payroll estimate is 298,000, a yuge number. This would make tomorrow’s jobs report the biggest gain since October 2015 and one of the very largest of this recovery from what was the Great Recession, let us not forget. ADP isn't always followed closely but its call last month for outsized growth in January payrolls did prove correct with January’s 227,000 payroll growth, says Econoday.

The reason? It may be rising factory orders, a major component of the even stronger manufacturing sector. The ISM, which tracks anecdotal assessments from a national sample of purchasers, surprised economists this week with a 4.7 point jump in its new orders index to 65.1.

This level of order growth was last exceeded in August 2009 and follows two prior 60 readings as tracked by the green line of the graph, said Econoday. This is rare strength. Among regional reports, the most closely watched one, the Philly Fed, has been making similar headlines with its new orders index surging 12 points to a 38 level that was last witnessed way back in 1987.

Graph: Econoday

But such anecdotal evidence may not be enough to boost overall GDP growth, as the stronger dollar is holding down exports. Data on goods trade show a major widening in the deficit, to $69.2 billion during January. Foreign buyers showed little interest in U.S. goods in the month as exports of capital goods fell sharply and pulled total exports down 0.3 percent to $126 billion as tracked on the graph, said Econoday.

Whereas imported goods jumped 2.3 percent to $195 billion and once again were fed by America's appetite for foreign consumer goods and foreign vehicles, which subtracts from GDP growth. So ongoing strength in the dollar, as tracked in reverse by the red line, will hold back exports by making

U.S. products more expensive to foreign buyers and lift imports by making foreign products less expensive to U.S. buyers.

Is this all about the ‘Trump’ enthusiasm effect, which to date has nothing to show for it but executive orders and Tweet storms? He has historically low approval ratings for a new president (at least among Democrats and Independents), and has been unable to start his term with a burst of substantial legislation, as Barack Obama did, and as I said last week.

So the jobs surge may be temporary, unless the Trump administration begins to focus on jobs legislation, rather than attacks on their perceived enemies. That is still the question, with so many intelligence scandals and conflicts of interest surrounding him. President Trump has to first prove he can lead his own party.

Harlan Green © 2017


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Private Payrolls, Consumer Confidence Signal Strong January

Popular Economics Weekly

ADP is calling for substantial strength in Friday's employment report, reporting yesterday 246,000 for private payrolls, not including government jobs. This is far beyond expectations and would compare with December private payroll growth in the government's report of 144,000 (ADP's count for December is revised slightly lower to 151,000).

The data follow positive employment indications in Tuesday's consumer confidence report and may very well pull expectations higher for Friday's January employment report, says Econoday.

Graph: Econoday

And the Conference Board's consumer confidence numbers showed further consumer strength. Consumer confidence held strong and steady in January, at 111.8 for only a slight decrease from December's 15-year high of 113.3 (revised), said the Conference Board. Details are positive including a noticeable decline in those saying jobs are hard to get right now, at 21.5 percent vs December's 22.7 percent, combined with a solid rise in those who say jobs are plentiful, at 27.4 vs 26.0 percent.

Then we have today’s ISM manufacturing index back to post-recession highs. The ISM manufacturing report, in line with a run of regional reports, is signaling the strongest conditions in the factory sector since the oil-price collapse of 2014. The composite index for January is 56.0 for a sizable 1.5 point gain and the highest reading since November 2014.

New orders at 60.4 vs 60.3 in December is also a high since November 2014 and is the first back-to-back 60 showing since December 2013. Employment is also strong, up a sharp 3.3 points to 56.1 for the highest reading since August 2014. Inventories are steady as are delivery times which have been slowing in line with rising activity. Input costs are showing increasing pressure, in line with rising costs in other anecdotal reports.

Graph ISM

So what have we for economic prospects in the Trump era? A lot will depend on the markets confidence that the Trump team can follow through on its promises. But limiting immigration when the economy is basically fully employed is not a recipe for further growth, because where will the workers come from to build all those infrastructure projects, for instance?

Probably from overseas. Or, maybe from some of the unemployed blue-collar workers that don’t have the skills in today’s high tech economy. Though housing construction is rising, public construction spending fell a sharp 1.7 percent in the month. Educational spending fell 2.2 percent with highways & streets down 0.6 percent. Private nonresidential categories are mixed with total spending for this component unchanged in the month.

Also, where will the additional monies come from to finance those Trump projects?

Harlan Green © 2017

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Full Employment Reached—161,000 Payroll Jobs

Popular Economics Weekly

Average hourly earnings are up 2.8 percent annually, a recovery high. Nonfarm payroll growth was up 161,000 with upward revisions adding a net total 44,000 to September (191,000) and August (156,000). The unemployment rate is down 1 tenth to 4.9 percent and, for some, is already signaling full employment for the labor market, said the Bureau of Labor Statistics.

