April 15, 2026 – Welcome back to another post. This time, I want to do another economic update, which many readers seem to enjoy. Today’s topic is whether the recent oil price shock, driven by Middle East geopolitical uncertainty, poses a threat to the U.S. economy. That risk is certainly pushed by the news and also reposted by some folks in the personal finance sphere. For example, the recent post on The Motley Fool, claiming their Moody’s AI model (which has never been wrong for 80 years), almost certainly predicts a recession over the next 12 months. What to make of that? After all, the Fool/Moody’s model is AI, so it must be right, right? They wouldn’t publish any clickbait, right? Well, not so fast! There are many reasons to feel much more relaxed about the recent oil price spike. Let’s take a look…
Continue reading “Can an Oil Price Shock Derail the US Economy?”Tag: Macroeconomy
Market Musings: Recession Fears and the Trade War – Is this the end of FIRE?
May 9, 2025 – By popular demand, and because it’s been a while since I wrote my last such post, here are a few thoughts on the current market conditions, especially the economic and financial uncertainty. Some of the issues I like to cover:
- Is there a recession around the corner?
- What’s my inflation and Federal Reserve policy outlook?
- What are my views on the Trade War?
- With all this financial volatility, is the FIRE movement finally finished?
That’s a lot to cover, so let’s get started…
Continue reading “Market Musings: Recession Fears and the Trade War – Is this the end of FIRE?”May 2023 Macro and Market Musings: Monetary Policy and Inflation
May 17, 2023 – Since early 2022, the Federal Reserve has been raising its policy interest rate at breakneck speed by a full five percentage points. Inflation has indeed subsided a bit, but both price levels and percentage changes remain stubbornly high. When will inflation finally go back to normal? What’s the path forward for monetary policy? Will there be a recession? So many questions! Let’s take a look…
Continue reading “May 2023 Macro and Market Musings: Monetary Policy and Inflation”Recession Or Not?
August 5, 2022 – Last week we got the Q2 GDP numbers and the Bureau of Economic Analysis (BEA) confirmed that GDP has now declined for two consecutive quarters. What do I make of that? Are we in a recession now? Since several people asked me to comment on this issue, here are my thoughts…
Continue reading “Recession Or Not?”The Bear Market is here. What Now?
June 15, 2022 – With the recent confirmation of a Bear Market finally taking hold, I’ve gotten some requests to comment on the situation: Are we going to have a recession? What’s my inflation outlook? What to expect from the Federal Reserve? What does this all mean for us in the FIRE community?
Let’s take a look…
Continue reading “The Bear Market is here. What Now?”Q4 2020 GDP Update: Are we on track for a sustained economic recovery?
February 1, 2021 – Last week on Thursday we got a new snapshot on how the economy is doing. The Bureau of Economic Analysis released the quarterly Gross Domestic Product (GDP) numbers that day and the headline number came out as +4%. So the economy grew at an annualized rate of 4% that quarter or about 1% quarter-over-quarter. Not bad! Considering the uncertainty about growth going forward after the blockbuster 33.4% third quarter growth number it’s reassuring that we kept some of the upward momentum in the fourth quarter.
But just to be sure, there is still a lot of economic pain and uncertainty out there. You ask two different people and you will hear two different opinions on how the economy is going. Unless, of course, they are economists and you will hear three different opinions, as the joke goes.
Since I wrote my post about the Q3 GDP release three months ago and it was quite popular, I thought it would be a good idea to write another update. Is the recession finally over? How much of the pandemic-induced loss has the economy recovered? Do we have to worry about a renewed drop in the economy? Let’s take a look..
Continue reading “Q4 2020 GDP Update: Are we on track for a sustained economic recovery?”
What to make of that Q3 U.S. GDP number?
October 29, 2020 – Today’s GDP release for the third quarter came in at 33.1%. Not a typo. After the disastrous second-quarter number of -31.4%, the worst quarterly number on record we now got the best quarterly reading on record. What’s going on here? What do I make of that number? Are we out of the woods now? I’m putting on my economist’s hat for today and share my thoughts in a short post. Let’s take a look…
The Shortest Recession Ever? My Thoughts on the State of the Economy
August 25, 2020 – A lot of people – online and offline – have been asking about my opinion on the economy. When will the recession be over? Is the recession over already? How does the recession stack up with other events in the past? What are the risks going forward?
So many questions! Let’s take a look…
Continue reading “The Shortest Recession Ever? My Thoughts on the State of the Economy”
Are we in another Bull Market now?
Update 8/18/2020: Well, that didn’t take very long! On August 18, the S&P 500 and Price Index finally set a new record high. The Total Return Index (dividends reinvested) had already reached its new all-time high on August 10. So, we know for sure that this is a new Bull Market and it started after the March 23 Bear Market Low!
May 11, 2020: The stock market is still well below its February all-time-high, but it’s holding up remarkably well considering how poorly the economy is doing right now:
- Double-digit unemployment,
- 20+ million jobs lost according to the BLS payroll employment data,
- 30+ million jobs lost according to the sum of weekly unemployment claims since March,
- -4.8% GDP growth in the first quarter (annualized rate) and possibly a 10% drop quarter-on-quarter in Q3, which would be reported as a 34% drop annualized!
- And a whole host of other economic indicators that look so bad, you’d have to go back to the Great Depression to find similar readings
Actually, “holding up” is a bit of an understatement when you look at the stock market as of the Friday, May 8 close:
- The S&P 500 TR index rallied 31% since the March 23 low!
- We’ve recovered more than half of the drop peak to trough!
- Since April 8, we’re no longer 20% below the recent all-time-high, which is often quoted as the cutoff for the Bear Market!
Does that mean the Bear market is over now? I certainly hope so! Whether the Bear Market is over and a new Bull Market might have started already obviously depends on the definition of Bull vs. Bear. What is that definition of Bull vs. Bear anyway? Different people have different definitions, some more sensible than others. And it gets more complicated: even if we do agree on a sensible definition, there could still be uncertainty over what’s the state of the market right now because some criteria cannot designate the state of the world in real-time but only after the fact. There’s a confirmation lag! So, we could be in a sort of a bull/bear-limbo state right now! How is that possible???
So many questions! Let’s take a look at how I think about Bull vs. Bear…
Some Random Thoughts on the State of the World
March 27, 2020 – Wow, I’m in a writing mood these days. A second post this week! Here are a few random thoughts about the current situation. All the things on my mind right now that might be too short to put into a separate blog. Since you’re likely all sitting at home feeling bored, I thought you might enjoy this… Continue reading “Some Random Thoughts on the State of the World”