Newsletter - Kamran Afshar Associates Inc.

Explore the latest Lehigh Valley Economic Review

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BROWSE POSTS

The FED Holds Steady on Interest Rates

3/24/2025, 3:26:05 PM

After increasing rates 11 times from March 2022 to July 2023, the FED implemented three rate cuts between September and December of last year. In March, it held rates steady, announcing that “we now have inflation coming in from an exogenous source, but the underlying inflationary picture before that was basically 2.5% inflation, 2% growth and 4% unemployment.”

Artificial Intelligence

2/15/2025, 12:34:21 PM

AI became the news of the week after the arrival of DeepSeek, the Chinese AI that does not require advanced computer chips and thus does not require an entire power plant to operate!But what is AI? I used to tell my students this was a misnomer, as the program was not intelligent. It may have extreme amounts of information about a subject but is unaware of simple things that a child of 4 readily knows. Also, the word artificial is inaccurate since the program depends on the very real intelligence of its programmer. I asked ChatGPT about my definition; it mostly agreed with my description, although it said modern AI, particularly machine learning models, are not purely hand-coded. I think it used the word modern to make fun of my age and reliance on writing code! The program can learn from large amounts of data; however, this is not beyond its programming since the programmer directs the AI to gather and analyze new information.

Business borrowing, how does it affect the economy?

3/27/2024, 5:33:35 PM

Of all the indicators of the economy's future growth, the volume and change in the level of business borrowing stand out as significant barometers of future economic activity. Business borrowing is typically for expansion purposes. Banks do not easily grant loans solely to cover payroll expenses, especially not on a recurring basis. Banks lend money primarily to entities that do not urgently require the loans. To be fair, banks are also businesses themselves and must ensure a reasonable certainty of debt repayment.

Our national debt is now larger than our GDP, is it possible to reduce the debt

5/23/2023, 5:32:35 PM

The national debt is now at $31 trillion and will continue to rise. At this level, it is 119% of the country's Gross Domestic Product. Yes, the national debt is larger than the GDP, and it has been since 2015. However, as high as the debt is, it is not the first time that debt has exceeded the GDP; at WWII's end, the debt stood at 121% of the GDP. And much closer to the present, during the 2nd quarter of 2020, national debt rose to 135% of the GDP, even higher than after WWII. The interest payment on the WWII debt was less than 1.8% of the GDP, which is obviously due to the very low interest rates of the time.

We are using less electricity

4/1/2023, 12:35:35 PM

According to the US Energy Information Administration, we use less electricity per capita. While we have increased our electrical usage by 16% this century, US population increased by 20% during the same period. On a per capita basis we have reduced our electrical consumption by 3% since the beginning of this century.

Lehigh Valley's economy grew by 0.8% in 2022

11/27/2024, 12:47:57 PM

According to the Bureau of Economic Analysis, the Lehigh Valley's GDP for 2022 rose to $54.3 billion. After adjustment for inflation, the Valley’s economic growth in 2022 was 0.8%. We have borrowed the term Gross Domestic Product from a nationwide concept to apply it to regional economies. The term basically means the total output of goods and services produced by labor and capital located, in this case, in the Lehigh, Northampton, Carbon, and Warren counties.

Car Sales spiked in March

4/29/2025, 10:09:13 AM

For most people, purchasing a vehicle represents the second-largest financial commitment after housing. While a home generally consumes the greatest portion of a household budget, cars follow closely—not simply due to their upfront cost, but because of the frequency with which they are replaced and the continuous expenses they incur contribute to the long-term cost of car ownership. Unlike homes, which usually appreciate, vehicles steadily decline in worth, turning them into ongoing liabilities. In March, seasonally adjusted car and light truck sales spiked to nearly 1.5 million units, a significant 11% jump from February and 13% above their last year’s level. It appears that many people were trying to get it done before the tariffs went into effect, which are highly likely to raise car prices.

Are we leaving this $34 trillion and rising national debt to our children to pay?

4/8/2024, 2:54:38 PM

The national debt is now at $34 trillion and appears to continue to rise for the foreseeable future. This puts the national debt at 121% of the GDP, which is huge but below its record high of 133% in the 2nd quarter of 2020. And while 2020’s Covid emergency made it an exception, national debt did not exceed 121% of the GDP even during WWII. Carrying debt creates several issues, the most pressing one being interest payment.

Real Retail Sales are easing down from their inflationary levels

6/4/2024, 8:29:04 AM

After the COVID shutdowns, retail sales exploded upwards, rising by more than 18% in 2021, followed by another historically high increase of 9% in 2022. During these two years, retail sales increased by more than $150 billion. The equivalent of 8 years of increases before COVID.