Graph: Marketwatch

We are reaching full employment levels, in other words, which will surely mean the Fed raises short term rates in December. Rising wages are two-thirds of product costs, which means the Fed Governors believe higher inflation has to be immanent.

But where is it? The overall PCE price index is up just 1.2 percent annually. This is the strongest yearly showing since November 2014 and is 2 tenths closer to the Federal Reserve's 2 percent target. Yet employment costs aren’t rising with the so-called Employment Cost index, the sum of benefits and salaries, no higher than 2.5 percent in a year.

The increase in hiring last month, along with stronger job gains in August and September than previously reported, shows the seven-year-old economic recovery still has plenty of life despite a slowdown in growth earlier in the year, says Marketwatch.

Q3 GDP growth rose to 2.9 percent, and fourth quarter growth looks to be strong, as well. Health care companies, white-collar professional outfits, and financial firms led the way in job creation, all in the service industries, while mining and manufacturing payroll employment declined.

Better news was that a broader measure of unemployment fell to 9.5% from 9.7%, touching the lowest level since May 2008. The so-called U6 rate includes part-timers who can’t find a good full-time position and discouraged jobseekers who’ve recently given up looking for work.

Also 19,000 new government jobs were added. Health care employment rose by 31,000 in October. Over the past 12 months, health care has added 415,000 jobs. Employment in professional and business services continued to trend up in October (+43,000) and has risen by 542,000 over the year. Over the month, a job gain occurred in computer systems design and related services (+8,000). Employment in management and technical consulting services continued to trend up (+5,000).

U.S. Manufacturing is also strong, according to the ISM’s Manufacturing Index. "The October PMI^® registered 51.9 percent, an increase of 0.4 percentage point from the September reading of 51.5 percent, “ said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee. . “The New Orders Index registered 52.1 percent, a decrease of 3 percentage points from the September reading of 55.1 percent. The Production Index registered 54.6 percent, 1.8 percentage points higher than the September reading of 52.8 percent. The Employment Index registered 52.9 percent, an increase of 3.2 percentage points from the September reading of 49.7 percent.”

So employment, production and deliveries were up, though new orders dropped slightly. This all has to mean the Fed will shortly (i.e., after the Presidential election) probably raise their short term rates another 0.25 percent, which means the Prime Rate of 3.50 percent that controls revolving credit rates for starters, is due to rise at least 0.25 percent.

Harlan Green © 2016

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The Fed Can’t Really Grow US Economy

Popular Economics Weekly

Most eyes are watching Janet Yellen and the Fed’s Jackson Hole conference, where she hinted at a possible raise in short term rates this September. Higher rates are really not needed. Nothing she says in Jackson Hole can really affect longer term economic growth, which is the real problem. The record low interest rates engineered by the Fed have barely raised inflation since the Great Recession, and done almost nothing to increase investment and future growth.

Marketwatch economist Rex Nutting highlighted the low investment climate of today. We are still in an investment recession. The record low amount of investment (capital expenditure) spending by the private sector, local, and national governments as a percentage of GDP since the Great Recession has meant we are using up what we have invested to date in public and private productive capacity without replacing it.

The result is a record low productivity rate and low-paying jobs in the service sector that mostly cater to domestic demand. “Who’s preparing the United States for the 21st century?” writes Nutting. “Nobody, really. Not the 22 million private businesses, not the 118 million households, and not the 90,000 state, local or federal government agencies. Most troubling, there’s still very little investment in the buildings, equipment and intellectual property that we ought to be putting into place today as the foundation of our prosperity tomorrow.”

We see as evidence the lackluster growth in this morning’s second revision to Q2 GDP growth at only a plus 1.1 percent annualized rate following even softer rates in the prior two quarters of 0.8 and 0.9 percent. Yet consumer spending increased 4.2 percent in Q2. So what are consumers buying? Mostly imported foreign products produced overseas.

Much of that is due to the flight of manufacturing jobs overseas that Bernie Sanders and Donald Trump have been railing about. But the flood of cheaper imports is also because of our low productivity rate due to the obsolescence of things that increase productivity, which means better transportation, power transmission, education and R&D investments that would enable Americans to produce more efficiently, and so compete with cheaper foreign products.

 Labor productivity is at a historic post WWII low, increasing just 1.3 percent since the Great Recession. It is calculated at output per hour of work. In Q2 2016, for instance, output increased 1.2 percent while hours needed to produce that amount increased 1.8 percent. Normally, productivity should also surge after such a downturn for production to catch up with depleted inventories, but it hasn’t this time.

