Stimulus

Share to Twitter Share to Linkedin This story has been updated. President-Elect Joe Biden’s transition team released a sweeping $1.9 trillion stimulus proposal on Thursday. The wide-ranging plan calls for significant economic relief including additional stimulus checks of $1,400, enhanced federal unemployment benefits, a $15 per hour minimum wage, paid sick leave, and investments in public health infrastructure and pandemic relief programs. While the proposal calls for billions of dollars in relief for higher education, not included in Biden’s plan is any student loan forgiveness or other relief for student loan borrowers. House Democrats had previously passed stimulus legislation in May providing for an extension of the current moratorium on student loan payments to September 2021, as well as $10,000 in student loan forgiveness for economically distressed borrowers. That legislation was never taken up by the Republican-controlled Senate. Democrats … [Read more...] about Biden’s Stimulus Proposal: No Student Loan Forgiveness

Share to Twitter Share to Linkedin Bank contagion has officially spread to international markets, raising fears that last week’s dramatic failures of U.S. lenders Silicon Valley Bank (SVB) and Signature Bank may be just the start of another global crisis. Shares of Credit Suisse Group, one of Europe’s top 20 largest banks by assets, plunged more than 32% in intraday trading, hitting a new all-time low following reports that the Swiss bank continues to see depositor outflows. Yields on short-dated U.S. Treasury bonds fell to their lowest levels in months on increased safe-haven demand. (Bond yields and prices move in opposite directions.) The six-month yield traded as low as 4.5% on Wednesday, while the one-year yield came close to breaking below 4.0% for the first time since October 2022. I believe the bond rally may continue the longer fears of a full-blown banking crisis persist. Investors interested in capital preservation right now can do much worse … [Read more...] about Ultra-Short Government Bonds Are Rallying On Bank Contagion Fears

Share to Twitter Share to Linkedin Prices of bellwether commodities like oil, gas, lumber and copper are down significantly from a year ago. Commodity markets are remarkably efficient in a classic “Econ 101” sort of way. Prices go up, producers respond with higher rates of production, and then prices go down. A look back at recent history makes it easy to see why commodities are famous for their cyclicality. Prior to the onset of the COVID pandemic, the global economy was stable, relatively healthy, and, most importantly, the supply and demand of most commodities was largely in balance. Rates of consumption were steady, and commodity producers were, by and large, fulfilling demand requirements through efficient and well planned production increases. Things were predictable; demand rose incrementally and steadily, and money was cheap for investment into production facilities. Producers could pretty much predict how much they needed to produce and how to … [Read more...] about Commodity Prices Are Leading Indicator Of Inflation’s Demise

Share to Twitter Share to Linkedin The Power of Words “Our experts believe, and the data shows, that most of the price increases we’ve seen are temporary.” – President Biden (2021) “We have in recent months seen some inflation ... I personally believe that this represents transitory factors.” – Janet Yellen (2021) “Inflation is likely to be transitory.” – Lael Brainard (2021) “Economists continue to believe that higher inflation is transitory.” – Reuters (2021) “Transitory has different meanings to different people.” – Jerome Powell “Fed officials have worked to clarify that their meaning behind “transitory” inflation is quite different from the public’s.” – Washington Post (2021) “Powell admits the Fed got it wrong on inflation, and says they should stop calling it ‘transitory’.” – Fox Business News (2021) “Democrats are in a tricky position [having] made a tactical error. Their initial messaging strategy labeled inflation as … [Read more...] about What Is Transitory Inflation? (2) The Politics

Share to Twitter Share to Linkedin Over the past few years, there has been an uptick in the number of taxpayers asking about married filing separately as a tax status. Some of the inquiries are because the status can be confusing, but others have focused on whether there was a benefit to switching status to claim certain pandemic-related benefits. Now that most of those benefits have expired, some taxpayers wonder if it’s time to switch back to married filing jointly. Here’s what you need to know. Marital Status Your marital status is determined as of the last day of the tax year—December 31—according to state law. If you’re married on that day, you’re married. It’s not more complicated than that. If you are married, you generally have two choices: married filing jointly (MFJ) or married filing separately (MFS). MFJ Is More Popular Most married couples file jointly. For the tax year 2020, the last year for which complete data is available from … [Read more...] about Is Married Filing Separately The Right Tax Filing Status For You?

