Paulitical Economy™

Post 367: The War on Cash, Business and the Next Generation

* Father’s Day trumps Mother’s Day.  * Don’t shoot the messenger. * Comparing Uber with Lyft.  * I’ve started using Lyft more often. * Canada’s youth are suffering from bad government policy.  * While the country’s baby boomers benefit. * A look at cash.  * Most people still carry it but unfortunately its relevance is declining.  * This is a really bad thing. * An Op-Ed from former Starbucks CEO Howard Schultz.  * Pointing out how the anti-business government policies in the state of Washington are driving jobs to other states. * Headline inflation in the U.S. is the highest since 2023 as the war in Iran takes its toll.  * Core inflation that excludes energy is also rising. * Financial Ructions:  * Bond yields are soaring from what are still relatively low levels.            * This will eventually matter. * Wholesale inflation in the U.S. soared to 6.0%  * This will eventually matter. * Book Review: False Dawn by George Selgin  * Although government spending plummeted after World War II the economy soared.  * Despite the warning from Keynesian economists. * Official unemployment numbers would have been higher if it included all of the women who lost their jobs with men returning home after the war.  * But many of the women who left the workforce had no intention of staying there once the war ended. * Private investment is the source of economic prosperity.  * In particular, net private fixed investment is what matters.

Post 366: Central Bank Policy That Resulted In Unaffordable Homes and Basic Necessities

* Clorox continues to struggle to grow its top line.  * And its share price * A look at real residential real estate price appreciation over the years in:  * Canada * U.S.A. * China * UK * Costco sales are still soaring.  * And a look at the profit model. * Whirlpool's sales and share price are tanking.  * Tariffs to the rescue.  * And a look back at 1992. * The US jobs numbers for April were weak.  * But the headline number looked OK due to a massive adjustment.  * Full-time jobs are down by over a million from last year. * Canada has lost jobs in three of the last four months.  * And underneath the hood the quality is even worse. * In Financial Ructions:  * The Canadian government launches the Canada Strong Wrong Fund.  * And no, it’s not a Sovereign Wealth Fund. * A look at an article on value investing.  * Time horizon is the great differentiator. * Book Review:  * Uncertainty with respect to monetary policy has a dampening effect on capital investment.  * PM: Over the last 16 years, the certainty that the Fed will always bail out Wall Street has had an amplifying effect on stock markets. * Keynesians worried that as World War II ended and government spending was slashed that it would result in a new Great Depression.  * Not only did the government cut spending but the country enjoyed a budget surplus for the first time since 1930.  * The economy soared.

Post 365: Home Sizes Shrink as Their Prices Soar And Spirit Soars No More

* Home Depot is still experiencing slow growth due to consumer uncertainty and normal interest rates. * Spirit Airlines goes bankrupt. * No taxpayer rescue. * Prices of Kimberly-Clark products are falling and volume is rising. * There are many apologists out there for soaring home prices i.e. those who own houses. * But no, increasing home sizes do not justify higher home prices. * And home sizes have been falling over the last ten years. * Financial Ructions * The driver of Canada’s GDP growth has been government spending. * And investment has been weak. * Which does not bode well for our economy’s future productive capacity. * Book Review * In the next two chapters of George Selgin’s False Dawn we see that: * Herber Hoover was much very much a Keynesian while Franklin Roosevelt was not. * And that the Roosevelt administration was extremely hostile to business. * And thus the collapse of investment.

Post 364: Government Policy Works Well on Crime, Not So Much On Markets

* The rate of crime in the US has fallen significantly. * Homicide rate the lowest since the year 1900. * Spirit Airlines has filed for bankruptcy protection: for the second time. * Government meddling is making a bad situation worse. * And a look back. * UPS and Fedex are going in different directions in terms of their package volumes.  * It’s because of Amazon. * The quality of life in Canada is improving from very low levels and now ranks 26th: 21 points lower than in 2013 * Netherlands is number one. * Italy number forty. * Procter & Gamble has reduced its prices in real terms (after inflation) for two years. * Sales and volume have both responded positively. * Pepsi increased prices by the lowest amount in years. * And for the first time in over three years   volume didn’t decline. * It didn’t grow either but at least it’s a start. * Rising oil prices are hitting inflation in Canada. * But core inflation ticked down a bit. * In Financial Ructions: * An IMF report says that Canada suffers from “longstanding structural issues.” * PM: One of them being out of control government spending and an explosion of debt. * Book Review: * In the next two chapters of False Dawn by George Selgin we see that: * There were a number of contributing factors to the Roosevelt Recession of 1937. * And that New Deal policies were anything but Keynesian.

Post 363: Growing Government Jobs Restrict Growth as Tariffs Begin to Bite

* Lululemon has not grown comparable store sales in the US for almost two years.  * And we review a scathing attack from the company's founder. * US home prices vs. income have increased over the last twenty-five years.  * This, despite much lower mortgage rates.  * Correction, because of much lower mortgage rates. * Ski-Doo and Sea-Doo maker BRP has experienced strong sales growth of late.  * But new tariffs whacked the company’s share price. * Church & Dwight is a well-run consumer products company.  * But even their sales have slowed to a crawl. * In Financial Ructions:  * A look at average US productivity growth through the decades. * A look at the jobs situation in Canada.  * And comparing government vs. private worker job growth.  * It’s bad news. * An article in the Financial Times again attempts to blame the high inflation of 2022 on Russia/Ukraine war.  * No, it was policy-driven. * Book Review  * Although base money soared in the 1930s due to gold flooding into the U.S.  * The Administration, through the Fed, did its best to limit its impact on the money supply. * What recovery there was up to 1937 was a result of consumer spending.  * But it was not accompanied by investment and there was no increase in the capital stock. * PM: In other words, you can’t consume your way to prosperity.