Recession Odds Fade
Week in Review: Jan 22-26
It’s getting tough out here for those of us who predicted recession. And by “those of us who predicted recession,” I mean, “the vast majority of economists.” I am an especially pessimistic person (you know, with the no-girlfriend-in-high-school-or-college thing). So this wave of fabulous data on GDP, inflation, stock prices, consumer spending, etc. has me down. Way, way down. Thank you to Lamar Jackson for bringing me back from the brink. Taylor Swift – you’ve got a purple problem this week. Ok, let’s get to it.
Gas prices increased for the first time since the end of September, albeit by just $0.002 per gallon. Gas is still very cheap at $3.18 per gallon, but prices have likely bottomed out for the time being. Gas prices are typically lower in winter, rise during spring, and peak during summer. That’s due to: 1) higher demand in warmer months; and 2) regulations that require gas sold during summer months to be less prone to evaporation. As of this writing (Friday, 1/26), the price of oil in North America is north of $77/barrel, so further near-term gas price increases are in the offing.
That said, diesel prices inched lower to $3.83 per gallon and remain near a 6-month low.
TSA Checkpoint Travel Numbers
After starting the year with a travel boom, the number of passengers screened by TSA has now been roughly in line with 2023 levels for the past two weeks. I was on a flight from Fort Lauderdale to Baltimore last night with 44 other passengers. Could be a fluke, or it could be that travel slowing down.
House Ways and Means Committee Tax Deal
This W&M Committee tax deal would temporarily and retroactively restore two business deductions, expand the child tax credit, and make a few other changes, all of which would be paid for by recouping fraudulent payments of the Employee Retention Credit. The Tax Foundation has an in-depth analysis that concludes:
“While the package is far from ideal, it represents a step in the right direction by taking a fiscally responsible approach to improving cost recovery. Most importantly, it addresses a major competitive disadvantage in our current treatment of research and development (R&D), returning to the international norm of allowing companies to fully and immediately deduct R&D expenses, including salaries for scientists and researchers. Similarly, it allows companies to fully and immediately deduct investment in equipment and other short-lived assets. However, it only extends these provisions temporarily through 2025, creating uncertainty for taxpayers and dampening the policies’ otherwise strong pro-growth incentives.”
Union Membership Data
Despite an onslaught of news regarding labor unions in 2023, the number of workers who were members of a union fell from 10.1% in 2022 to 10.0% in 2023. That’s the lowest share on record. The record goes back to 1983 when more than one in five workers were members of unions. Union membership was even higher before Mr. Reagan came to Washington.