Newsletter - Kamran Afshar Associates Inc.

Explore the latest Lehigh Valley Economic Review

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BROWSE POSTS

2021 Year in Review

1/12/2022, 9:32:58 AM

2021 was a transitional year, as the economy, dampened by the COVID virus, took off with exceptional growth thanks to a new vaccine and a significant infusion of government transfer payments to individuals.

The rate of inflation highest since 1982!

12/13/2021, 10:14:25 AM

According to the Bureau of Labor Statistics, the consumer price index (the CPI), rose by zero-point-eight percent in November. Adjusted for seasonality, inflation during the first 10 months of the year rose at an exceptionally high rate of 6.9%. For the last 12 months, the inflation rate was 6.8%, the highest inflation rate for any 12 months since March 1982, a 39-year high. While this is numerically correct, it is also hype; numbers, absent context, often do that. For example, the economy was in recession; inflation was almost half-a-percent for the first 11 months of last year. A more accurate inflation assessment is when it is compared with November 2019, skipping the COVID-recession year, then average annual inflation becomes a more reasonable rate of 4.0%. So does this mean that this is all hype? Unfortunately, that is not correct either; monthly inflation calculated at annual rates was 9% or higher in 4 out of the last 11 months.

Payroll employment rose by 210,000 in November

12/6/2021, 3:16:07 PM

According to the Bureau of Labor Statistics, payroll jobs increased by a net 210,000 during November. This, coming on the heels of a whopping 613,000 jobs added in October, makes the total number of new payroll jobs created in the first 11 months of this year 6.1 million. It should be noted that the number of jobs created during November was larger than the net increase noted above by order of magnitudes. More than 4 million people quit their jobs during the month, and another 2 million were let go or otherwise separated from their jobs. So there were close to 6.5 million new hires in November.

Real Retail Sales is dropping

11/18/2021, 5:13:21 PM

Real Retail sales, which is adjusted for inflation, has been slowly dropping after it peaked in April. It should be noted that despite the drop, retail sales, including food services, is still 8% above its last year's level.

Consumer sentiment index rose in December

12/26/2021, 6:27:32 PM

According to the University of Michigan, the consumer sentiment index rose by 5% in December, while still well below its June and July highs, it was a step in the right direction. COVID's Delta variant in summer and the Omicron variant in late fall and the persistent inflation dropped the consumer sentiment way down through November. However, the increase in December was expected, well more like hoped for, due to the over-reaction of the previous months.

Two-thirds of the 5.7% GDP growth in the 3rd quarter was erased by inflation

10/30/2021, 5:11:32 PM

According to the Bureau of Economic Analysis, the advanced estimate of the US economy's 3rd quarter growth of 5.7% became 2.0% after adjustment for inflation. The inflation-adjusted growth, otherwise known as the real growth, is what we follow. Over the last 12 months, the real growth was at an exceptionally high rate of 4.9%, making it the 2nd highest growth rate for any 4 quarters in this century. This is 2.5 times the average growth rate for any 4 quarter in this century, half of which falls between 1.4 to 2.9%.

Housing prices, where are they going?

12/20/2021, 1:40:38 PM

During the pandemic, we experienced explosive growth of the housing market and the accompanying skyrocketing of their sales prices.By May of last year, the number of existing homes sold in the country fell by 30%; however, average home sales price declined slightly despite this huge drop. In the Lehigh Valley, sales volume dropped by 60%, twice as bad as the national average, without any lasting decline in prices.

The Valley has recovered 8 out of every 10 payroll jobs it lost last year

11/23/2021, 9:27:42 AM

In March and April of last year, the Valley lost 72,000 or 1 out of every 5 payroll jobs it had. By any account, this was a devastating blow. Thanks to the stimulus and transfer payment packages, the economy did not fall into a depression. And as of the end of September 2021, 79% of the payroll jobs lost were recovered, placing total local employment still 4.3% short of its pre-pandemic level, slightly behind the national average, which is only 3.3% down.

Where are gasoline prices going?

11/29/2021, 10:29:46 AM

According to the U.S. Energy Information Administration, the average price of regular gasoline on the Monday before Thanksgiving this year was $3.40 per gallon, significantly higher than last year’s $2.11. However, last year was a recession, the year to compare with is 2019, but even then, the gas prices were around 80 cents cheaper than now. And this is not happening due to more driving this year; actually, we drove 5% fewer miles in 2021 compared to 2019. So why the price of gas is so much higher.

Lehigh Valley business sentiment index stalled in October

11/8/2021, 9:24:11 AM

The Lehigh Valley Business Sentiment Index, the BSI, rose by a statistically insignificant 1% in October, coming on the heels of a 6.3% increase in July, and its April’s 13.1% leap, making this a course correction. After bottoming out in April 2020, the index showed significant increases in every quarterly survey, except in October 2021, when its nominal increase of 0.1% is statistically not different from zero. While after three strong increases this year, the BSI has risen to just a shade below its 2019 level (the last year before COVID), it is still 8.5% below its October 2018 level when the BSI was at its peak.