Elliot Eisenberg Economic & Policy Blog

Pending Problem Pending home sales slipped 5.5 % M-o-M in December and slid 5 % Y- o-Y . This isn ’ t surprising , given the nearly one percentage point rise in 30-year mortgage rates since the recent low of 6.08 % for the week ending 9-26-24 . Moreover , absent seasonal adjustment , the Pending Homes Sales Index is at its lowest since 2001 when the NAR began reporting pending sales . Absent lower rates , sales will continue struggling .

Astonishing Alexa The Friday File : In 1983 , Alexa was the 745th most popular name with about 200 girls receiving it . It then steadily rose , peaking in 2006 at 39th most popular , with over 6,100 girls given the name . By 2014 , when Amazon introduced Alexa , it was the given name of 4,000 girls . It oddly spiked to 6,000 in 2015 but has since slid , and in 2024 just 490 girls were named Alexa .

Retail Reset January retail sales were down a substantial 0.9 %, the biggest monthly decline in almost two years and well worse than the expected 0.2 % decline . Car sales fell , as did sales at most stores . There have been occasional blooper months since 2020 , but they have never been a harbinger of anything . More importantly , last month was the coldest January since 1988 , and there were also the fires in CA .

Tariff Talk By reducing US demand for imports , tariffs reduce the supply of dollars flowing to foreigners . That reduced supply raises the foreign exchange value of the dollar . While a stronger dollar reduces inflation , it makes US exports more expensive . This partly offsets some of the benefits of the tariffs . To reduce imports but boost exports a nation could devalue their currency . That would , however , boost inflation .

Employment Enigma January net job growth was a decent 143,000 , Nov / Dec were upwardly revised by 100,000 , and the unemployment rate fell to 4 %, its best level since 5 / 24 . But the

workweek slid to 34.1 hours , the lowest reading since 3 / 20 , and quite surprisingly , wages rose a very strong 0.5 %. I suspect the Fed keys in on the falling unemployment rate and rising wage growth number and holds tight for the near term .

Receding Rate While the Fed ’ s favorite inflation measure came in at 0.2 % for December ( the unrounded number was 0.156 %), the six-month rate is running at 2.3 %, and the threemonth at 2.2 %, very close to the Fed ’ s 2 % target . Better yet , while labor compensation was up 0.9 % Q- o-Q , and 3.8 % Y-o-Y , with productivity growing at about 2 %, compensation minus productivity , the underlying inflation rate , is up a benign 1.8 %! Inflation continues to soften .

Bad Budget In the first four months of FY25 , the budget deficit totaled $ 838 billion ; $ 306 billion more Y-o-Y . Revenues were $ 11 billion higher , outlays were $ 317 billion higher . But some of the increase was due to calendar effects . Absent them the deficit would have been $ 750 billion . Despite the large rise , the CBO still projects the CY25 deficit will be $ 1.9

trillion , unchanged from CY24 , and in my opinion , inexcusably high .

Terrible Tariffs While US exports to Canada and Mexico are both about 1 % of GDP , or $ 315 billion / year , do not be dismissive . Canada accounts for 60 % of all US crude oil imports , about 3.8 million bbl / day . As for Mexico , they account for 23 % of total US food imports . This includes 63 % of vegetables , and 47 % of fruits and nuts . Collectively Canada and Mexico represent 30 % of all US imports .

Elliot Eisenberg , Ph . D . is an internationally acclaimed economist and public speaker specializing in making economics fun , relevant and educational . Dr . Eisenberg earned a B . A . in economics with first class honors from McGill University in Montreal , as well as a Master and Ph . D . in public administration from Syracuse University . Eisenberg is the Chief Economist for GraphsandLaughs , LLC , a Miami-based economic consultancy that serves a variety of clients across the United States . He writes a syndicated column and authors a daily 70- word commentary on the economy that is available at www . econ70 . com .

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