ECONOMIC OUTLOOK
Elliot Eisenberg, Ph.D. is an internationally acclaimed economist and public speaker specializing in making economics fun, relevant and educational. Dr. Eisenberg earned a B.A. in economics with first class honors from McGill University in Montreal, as well as a Master and Ph.D. in public administration from Syracuse University. Eisenberg is the Chief Economist for GraphsandLaughs, LLC, a Miami-based economic consultancy that serves a variety of clients across the United States. He writes a syndicated column and authors a daily 70-word commentary on the economy that is available at www.econ70.com.
COUNTRY CIRCUMFERENCE
While many have trekked across the US, Jack Kadis is currently attempting to walk the perimeter of the mainland US. That distance is roughly 11,500 miles. Jack is walking 11 miles/day and at that rate it will take him 2.86 years, 34 months. In 2016, Leroy Bailey did it in 29 months. To do it in 28 months, Jack will have to walk 13.5 miles/day. That’s exercise!
WORK WEARY
March net employment growth was a powerful 178,000, but Jan/Feb were lowered 69,000, and while the unemployment rate declined from 4.4% to 4.3%, it’s because the participation rate eased to 61.9% from 62%. Moreover, the workweek shrank to 34.2 hours, wage growth slid from 3.8% Y-o-Y to 3.5%, and from 4.2% a year ago. Thus, work-based pay slipped 0.1% M-o-M! GDP growth is coming exclusively from productivity growth, not ideal.
FED FUNDS
The Fed’s balance sheet is $6.7 trillion, composed almost entirely of Treasuries and MBS. Current Fed nominee Warsh wants to reduce it. To do that we must understand the liabilities these assets offset. They include $3 trillion in commercial bank deposits, $2.4 trillion in currency, and $1 trillion in the Treasury checking account. Only bank deposits can be reduced and that means (carefully) reducing bank liquidity. Easier said than done.
PETROLEUM PROBLEM
Pre-Iran War, oil shipments through the Strait of Hormuz totaled 20.5 million bbl/day. About 5 million barrels are now rerouted via Saudi pipelines to Yanbu, while a UAE pipeline to Fujairah carries 500,000 bbl/day. Iran is exporting 1.7 million barrels of its own oil plus another 500,000 from other nations, Iraq 300,000, and SPR releases total 3.7 million. We remain short 8.8 million bbl/day—manageable, but not indefinitely.
MONEY MOVING
Between CY2022 and CY2023, not only did people migrate between states but so did their income. The state with the largest net gross income migration gain was Florida at $20.6 billion (over 1% of GDP), Texas $5.5B, SC $4.1B (over 1% of GDP), NC $3.9B, and TN/AZ at $2.8B. The biggest losers: California -$11.9B, NY -$10.7B, Illinois -$6B, Massachusetts -$4B, and NJ -$2.8B. Taxes matter.
AMAZING ARTEMIS
On April 6th, the four Artemis II mission astronauts in the Orion spacecraft traveled further from Earth than ever. The previous record was accidentally set by Apollo 13 (during the emergency that prevented their lunar landing) at 248,655 miles. Orion went out 252,756 miles from Earth. This wide loop around the moon was done to test Orion and still have it “slingshot” back to Earth. Congrats!
INCREASING INFLATION
March CPI rose a staggering 0.9% M-o-M, the most since 6/22, and that commensurately reduced inflation-adjusted salaries by almost one percentage point. With Y-o-Y inflation up 3.3%, led by a 21.2% M-o-M rise in gasoline, inflation-adjusted salaries are up just 0.2% Y-o-Y! Quite positively, however, core inflation, which excludes food and energy, rose just 0.2% M-o-M and 2.6% Y-o-Y and service inflation was benign, suggesting no inflation flow-through, yet.
PERPLEXING PRICING
While oil prices have risen dramatically due to the Iran War, US natural gas prices have marginally declined. Moreover, higher oil prices may cause natural gas prices to decline further. Why? Because high oil prices should encourage US oil producers to drill more and when they do, they will produce natural gas as a byproduct. The low price should shield US consumers and give US manufacturers a competitive edge.
