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  • Brian Wesbury Weekly Outlook: The Recession is Over

    07.07.2020 10:42 - First Trust Global Portfolios Limited: The Recession is Over The recession that started in March is the sharpest downturn since the Great Depression. As it turns out, it was also the shortest. Friday’s employment report should leave little doubt that the US economy has already hit bottom and is starting to recover. Every economist brave enough to make a public forecast thought nonfarm payrolls would drop in May and the unemployment...

  • Brian Wesbury Weekly Outlook: More Green Shots

    07.07.2020 10:42 - First Trust Global Portfolios Limited: More Green Shoots A full recovery from the COVID-19/Shutdown Crisis is going to take a long time. We don’t anticipate reaching a new peak for real GDP until the end of 2021; we don’t anticipate a 4% unemployment rate until 2024. However, there is a growing amount of evidence that the economy may have hit bottom in May. It’s important to be cautious; the evidence for having hit bottom already is...

  • Brian Wesbury Weekly Outlook

    27.05.2020 17:47 - First Trust Global Portfolios Limited: Signs of Economic Life This year’s experiment with government-imposed lockdowns has been a fiasco. We should have been focused on sealing-off nursing homes and limiting mass indoor events, while the vast majority of businesses that were shutdown could have kept operating, with natural social distancing. Now, as most people (those that are not elderly or immuno-compromised) realize their health...

  • Brian Wesbury Weekly Outlook

    19.05.2020 14:20 - First Trust Global Portfolios Limited: How Are We Going To Pay For All This? The largest federal budget deficit since World War II came back in 2009, as slower growth and increased government spending during the subprime-mortgage financial panic pushed the deficit to 9.8% of GDP. This year’s the budget deficit will, quite simply, blow that record out of the water. The Congressional Budget Office recently totaled up all the...

  • Brian Wesbury Weekly Outlook

    05.05.2020 17:27 - First Trust Global Portfolios Limited: Light at the End of the Tunnel When the employment report for April is released this Friday, the economic damage from the deepest of the Coronavirus shutdowns will become clear. We estimate that nonfarm payrolls will be down roughly 22 million versus March, and the unemployment rate will skyrocket to around 17.0%, the highest reading since at least 1948. To put that in perspective, during the...

  • Brian Wesbury Weekly Outlook

    05.05.2020 17:27 - First Trust Global Portfolios Limited: GDP: Bad, And Getting Worse Before the Coronavirus, the US economy was cruising for what looked like 3% annualized growth in real GDP in the first quarter. But the effects of both natural social distancing and government-mandated lockdowns crushed economic growth in March. As a result, we now think real GDP contracted at a 3.7% annual rate in Q1, led by a massive drop in inventories as well as...

  • Brian Wesbury Weekly Outlook

    05.05.2020 17:27 - First Trust Global Portfolios Limited: With each passing week, the economic damage wrought by the Coronavirus and the resulting shutdowns grows larger. It’s not just businesses, both small to large, feeling the pain. Educational institutions, hospitals, churches, not-for-profits, and state and local governments are all finding it hard to remain financially viable. The US has essentially turned off broad swaths of the private sector – the...

  • Brian Wesbury Weekly Outlook

    14.04.2020 17:18 - First Trust Global Portfolios Limited: Job Destruction Normally, we’re not big fans of enhanced unemployment benefits. But the current severe economic contraction brought about by the Coronavirus and the government-mandated shutdowns of businesses meant to stop the disease is a completely different animal from a normal recession. It’s not just that people are staying away from certain economic activities because of the virus: the...

  • Brian Wesbury Weekly Outlook

    07.04.2020 16:31 - First Trust Global Portfolios Limited: Do the Least Harm Doctors think differently than economists. They put patients with a potential for brain damage in an artificial coma to stop swelling, and when it stops, they bring them out. This fits with the Hippocratic Oath all doctors take, which states “First, do no harm.” The idea is to “limit” damage and then “restart” a more normal body with fewer problems. The economy doesn’t work...

  • Brian Wesbury Weekly Outlook

    31.03.2020 17:38 - First Trust Global Portfolios Limited: The Coronavirus Threat Total deaths in the US from COVID19 look like they’ll hit at least 3,000 by the end of March. A potentially brutal April lies ahead. In the meantime, the measures taken to limit deaths have temporarily tanked the US economy. Initial claims for jobless benefits soared to 3.283 million per week, easily the highest ever. The prior record was 695,000 in October 1982; the...

