Paulitical Economy™

Paul Musson
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A snapshot of what’s going on in the world’s economy. 

  1. 4d ago

    Post 368: Energy Shock, Mortgage Shock, and a Stretched Consumer

    The fallout from the Iran war in terms of rising energy prices may just be beginning.US gas prices are up 45% from last year.Canadians renewing their 5-year fixed rate mortgages in 2026 will see the biggest shock yet to their monthly payments.More Americans are moving from California and New York to Texas and Florida.Wendy’s same-store sales have declined in the U.S. for five straight quarters.Its share price is back to where it was in 1993.McDonald’s has had four straight quarters of positive comparable store US sales growth.Although consumer sentiment is worsening and the next quarter will not be as strong.And a look back.Walmart continues to drive impressive same-store sales growth in the U.S. although their most recent print is the lowest in two years.And they too are seeing cracks in consumer sentiment.Lowe’s eeks out a comparable store sales gain.But notes that this is the most difficult housing market since the Great Financial Crisis.Campbell’s Soup has only seen one quarter of adjusted sales growth out of the last ten.It is walking back some price increases on chips and like Pepsi/Frito Lay, they will be surgical about it.Its share price is back to 1994Core inflation in Canada (excluding energy) continues to tick lower.The main risk is that it’s due to a struggling economy.The percentage of Americans making withdrawals from their pension plans for hardship reasons has tripled.In Financial Ructions:The yield curve continues to increasingly uninvert.It’s a bear steepener which doesn’t usually lead to a recession.Although we had a nasty one in the early 1970s.We look at the supply of base money relative to M2.And why inflation soared in the early 2020s.Judy Shelton makes the case for a shrinking Fed balance sheet and lower interest rates.Book ReviewWe complete the last two chapters of the great book False Dawn by George Selgin.Monetary policy was highly accommodative during World War II.But not after the war ended, despite yield curve control still being in effect.We must learn the lessons of the Great Depression and resist resorting to the New Deal playbook.And a shout out to Hayek.

    55 min

  2. May 18

    Post 367: The War on Cash, Business and the Next Generation

    Father’s Day trumps Mother’s Day. Don’t shoot the messenger.Comparing Uber with Lyft. I’ve started using Lyft more often.Canada’s youth are suffering from bad government policy. While the country’s baby boomers benefit.A look at cash. Most people still carry it but unfortunately its relevance is declining. This is a really bad thing.An Op-Ed from former Starbucks CEO Howard Schultz. Pointing out how the anti-business government policies in the state of Washington are driving jobs to other states.Headline inflation in the U.S. is the highest since 2023 as the war in Iran takes its toll. Core inflation that excludes energy is also rising.Financial Ructions: Bond yields are soaring from what are still relatively low levels.           This will eventually matter.Wholesale inflation in the U.S. soared to 6.0% This will eventually matter.Book Review: False Dawn by George Selgin Although government spending plummeted after World War II the economy soared. Despite the warning from Keynesian economists.Official unemployment numbers would have been higher if it included all of the women who lost their jobs with men returning home after the war. But many of the women who left the workforce had no intention of staying there once the war ended.Private investment is the source of economic prosperity. In particular, net private fixed investment is what matters.

    29 min

  3. May 11

    Post 366: Central Bank Policy That Resulted In Unaffordable Homes and Basic Necessities

    Clorox continues to struggle to grow its top line. And its share priceA look at real residential real estate price appreciation over the years in: CanadaU.S.A.ChinaUKCostco sales are still soaring. And a look at the profit model.Whirlpool's sales and share price are tanking. Tariffs to the rescue. And a look back at 1992.The US jobs numbers for April were weak. But the headline number looked OK due to a massive adjustment. Full-time jobs are down by over a million from last year.Canada has lost jobs in three of the last four months. And underneath the hood the quality is even worse.In Financial Ructions: The Canadian government launches the Canada Strong Wrong Fund. And no, it’s not a Sovereign Wealth Fund.A look at an article on value investing. Time horizon is the great differentiator.Book Review: Uncertainty with respect to monetary policy has a dampening effect on capital investment. PM: Over the last 16 years, the certainty that the Fed will always bail out Wall Street has had an amplifying effect on stock markets.Keynesians worried that as World War II ended and government spending was slashed that it would result in a new Great Depression. Not only did the government cut spending but the country enjoyed a budget surplus for the first time since 1930. The economy soared.

    36 min

  4. May 4

    Post 365: Home Sizes Shrink as Their Prices Soar And Spirit Soars No More

    Home Depot is still experiencing slow growth due to consumer uncertainty and normal interest rates.Spirit Airlines goes bankrupt.No taxpayer rescue.Prices of Kimberly-Clark products are falling and volume is rising.There are many apologists out there for soaring home prices i.e. those who own houses.But no, increasing home sizes do not justify higher home prices.And home sizes have been falling over the last ten years.Financial RuctionsThe driver of Canada’s GDP growth has been government spending.And investment has been weak.Which does not bode well for our economy’s future productive capacity.Book ReviewIn the next two chapters of George Selgin’s False Dawn we see that:Herber Hoover was much very much a Keynesian while Franklin Roosevelt was not.And that the Roosevelt administration was extremely hostile to business.And thus the collapse of investment.

