Category Archives: Adolfo Laurenti

ECB Decision: The Choice of the Glutton, with Nothing Left on the Table

Standing before a smorgasbord of policy options, the president of the European Central Bank (ECB), Mario Draghi, made the choice of the glutton; he chose them all: lower interest rates, expansion of the balance sheet, short-term financing to banks and forward guidance. Short of purchasing sovereign bonds and throwing in the kitchen sink, practically every [...]

Construction Spending Partially Disappoints in April

Construction spending in April rose by 0.2%, a slightly disappointing figure that reflects a standstill in private spending and some modest progress in public construction expenditures. Expectations counted on seasonal improvements and a return to warmer temperatures for a more robust turnaround in activity, which in fact failed to materialize

Industrial Production: Big Picture after Small Revisions

The Federal Reserve’s annual revisions for the index of industrial production and related measures of capacity and capacity utilization are available now. These revisions are usually based on a more accurate reassessment of survey data, as well as refinements in methodology and data collection. Changes are usually small but not inconsequential; oftentimes, small revisions have [...]

Economic Consequences of Crisis in Ukraine

We are optimistic that there will be no further escalation, i.e., it is unlikely that Russia’s President Vladimir Putin will move his forces further west into Ukraine beyond the Crimea. The reason is, neither country can afford the political and economic costs of escalation. Our baseline scenario is for a short-lived crisis, the de facto [...]

Russian Troops in Crimea Trigger “Flight To Safety”

A global “flight to safety” is taking place in financial markets since Russia took de facto military control over the Ukrainian southern peninsula of Crimea over the weekend. Equities were hit in Asia, Europe and emerging markets overnight, while Treasury bonds rallied. Financial markets in Russia were hit even harder. Oil prices have also risen, [...]

Argentina Falters; Emerging Markets under Pressure

Emerging market currencies are under pressure after a worsening in the financial situation in Argentina, where the peso suffered severe losses in the last couple of days. As of Friday morning, tensions have extended to other developing countries, with steep declines registered for the Turkish lira and the South African rand. The risk at the [...]

No Link between Participation Rate & Government Shutdown

I object to those suggesting that labor force participation may have dropped because of the government shutdown. First, those workers show up under “unemployed because of temporary layoff;” second, I hardly believe that furloughed workers would consider themselves OUT of the workforce altogether, which I see as a semi-permanent status — in fact it accounts [...]

Surprise Rate Cut in Europe

Europe: Surprise rate cut to preempt deflation & support fragile economic turnaround To the surprise of many, the European Central Bank (ECB) decided today to cut in half its key, short-term interest rate to 0.25% from 0.5%. While the option to reduce rates further was on the table, the lack of adequate “signaling” ahead of [...]

A View from London

It is hard to escape the contrasts and the contradictions of the United Kingdom (UK) and its economy. On my arrival in London, I was greeted by heavy traffic, masses of tourists, long lines outside restaurants in Soho, Mayfair and Belgravia, with cranes and busy construction sites all over the British capital. Hard to reconcile [...]

If it’s Thursday, I must be in London

I am currently in Europe, following an intense program of meetings, conferences and symposia over the next two weeks. My visit began in Berlin; I then moved to London; next week, as part of a delegation from the National Association for Business Economics (NABE), I will meet business leaders, economists and policy makers in Paris [...]