Share to Twitter Share to Linkedin The Fed began raising interest rates one year ago, on March 17, 2022, and the U.S. economy is not in recession. This “Godot Recession” (because we’re just waiting and waiting and it never comes, in the words of Ray Faris) should not be surprising . There never was good reason to expect a recession so quickly, though there is good reason to expect one to begin late in 2023 or early 2024. That conclusion derives from the usual business cycle pattern, adjusted for some special aspects of this episode. The average time lag between changes in monetary policy and the real side of the economy—spending, production and employment—is about one year. The time lag for changes in inflation is roughly two years. This description simplifies a more complicated process and ignores substantial variability of the time lags. Milton Friedman famously found that the time lags are long and variable. Still, the average is a good starting point. … [Read more...] about Why No Recession One Year After Interest Rates Started Up

Colorado hospitals as a whole remained financially healthy through the first two years of the pandemic, but their profit margins were slashed in half in 2022 as costs swelled, pushing the majority of the state’s hospital systems into the red by the fall. Breaking even or losing money for a year or two might not spell disaster for hospitals, particularly for systems that built up reserves before COVID-19 hit. But an inability to turn at least a small profit over the longer term could lead to layoffs, reduced health services or even hospitals closing. St. Vincent Hospital in Leadville came close to shutting down last year, before an infusion of state and local funds pulled it from the brink. Health systems such as Banner Health and CommonSpirit Health — which owns the Catholic hospitals under the Centura partnership, including St. Anthony in Lakewood — lost money treating patients in the first nine months of 2022. And Denver Health’s loss of $34 million last year, and the fact it … [Read more...] about Majority of Colorado hospital systems lost money in 2022 as costs surged, stock market tanked

Share to Twitter Share to Linkedin The long goodbye at Salesforce continues with more layoffs reported today. Tech Layoffs Really Are Rising, and Here's Why. Google, Microsoft, Amazon and other tech companies have laid off more than 95,000 employees in the last year. Big layoffs are happening — this time in the tech industry. It’s a story most of us are familiar with. Our reliance on technology expanded dramatically during the early days, weeks, and months of the pandemic. Work from home meant that every employee had to access remote technology. Stay-at-home orders meant that all of our shopping — everything from groceries and daily staples to cars and furniture — happened online. We gathered with friends and family over Zoom and FaceTime and Teams. Connecting with life meant connecting through technology. Pandemic stimulus relief money enabled tech companies to raise capital and invest in growth. They went on a hiring … [Read more...] about The Deeply Personal Impact Of This Round Of Layoffs

Share to Twitter Share to Linkedin Just four months ago I warned about underestimating the huge role which irrationality plays in bank runs. I call the phenomenon “excessive rationality-assumption bias.” Now we are seeing this bias play out globally, beginning with a run on Silicon Valley Bank and spreading to Credit Suisse, which was just acquired by its larger competitor UBS. Irrational behavior is part of human psychology. It is a mistake to think that depositors, bank executives, the media, and regulators can be counted on to behave rationally. Consider each in turn. It is a mistake to believe that depositors can be counted upon to behave rationally. Depositors are people, and people are psychologically hard wired to experience a “fight or flight” reaction to fear. For Silicon Valley Bank, depositor flight by a few was propelled by crowd psychology into a panic involving many. 1 In Shakespeare’s play Hamlet, Hamlet uses the phrase “thinking … [Read more...] about The Psychology That Brought Down Silicon Valley Bank Is Not Going Away

Share to Twitter Share to Linkedin Founder and Managing Principal of OrgLeader , helping leaders thrive in uncertainty and better manage risk. Is stakeholder capitalism a fad, a form of government influence or an unrealistic ideal spurred by recent global events (e.g., the pandemic, climate action and the Black Lives Matter movement)? Skeptics use these descriptions when discussing the concept. An objective look at stakeholder capitalism reveals their depictions are off the mark. These descriptions are misconstrued fragments. Government can be a stakeholder. However, it is not required. Certain parts of the political arena may favor stakeholder capitalism more than others, but such capitalism is non-partisan. It is reasonable that global events contributed to the interest in stakeholder capitalism. Nevertheless, none of these individually is enough to propel it on a large scale. Business plays a vital role. Shared Tenets When 181 … [Read more...] about Drive Organizational Effectiveness With Stakeholder Capitalism