Articles authored by Sonu Varghese

Housing was the biggest drag on economic growth last year. The economy grew by 2.1% in 2022, but that overcame a 0.93%-point drag from residential investment, i.e. housing. In fact, it’s been a drag on GDP growth for 7 straight quarters now (through the end of 2022). It got worse over the last 3 quarters …

Corporate bankruptcies are rising in 2023, based on S&P data. The first 3 months saw 183 bankruptcy petitions, which was the highest for a first quarter since 2010. March alone saw 71 corporate bankruptcy petitions, the fourth straight month of increase and the highest monthly total since July 2020. Obviously, the most noteworthy bankruptcy filing …

Inflation is on everyone’s mind these days, but as we wrote last week, the good news is that inflation is on a relatively strong downtrend. As of March, CPI was up 5% over the past year, but well below the peak of 9.1% we saw last June. However, even 5% inflation is really elevated. No …

The March inflation report showed that CPI inflation rose only 0.1%, slightly below expectations. Over the past year, inflation is now up 5%, well off the peak 9% from June 2022. As you can see below, the big driver of lower inflation has been energy and food. Energy makes up about 7% of the “inflation …

Another month, another strong payroll report. The economy created 236,000 jobs in March, topping expectations for a 12th straight month. A record streak that is more than double the previous longest streak (before the current expansion). That in and of itself tells you how strong and underestimated this labor market is. Prior to the report’s …

There’s always been talk about the U.S. dollar (USD) losing its dominant currency status globally, but lately, the chatter seems to have increased, especially since Russia’s invasion of Ukraine, which saw the US impose severe and expansive sanctions on Russia and Russian officials – enabled by the fact that the US treasury has jurisdiction over …

Here’s something really positive about the US economy It’s hard to get away from the negative headlines that have accompanied the Silicon Valley Bank crisis. Recession calls have seen a renewed uptick since the crisis unfolded, whereas they were dying down prior to that, thanks to positive economic data in February and early March. Note …

Most risky assets have had a volatile stretch since the Silicon Valley Bank crisis began. The S&P 500 Index has recovered but is still down about 0.5% between March 8th (the day prior to the crisis unfolding) and March 28th. In a welcome change from last year, bonds have zigged while stocks zagged, with the …

The Federal Reserve raised the federal funds rate by 0.25% at their March meeting, bringing it to the 4.75-5.0% range. This is the ninth-straight rate increase and brings rates to their highest level since 2007. However, the most aggressive tightening cycle since the early 1980s, which saw them lift rates all the way from near …

The Federal Reserve has two mandates – “pursuing the economic goals of maximum employment and price stability.” Over the past year, the Fed has been leaning on the side of the price stability mandate, arguing that the labor market is too tight, i.e., beyond maximum employment. Fed Chair Jerome Powell’s mantra has been: “We must …