This is one area in which both Republicans and Democrats seem to be in agreement. Both advocate increased spending on public and other productivity enhancing projects, but not who should pay for them. It has to be taxpayer funded if private industry won’t step up. And Hillary, for one, is proposing to penalize those corporations that spend their profits on stock buybacks that enhance CEO incomes, rather that projects that would enhance their long term growth. Such ‘inducements’ seem to be the only way to keep US competitive in what is now a global economy.

Harlan Green © 2016

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Much More Housing Needed

The Mortgage Corner

There’s an exception to the current low inflation prognostications echoed in my column on the San Francisco Fed John Williams. It’s in housing, which is struggling to meet the surging demand for both new homes and apartments that our newest millennial generation and immigrants need. The result is housing prices are rising faster than inflation, some 5 to 6 percent.

But if Janet Yellen and her Fed Governors give in to the cry by inflation hawks for higher interest rates just because Q3 and Q4 growth may be slightly higher than the horrid current GDP growth (how about 1.2 percent?), the housing rally (if you can call it that) would be nipped in the bud. It’s only because of the record low mortgage rates that housing is becoming more affordable for those that can afford to buy—which is the diminished American middle class. We will know more when both new and existing-home sales come out this week.

Millennials are the new baby boomers (as well as their offspring) in being the largest population group in history. And they are coming of age, all 80 million of them, of which the oldest now are 36 years of age and forming households.

 Graph: NAHB.org

This increased demand for housing is reflected in new home construction and higher builder optimism, reflected in the Wells Fargo Housing Market Index that measures home builders sentiment, and has been positive since January 2014.

Graph: Econoday

 July housing starts rose a strong 2.1 percent to a 1.211 million annualized rate which comes on top of June's 5.6 percent surge. Starts for single-family homes, the most important category in terms of economic growth, rose a very respectable 0.5 percent in July but were dwarfed by a 5.0 percent surge for multi-family homes. These results point to ongoing strength for construction, as well.

Other signs point to faster growth, such as industrial production, which is finally expanding after contracting for more than one year? July production jumped 0.7 percent to give a big one half point lift to the capacity utilization rate which is at 75.9 percent, according to the Federal Reserve. And the Chicago Fed’s National Economic Activity Index that attempts to measure overall US growth rose to a 12-month high this week.

Graph: Econoday

Manufacturing output rose 0.5 percent in the month which follows a downward revised but still very respectable 0.3 percent gain in June. Vehicle production was exceptionally strong in June and was also very solid in July though other manufacturing industries were also strong contributors to the latest month's gain.
Hi-tech was also strong in the month and a look at market groups shows 0.6 percent monthly gains for both consumer goods and business goods, the latter a plus given the persistent weakness in business investment.

The pundits are saying that Fed Governor Yellen will hint at a boost in the Fed’s short term rates from 0.5 percent, but that would be a mistake. There is no really affordable housing being built at present, which means rents and rental housing will have to carry the burden of new household formation.

And the result is that rents are now rising at record rates throughout the country. In fact, RealtyTrac, (www.realtytrac.com) “the nation’s leading source for comprehensive housing data,” released its 2016 Rental Affordability Analysis in January, which shows that buying is still more affordable than renting in 58 percent of U.S. housing markets despite home price appreciation outpacing rent growth in 55 percent of markets. The report also shows that the rise in rents is outpacing weekly wage growth in 57 percent of markets, per Realtytrac.

Harlan Green © 2016

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JOLTS Jobs Report Highest In Years

Popular Economics Weekly

The U.S. Bureau of Labor Statistics reported the number of job openings was little changed at 5.8 million on the last business day of March, but it is actually up 11 percent over March 2015. Methinks the BLS is being overly modest, as it shows many more available jobs than workers, a sign of future job and economic growth.

Graph: Calculated Risk

Why do we know this? Jobs openings even increased substantially in March to 5.757 million from 5.608 million in February. And Quits are up 9 percent year-over-year, which is when workers leave voluntarily, usually because they are able to find better jobs. These are voluntary separations. (see light blue columns at bottom of graph for trend for "Quits").

Note that hires (dark blue line) and total separations (red and light blue columns stacked) are pretty close each month in the Calculated Risk graph. This is a measure of labor market turnover.  When the blue line is higher than the columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

We also see much improvement in home building, another job creator, as construction jobs are up 1.2 million jobs from their lows, but 1.1 million below their 2006 bubble highs.

