Articles from AIER Staff
George Gilder's recent book might be his biggest seller yet, and this is after a career of rocking both the intellectual and political worlds with visionary works that have anticipated and then defined the technological and policy trends of the times. His book is Life After Google, and its focus is on the rise of decentralization in what he called the Cyrptocon. He explains why the tech giant's business model may not work in the future and how the cryptocon will provide a replacement.
In the Cotswold Hills north of Bath, England, large manor houses were made from the local oolitic limestone. Cotswold Cottage at AIER in Great Barrington, Massachusetts, built from 1929 to 1931, was intended to be a copy of that Cotswold style, which is why our revered stone house has sometimes been called “Old Cotswold.”
Quality of life and demographics, rather than the economic climate, play a stronger role in the top rankings for metro areas in this year’s AIER College Destinations Index. This is particularly true for metro areas with a population of 1 million or more. In contrast, economic climate plays a more important role in our rankings for metro areas with populations under 1 million.
Consumer spending slowed to a 2.1 percent annual rate in the third quarter from a strong 4.3 percent pace in the second quarter, according to the latest data on real gross domestic product from the Bureau of Economic Analysis. On a year-over-year basis, personal consumption expenditures, a measure of real consumer spending, grew at a 2.6 percent rate, down slightly from a 2.7 percent pace in the second quarter (Chart 1).
Excessive debt played a major role in the Great Recession, from December 2007 to June 2009. In the seven years since the recession ended, home prices have rebounded, and households have significantly reduced their debt load. Only recently have households begun to increase their overall debt, which has inched up just 2 percent from when the recession began. Debt growth for corporate and small businesses has been more significant, rising 36.5 percent and 29 percent, respectively.
The U.S. economy continues to expand at a pace below its long-term average. Revised data show the economy grew at a 1.1 percent annual rate in the second quarter compared with a long-term average annual rate of 3.2 percent. Consumer spending, a key driver, rose 4.4 percent and contributed 2.9 percentage points to overall economic growth. Business fixed investment remains weak, hampered by poor performance in the domestic energy industry, but our conclusion remains that it may well improve in the second half of 2016.
The U.K.’s surprising June 23 referendum vote to leave the European Union (Brexit) caused dramatic moves in global capital markets. In the days that followed, politicians from around the world offered a wide range of comments, from support for Brexit and independence movements in other European nations to anger and threats. In the U.K. protesters against Brexit took to the streets, while a string of political resignations left a leadership void.
AIER’s Business-Cycle Conditions model rebounded in May to 50, a neutral position, following two months at 38, a level that had indicated economic weakness. This uptick supports our expectation that a strong labor market would boost consumer sentiment and spur further gains in consumer spending. It also justifies our reluctance to assert that a recession was likely when our index first fell below neutral. With our Leaders back at the 50 threshold, AIER researchers judge the risk of recession has receded, although it is still slightly elevated.