Deep Dive

DEEP DIVE: Productivity Is Making A Roaring Comeback

Feb 10, 2024 3 min read paid

Our Roaring 2020s economic scenario is predicated on our assumption that chronic labor shortages, especially of skilled workers, will cause businesses to boost the productivity of the available labor force. Technological advances will enable the boost, and it should be a dramatic one. Accordingly, we expect a productivity growth boom during the current decade. It may well be that the boom started at the end of 2015, was interrupted by

Ed Yardeni

DEEP DIVE: Party Like It's 1999!

Jan 26, 2024 3 min read

Is it possible that the meltup phase of the bull market (which started on October 12, 2022) has begun already—having started following the correction low on October 27, 2023? Yes, it is possible. Since that recent low, investors have become much less concerned about such adverse macro issues as a recession, higher interest rates, persistent inflation, and the federal government deficit. Instead, they are excited about the likelihood that

Ed Yardeni

DEEP DIVE: A Very Brief History of Recoveries & Expansions

Jan 20, 2024 2 min read paid

How much longer might the current economic expansion last? That remains a widely disputed question. The debate started between the hard-landers, soft-landers, and no-landers in early 2022, continued in 2023, and now continues in 2024. We remain in the soft-or-no-landing camp. We have a sense of “déjà vu all over again” about this debate. We were among the no-landers for several years following the 2007-08 recession. We even compiled a

Ed Yardeni

DEEP DIVE: The True Story About Long & Variable Lags In Monetary Policy

Jan 13, 2024 6 min read paid

How long is the lag between monetary policy tightening and recessions? In the past, the answer to that question depended on how long it took the federal funds rate to rise to levels that triggered financial crises that morphed into credit crunches, which quickly caused recessions. Past federal funds rate hiking cycles tended to peak when financial crises resulted from rising interest rates and tightening credit conditions (Fig. 1 below)

Ed Yardeni

DEEP DIVE: Another Year Of Living Dangerously

Jan 3, 2024 6 min read paid

The Roaring 2020s has been a wild decade so far. During 2020, we all had to deal with the first wave of Covid. During 2021, we had to deal with another wave or two of Covid. During 2022, Russia invaded Ukraine, inflation soared, and the most widely anticipated recession of all times remained widely anticipated. During 2023, that same story played out for most of the year but with a

Ed Yardeni

DEEP DIVE: The Fed - Tightening Or Merely Normalizing?

Dec 15, 2023 3 min read paid

Based on November’s employment report released on Friday, we can safely conclude that there is still no sign of an impending recession. The Godot recession is still a no-show. Our soft-landing (a.k.a. rolling recession) scenario remains intact, as it has since early last year. The diehard hard landers are still expecting a recession, as they have been since the Fed started to tighten in early 2022. But

Ed Yardeni

DEEP DIVE: Construction Is Booming!

Dec 8, 2023 3 min read paid

The US economy has been remarkably resilient in the face of the Fed’s aggressive tightening of monetary policy since early last year. One of the sectors that accounts for that resilience is the construction industry. In the past, rising interest rates always depressed construction, which exacerbated the resulting recessions (Fig. 1 and Fig. 2). This time, the weakness in residential construction has been offset by relatively strong private nonresidential

Ed Yardeni

DEEP DIVE: Disruptive Technologies - 3D Printing Gives Flexible Robotics a Hand

Nov 26, 2023 2 min read paid

A new method of 3-D printing can create flexible products, including for use in robotics. Human-like robotic hands and artificial organs can be built using this new method, according to researchers at ETH Zurich, a Swiss university; MIT; and Inkbit, a startup company spun out of MIT. Traditional 3-D inkjet printing uses a material that dries quickly and is then scraped to eliminate any imperfections before the next layer of

Ed Yardeni

DEEP DIVE: In Yellen We Trust

Nov 17, 2023 2 min read paid

When Janet Yellen was Fed chair from October 2010 through February 2014, I often fondly (and respectfully) referred to her as the “Fairy Godmother of the Bull Market.” I noticed that almost every time she spoke publicly about the outlook for monetary policy and the economy, the stock market moved higher. She hasn’t been as bullish for the stock market since January 2021, when she became the secretary of

Ed Yardeni

DEEP DIVE: Captain America!

Nov 10, 2023 5 min read paid

US Economy: Superhero. Like Captain America, the American economy seems to have an indestructible shield. The Fed has raised the federal funds rate aggressively by 525bps since March 2022 with the aim of tightening financial conditions to slow the economy and to raise the unemployment rate with the ultimate aim of bringing down price and wage inflation (Fig. 1 below). Yet real GDP jumped 4.9% (saar) and rose 2.

Ed Yardeni

DEEP DIVE: Inflation - Beware of the Devil in the Details

Nov 3, 2023 2 min read paid

Investors have been spooked by inflation since Halloween 2021 as the CPI soared to peak at 9.1% during June 2022. It was down to 3.7% during September of this year. Yet investors are still spooked, fearing that inflation will remain stuck above the Fed’s 2.0% target or will rebound as it did during the 1970s. Consider the following: (1/4) We’ve recently observed that the

Ed Yardeni

DEEP DIVE: What's Driving Bonds?

Oct 27, 2023 5 min read paid

In his interview Thursday with Bloomberg’s David Westin at the Economic Club of New York, Fed Chair Jerome Powell was asked about the bearish impact of the increasing supply of government debt on the bond market given that the Fed is no longer buying Treasury securities and that foreigners reportedly are reducing their purchases as well. Powell responded that buying by foreigners has “actually been pretty robust” this year.

Ed Yardeni

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