Newsletter - Kamran Afshar Associates Inc.

Explore the latest Lehigh Valley Economic Review

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BROWSE POSTS

DJIA rose by 4% in the first 8 months of this year

9/11/2023, 11:39:26 AM

In the first 7 months of this year, our disposable income, that is, income after-tax, rose by almost $900 billion, and true to form, we spent 9 out of every $10 increase in our income! Surprisingly, despite this increase in expenditures, inflation dropped from 6.5% last December to 3.2% this July. During the same period of 2022, we increased our expenditures significantly more, and thus, the high inflation of last year.

Business borrowing, how does it affect the economy?

5/31/2023, 8:23:33 AM

The volume and change in the level of business borrowing is a barometer of business activities in the economy. Business borrowing is usually for expansion. Banks don’t easily make loans just to meet the payroll, and definitely not on a repeated basis. Banks lend money only to entities that don’t need the loans. To be fair, banks are also businesses and must ensure that there is a reasonable certainty of debt repayment. So when the economy goes into recession, banks automatically cut back the volume of their new loans.

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.

Are we on the verge of a financial crisis?

3/20/2023, 10:18:28 AM

The last financial crisis started as inflation continued to rise despite the FED raising its rates. Inflation eventually peaked at 5.6% in July 2008. The causes of the widespread financial crisis of 2008-2009 started in 2004 with the housing market exploding upwards, with more than 7 million houses sold nationally at higher and higher prices. For those history buffs, while not close, it had some resemblance to the 17th-century black tulip market crash in the Netherlands.

Car Sales in the US

3/5/2023, 5:18:26 PM

Cars are one of the biggest ticket items consumers purchase. Except for the large cities, public transportation in the rest of the country leaves a lot to be desired. Outside the major cities, our transportation infrastructure has become almost entirely based on private car ownership.

National debt as a percent of the GDP is dropping from its 2020 record high

1/23/2023, 10:00:38 AM

The national debt is now at $31.4 trillion and appears to continue to rise for the foreseeable future. This puts the National Debt at 119% of the country’s Gross Domestic Product; while huge, it is below its record high of 134% in the 2nd quarter of 2020. And while 2020’s Covid emergency made it an exception, even during WWII, the national debt did not exceed 121% of the GDP. Carrying debt has a number of issues, the most immediate one being interest payment on the debt. At the end of WWII, interest on debt accounted for 1.8% of the GDP, which was obviously due to the very low interest rates of the time.

The state of the Economy

9/25/2023, 1:18:01 PM

What is the state of the economy, and where are we heading? The best-known economic indicator is the GDP, a quarterly observation of the level of economic activity; however, this indicator was initially based on the mid-20th century US production structure. While adjustments have been made, the model is far from current! Over the last 4 quarters, the GDP rose by 6.1%; however, after adjustment for inflation, the real GDP increased by 2.5%, average for the US economy.

Unemployment rate dropped to 3.5% in December

1/8/2023, 3:52:17 PM

The U.S. unemployment rate fell to 3.5% in December, matching its lowest in over 50 years, according to the Bureau of Labor Statistics. And November marks the 11th consecutive month when the unemployment rate was below 4%.