As health care continues to represent a larger portion of U.S. gross domestic product, the federal government’s ability to finance that expenditure through tax revenues has relatively declined. Corporate taxes as a percent of GDP peaked at 2.6% in 2007. In the aftermath of the global financial crisis that proportion fell to 1% in 2009 and recovered to 1.9% in 2015. In 2018, the last year for which we have data, it was again at 2009’s level of 1%. … READ MORE >
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SEC adopts amendments bringing clarity to accredited investors and family offices
The SEC has adopted all the amendments of the accredited investor definition. Family offices and family office clients that meet this standard will be able to invest in the private markets, including private equity, venture capital and hedge funds. … READ MORE >
Hedge funds will be tested as U.S. fundamentals remain frail
Middle market hedge fund managers are coping with a contradiction—as the world unravels due to Covid-19, the S&P is nearing an all-time high. While the markets respond favorably to progress on a vaccine, money managers are looking to a future with a high degree of uncertainty around a possible U.S. recovery amid weak fundamentals. … READ MORE >
CHART OF THE DAY: TSA throughput highlights consumer uncertainty
As the dog days of summer near their end, traditional forms of data such as the Conference Board’s consumer confidence reading and Labor Department’s weekly jobless claims are starting to show strain in the U.S. economic recovery. High-frequency, real-time metrics such as TSA Traveler throughput data and OpenTable restaurant reservation … … READ MORE >
CHART OF THE DAY: U.S. durable goods orders accelerate on the back of strong auto demand
This uptick further bolsters the belief that manufacturing activity will help lead the U.S. economic recovery. … READ MORE >
Major policy shift at the Federal Reserve: average inflation targeting
Federal Reserve Chairman Jay Powell on Wednesday announced a significant shift in the central bank policy regime that moves away from its long held Phillips Curve-based trade-off between employment and inflation. This will provide the Federal Reserve more room for accommodation in an era of zero interest rate policy and position the central bank to support maximum sustainable employment without running the risk of higher inflation expectations and actual inflation. … READ MORE >
Chart of the Day: New home sales rise as housing stays hot
Sales of new homes continue to soar, increasing by 13.9% to a seasonally adjusted rate of 901,000 for the month of July, and up 36.3% from the same period a year earlier, according to data released this week from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales are up 8% year over year. … READ MORE >
Small and medium size firms in crisis: A message from the real economy
The condition of small and medium-size firms implies a potential inflection point in the nascent economic rebound following the near shutdown of the economy last spring. Without further reform and support of the signature Paycheck Protection Program (PPP)—which provided a vital lifeline to those firms during the worst of the pandemic—there will be an increase in bankruptcies, followed by another round of job losses, this time tilted toward the permanent elimination of jobs that support the bulk of the American middle and working classes. … READ MORE >
Chart of the Day: Consumer confidence falls to six-year low
The Conference Board’s measure of consumer confidence fell to its lowest level in six years in August, underscoring uncertainty amid high unemployment in a U.S. economy that has faced pandemic-driven stops and starts since mid-March. … READ MORE >
CHART OF THE DAY: U.S. IHS Markit August manufacturing PMI reaches highest point since early 2019
According to data released by IHS Markit, manufacturers noted improvement in operating conditions midway through the third quarter, as highlighted by the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index. The upturn, the fourth straight monthly advance, was driven by quicker expansions in output and new orders. … READ MORE >