The U.S. Census Bureau of the Department of Commerce announced construction spending during March 2016 is 8.0 percent (±1.6%) above the March 2015 estimate of $1,052.9 billion. During the first 3 months of this year, construction spending amounted to $240.4 billion, 9.1 percent (±1.5%) above the $220.3 billion for the same period in 2015.

Lastly, state and local government employment has been the largest drag on job growth. This graph shows total state and government payroll employment since January 2007. State and local governments lost 129,000 jobs in 2009, 262,000 in 2010, 247,000 in 2011, and 29,000 in 2012, for a total of 669,000 jobs lost due to the Great Recession.

Graph: Calculated Risk

And through November 2015, reports Calculated Risk, state and local employment is up 70,000.   So, in the aggregate, state and local government layoffs are over - and the economic drag on the economy is over.  However state and local government employment is still 561,000 below the pre-recession peak.

So where will all the new jobs come from? There will be a pickup in manufacturing for one, but most jobs will occur in the non-manufacturing service sector, as I’ve said in past columns. That means Professional and Business Services (insurance, et. al.), construction, health care, and Real Estate, now the fastest growing segments.

Harlan Green © 2016

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Is U.S. Approaching Full Employment?

Popular Economics Weekly

Are we approaching full employment will be the debate raging within the Federal Reserve and beyond this year. That’s because, “Total nonfarm payroll employment rose by 215,000 in March, and the unemployment rate was little changed at 5.0 percent,” the U.S. Bureau of Labor Statistics reported today. “Employment increased in retail trade, construction, and health care. Job losses occurred in manufacturing and mining, only.”

It does look like the U.S. is approaching full employment, the holy grail of most economists and the Fed’s overriding mandate? This is even though the unemployment rate rose a notch to 5 percent from 4.9 percent. But it was because more Americans joined the labor force, said the Labor Department. The size of the labor force has increased by 2 million people in the past five months, a clear sign that jobs are easier to find.

Those new workers and job seekers, particularly since last fall, pushed the so-called labor force participation rate up to 63 percent. That’s the highest level in two years, reversing at least for now a sharp decline that kicked in after the onset of the Great Recession, said the Bureau of Labor Statistics.

Graph: Marketwatch

And this is with the mini job-recession in the energy and manufacturing sectors that lost 12,000 and 29,000 jobs, respectively. The household survey measure of employment shows a very good 246,000 gain in March, it is just that the labor force increased by an even bigger 396,000. That means the labor force has now increased by more than two million in the past five months alone. The participation rate has jumped from a low of 62. percent last September to a two-year high of 63.0 percent this March.

“This is a remarkable turnaround in terms of both its speed and magnitude,” said Marketwatch’s Jeff Bartash.

And the manufacturing drop may be temporary as its component of the industrial production report posted a surprising 2 tenths gain in February last week, which came on top of January's ‘stunning’ gain of 0.5 percent.

In fact, the March just released ISM Manufacturing Report showed a big surge in ISM new orders, which is certain to shake up what has been a very downbeat outlook for the manufacturing sector, said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®).

"The March PMI^® registered 51.8 percent, an increase of 2.3 percentage points from the February reading of 49.5 percent. The New Orders Index registered 58.3 percent, an increase of 6.8 percentage points from the February reading of 51.5 percent. The Production Index registered 55.3 percent, 2.5 percentage points higher than the February reading of 52.8 percent.”
“Manufacturing registered growth in March for the first time since August 2015, as 12 of our 18 industries reported sector growth, and 13 of our 18 industries reported an increase in new orders in March,” said Holcomb.

Then what will full employment actually look like? Even In March, 1.7 million persons were marginally attached to the labor force, says the Labor Department, down by 335,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

But, the number of persons employed part time for economic reasons (also referred to as involuntary part-time workers) was about unchanged in March at 6.1 million and has shown little movement since November. These individuals, who would have preferred full-time employment, were working part-time because their hours had been cut back or because they were unable to find a full-time job.

So, eh, we are approaching full employment, but are still not there. Our Fed Chairwoman Janet is right. Let’s allow more of those part timers, and marginally attached folks to find work that can fully support them and their families, before the Fed tightens the credit screws any further.

Harlan Green © 2016

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U.S. Manufacturing Near Record Level

Gross output of U.S. manufacturing industries — counting products produced for final use as well as those used as intermediate inputs — totaled $6.2 trillion in 2015, about 36 percent of U.S. gross domestic product, and nearly double the output of any of the other big sectors: professional and business services, government and real estate, reports Marketwatch’s Rex Nutting.

This is hardly a failed sector of the economy, as the Republican primary candidates maintain. “China may have become the leading manufacturing economy in the world in 2010,” says Nutting, “but the United States maintains a strong second-place standing. The value added by U.S. factories is more than $2 trillion a year, equal to the next three countries (Japan, Germany and South Korea) combined. U.S. manufacturing is still the envy of the world.”

