We are big fans of GaveKal, the investment and macroeconomic advisory firm based in Hong Kong, and today’s newsletter will focus on one of their key insights – that GDP is energy converted. Obviously, an economy grows along with increases in its labor force or capital base – but a key bottleneck is access to energy, as history has revealed an exceptionally strong correlation between real GDP growth and underlying energy production. One has to look no farther than the deep rec

The US economy ground to a near halt with 1.4% growth in the fourth quarter – or did it? Actually, no. The economy continued to grow at a robust pace – but major distortions in the federal government sector, likely associated with the shutdown, led to the weak report. In fact, private sector real GDP grew at a solid 2.8% annual rate – right in line with the average of the past three quarters under Trump, and the previous ten under Biden. The private sector deflator was 3.0%,

Well, this is quite a weekend with Friday the thirteenth, followed by Valentine’s Day, then my late father’s 99th birthday, and finally Presidents Day. Actually, the week was exciting as well with – December retail sales, NFIB, the delayed January employment report, then ending with CPI. It started off slow with a weaker than expected retail sales report – but the January data from NFIB, employment, and the CPI all suggest a strong start to the year. This is critical as the 3