  • Brian Wesbury Weekly Outlook

    31.03.2020 17:37 - First Trust Global Portfolios Limited: The Coronavirus Contraction Due to fears about the Coronavirus – more specifically, the forceful government measures designed to halt its spread, the US is on the front edge of the sharpest decline in economic activity since the Great Depression. The US economy was on track to grow at around a 3.0% annual rate in the first quarter before fears and response measures escalated. Don’t just take our...

  • Brian Wesbury Weekly Outlook

    31.03.2020 17:37 - First Trust Global Portfolios Limited: Fed Fires Bazooka at Coronavirus Back in July 2008, then-Treasury Secretary Hank Paulson said he wanted a “bazooka” to deal with financial threats to Fannie Mae and Freddie Mac. Paulson wanted Congress to give him an unlimited credit line for these enterprises. This time around, it’s the Federal Reserve firing a bazooka at the Coronavirus, with more possibly to come. Instead of waiting until...

  • Brian Wesbury Weekly Outlook

    05.03.2020 10:43 - First Trust Global Portfolios Limited: Fed Should Be Decisive By the time you read this, the Fed may already have cut rates. That is the situation we find ourselves in given the recent correction in equities, which were at a record high only eight trading days ago but were down 12.8% from that peak as of the market close on Friday. Fears about the economic effects of the Coronavirus have driven equity prices lower and led to calls for...

  • Brian Wesbury Weekly Outlook

    02.03.2020 12:53 - First Trust Global Portfolios Limited: One of the worst bipartisan policy decisions in the past generation was the aggressive government push in the 1990s and 2000s to promote homeownership, beyond what the free market could handle. Policymakers encouraged Fannie Mae and Freddie Mac to gobble up lots of subprime debt, in turn boosting lending to borrowers who couldn’t handle their loans. But now a bizarre idea is making the...

  • Brian Wesbury Weekly Outlook

    02.03.2020 12:51 - First Trust Global Portfolios Limited: Thirty years ago, many in the US were in fear that a rising power in Asia was on the verge of eclipsing the US. Now it’s China, back then it was Japan. Back in the late 1980s Japan had become the second largest economy in the world after the US, and seemed like a juggernaut that couldn’t be stopped. Many center-left economists thought that the post-World War II experience of Japan proved that...

  • Brian Wesbury Weekly Outlook

    02.03.2020 12:50 - First Trust Global Portfolios Limited: In January, US payrolls expanded by 225,000, not only beating the consensus forecast, but also forecasts from every single economics group. Since January 2019 (12 months ago), both payrolls and civilian employment – an alternative measure of jobs that includes small-business start-ups – are up 2.1 million. The labor force – those who are either working or looking for work – is up 1.5 million, while the...

  • Brian Wesbury Weekly Outlook

    02.03.2020 12:49 - First Trust Global Portfolios Limited: Fears about the coronavirus knocked down equities last week, while a flight to safety brought the yield on the 10-year Treasury down to 1.51% at the Friday close versus 1.69% the week prior and 1.92% at the end of 2019. The consensus in the futures market is that the Federal Reserve will cut the federal funds rate by 50 basis points this year. We think that is ridiculous. The economy doesn’t need...

  • Brian Wesbury Weekly Outlook

    28.01.2020 16:45 - First Trust Global Portfolios Limited: Look for Steadiness from the Fed The Federal Reserve is set to make its first policy statement of the year on Wednesday, so this is as good a time as any to reiterate our view that the Fed is likely to keep short-term interest rates steady through 2020 and, while pressures will build, the Fed seems content to hold them steady next year, as well. We still think monetary policy is far from tight, and...

  • Brian Wesbury Weekly Outlook

    23.01.2020 11:22 - First Trust Global Portfolios Limited: Moderate Growth in Q4 Back in mid-November, the highly respected GDP forecasting model from the Atlanta Federal Reserve Bank (also known as “GDP Now”), estimated that real GDP would only grow at a 0.3% annual rate in the fourth quarter, which, if accurate, would have been the slowest growth for any quarter since 2015. At the time, we were forecasting economic growth at a 3.0% rate. Now, nine...

  • Brian Wesbury Weekly Outlook

    14.01.2020 16:32 - First Trust Global Portfolios Limited: The Gift That Keeps Giving The US economy is not in an economic boom, but growth has been consistently faster than during the Plow Horse phase from mid-2009 through the end of 2016. Real GDP has grown at a 2.6% annual rate since the start of 2017 versus 2.2% beforehand. But most analysts expect a noticeable slowdown in 2020; not a recession, but slimmer 1.8% real GDP growth (Q4/Q4). This is an...