Graph: Marketwatch

Then why so much bad mouthing of U.S. manufacturing? It’s maybe because fewer workers are needed to produce more, which has hurt the Midwest rust-belt states, and is probably why those blue collar workers have supported either Bernie or Donald in the Presidential primaries. Technology and new ways of organizing work have revolutionized the American factory since the Golden Age of the 1980s, says Nutting. Today, U.S. factories produce twice as much stuff as they did in 1984, but with one-third fewer workers.

The manufacturing component of the industrial production report posted a surprising 2 tenths gain in February last week, which came on top of January's stunning gain of 0.5 percent. Exports aren't specifically tracked in any of these reports but the implication is clear, says Econoday that this year's steep and early decline in the dollar, down 3.8 percent on the dollar index, is making our exports less expensive to our foreign customers.

So the ultra-strong dollar exchange rate with foreign currencies that allows Asian countries to outprice US on the cheaper consumer goods hasn’t hurt our manufacturing base that much. In fact, it’s been a great help to consumers, making imported goods that consumers love even cheaper.

Consumers aren’t necessarily spending their windfall from the cheaper imports and low inflation, however. Wages and salaries fell for the first time since last September in the Commerce Department’s just released income and outlays report, and their savings rates has risen to 5.4 percent. Why? We suppose anytime incomes fall, households tend to want to save more for that rainy day those pundits keep talking about.

 

Harlan Green © 2016

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Why is Fed Waiting for Inflation?

The Federal Reserve should stick with a “wait-and-see monetary response” absent more evidence of sustainable inflation gripping the U.S. economy, Chicago Fed President Charles Evans said Tuesday.  That seems to be Fed Chairwoman Yellen’s response to current world events, as well. 

But what is ‘sustainable inflation’, really?  It’s a code word for sustainable growth, as past history tells us we really need an inflation rate that is more than the Fed’s 2 percent target to achieve GDP growth that is sustainable.

Evans — considered to be one of the policy panel’s doves but perhaps no longer an outlier with that view — said he’s willing to allow the U.S. economy to tip above the Fed’s roughly 2 percent inflation target to gain assurance that flares in inflation signals aren’t transitory, even masking economic trouble-spots that might benefit from a go-slow Fed. Factors dragging on growth potential right now include: weaker corporate spending, low commodities prices, China’s economic slowdown and market volatility, he told the City Club of Chicago.

There’s also the U.S. Dollar’s strength, which is harming our exports (read manufacturing sector) because it is in such demand as the world’s reserve currency and considered a safe haven for foreign investors that are leery of investing otherwise amidst the current geopolitical uncertainty.

And if the Fed does boost interest rates further than last December’s one quarter percent hike, it will boost the dollar’s value higher, thus making U.S. exports even less competitive in the current hyper-competitive world trade environment. Such a trade environment with low trade barriers means almost anyone anywhere can produce what is needed, resulting in a world awash in goods and services.  The current oil glut is just one example that is depressing commodity prices.

And, as I said last week, though several of the Fed’s Open Market Committee are still pushing for higher interest rates, there is little sign of inflation at the wholesale or retail level, which means wages are not rising fast enough (that approx. 2/3rds of product costs) to boost consumer demand, and hence economic growth.

Graph: Econoday

The good news is that manufacturing seems to be recovering, even with the strong dollar.  The Philly Fed and Empire State manufacturing reports are the first positive signals of factory activity during the month.  A look at February’s industrial indicators also show definitive evidence of recovery, says Econoday. The manufacturing component of the industrial production report posted a surprising 0.2 percent gain which came on top of January's stunning gain of 0.5 percent. 

            Why the manufacturing pickup after 6 months of decline?  The dollar is down a surprising 3.8 percent on the dollar index, making our exports less expensive to foreign customers. The above Econoday graph tracks the index value of the manufacturing component against monthly dollar totals for exports.

Exports have been sinking sharply for more than a year in what, by contrast, underscores the formidable strength of domestic demand. Yet the drop in the dollar has been accelerating.  It is probably because the Fed’s Open Market Committee has been backing off its promise to raise short term rates as much as 4 times this year.

            So we should listen to Fed Governor Evans.  Higher inflation is necessary at his time and should be allowed, before the Fed raises rates further.  Any sign that inflation could be a danger to growth would be almost instantly reflected by higher yields in the bond markets.  And today’s US 10-year Treasury Bond is yielding an absurdly low 1.9 percent.  

Harlan Green © 2016

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