Inflation Threatens and Evictions Loom

Two major issues dominated the news in late July: Inflation – whether it is, is not a problem or is likely to be one; and the prospect that millions of renters would be evicted from their homes as a federal moratorium barring evictions for nonpayment of rent expired. 

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We knew the April labor report was going to be bad, and it was. “Dismal.” “Devastating.” “Catastrophic.” Economists, who usually refrain from hyperbole, gave in to it in the face of statistics unlike any they had ever seen or expected to see.  The economy shed 20.5 million jobs for the month and the unemployment rate hit 14.7 percent, both numbers shattering previous records.

Consumers are feeling better about the housing market, and the housing market appears to be feeling better about itself.

The forces driving the economy are no longer financial; they are primarily medical.  Concerns about the impact of the coronavirus, which continues to spread in the U.S. and abroad, have replaced speculation about whether the Fed will slash interest rates – which it did recently, announcing an “emergency” quarter-point reduction that analysts predict will be followed soon by another one, in an effort to forestall the panic that is gripping financial markets.

Analysts reached for superlatives – “blowout” and “blockbuster” among them ─ to describe November’s surprisingly strong employment report.  Employers added 266,000 workers to their payrolls, blowing well past the 187,000 economists had predicted.  October’s anemic 128,000 gain was revised upward slightly, to 156,000, and the unemployment rate remained unchanged at 3.5 percent.  Average hourly earnings increased by 7 cents – a 3.1 percent year-over-year gain.