    29 min

  5. Apr 27

    Post 364: Government Policy Works Well on Crime, Not So Much On Markets

    The rate of crime in the US has fallen significantly.Homicide rate the lowest since the year 1900.Spirit Airlines has filed for bankruptcy protection: for the second time.Government meddling is making a bad situation worse.And a look back.UPS and Fedex are going in different directions in terms of their package volumes. It’s because of Amazon.The quality of life in Canada is improving from very low levels and now ranks 26th: 21 points lower than in 2013Netherlands is number one.Italy number forty.Procter & Gamble has reduced its prices in real terms (after inflation) for two years.Sales and volume have both responded positively.Pepsi increased prices by the lowest amount in years.And for the first time in over three years   volume didn’t decline.It didn’t grow either but at least it’s a start.Rising oil prices are hitting inflation in Canada.But core inflation ticked down a bit.In Financial Ructions:An IMF report says that Canada suffers from “longstanding structural issues.”PM: One of them being out of control government spending and an explosion of debt.Book Review:In the next two chapters of False Dawn by George Selgin we see that:There were a number of contributing factors to the Roosevelt Recession of 1937.And that New Deal policies were anything but Keynesian.

    27 min

  6. Apr 20

    Post 363: Growing Government Jobs Restrict Growth as Tariffs Begin to Bite

    Lululemon has not grown comparable store sales in the US for almost two years. And we review a scathing attack from the company's founder.US home prices vs. income have increased over the last twenty-five years. This, despite much lower mortgage rates. Correction, because of much lower mortgage rates.Ski-Doo and Sea-Doo maker BRP has experienced strong sales growth of late. But new tariffs whacked the company’s share price.Church & Dwight is a well-run consumer products company. But even their sales have slowed to a crawl.In Financial Ructions: A look at average US productivity growth through the decades.A look at the jobs situation in Canada. And comparing government vs. private worker job growth. It’s bad news.An article in the Financial Times again attempts to blame the high inflation of 2022 on Russia/Ukraine war. No, it was policy-driven.Book Review Although base money soared in the 1930s due to gold flooding into the U.S. The Administration, through the Fed, did its best to limit its impact on the money supply.What recovery there was up to 1937 was a result of consumer spending. But it was not accompanied by investment and there was no increase in the capital stock.PM: In other words, you can’t consume your way to prosperity.

    30 min

  7. Apr 13

    Post 362: High Income Consumers Drive Spending While Consumer Sentiment Hits a Half Century Low

    Sales at Dollar General are slowly accelerating. Even with discretionary items.But sales growth at Dollarama is ticking lower. And we take a look back.Retail sales and the Special K economy. The bottom 70% of income earners reduced their spending.But that was more than offset by increased spending from the top 30%.Luxury furniture retailer RH has had impressive sales growth, albeit slowing. Share price growth? Not so impressive.Consumer sentiment in the US is the lowest on record. What might be causing this?Financial Ructions: Distressed office building sales soared last year in America.Interest rates continue to rise in Japan. As does inflation pressure.Book Review: President Hoover was rightly worried about the RFC (Reconstruction Finance Corporation) becoming a gigantic banking and pawn-broking business.”Keynesian economics was not really attempted by FDR. And he didn’t believe that large government debts led to economic prosperity.

    28 min

  8. Apr 6

    Post 361: Corporate Bifurcation With Consumers Buying Less Stuff While Governments Bail Out Governments

    The construction of multifamily properties in the US has soared over the last few years.Resulting in higher vacancy rates and lower rents.European consumer products company Unilever got rid of its ice cream business last year.Now they’re bidding adieu to the rest of their food business.US confectionery company Mondelez has been rapidly increasing its prices to offset higher commodity costs.Volume has been down four quarters in a row.Netflix continues to hit it out of the park in terms of sales growth.In the last six months members watched 96 billion hours of content.Nike returns to negative growth.And its share price continues to plummet.Tesla sales are up a bit from last year but down from two years ago..But the big news is that they will start mass production of their cybercab.Canada’s Federal and Provincial government (taxpayers) bail out Ontario’s municipal governments.This shouldn’t go down well in provinces with low new home development charges.In Financial RuctionsUS jobs were stronger than expected.As was the quality of those jobs.Book Review: False Dawn by George SelginFirst, we see that the NRA (National Recovery Act) served to delay the recovery.PM: Not for the first time, the government would have been better off doing nothing.Second, most of the benefits of well-intended policies to help homeowners instead went to lenders.And that cheap credit is “dangerously habit-forming.”PM: I’ll say.

    35 min
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A snapshot of what’s going on in the world’s economy. 

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  • Creator
    Paul Musson
  • Years Active
    2025 - 2026
  • Episodes
    50
  • Rating
    Clean
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    © 2026 Paulitical Economy™
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    Paulitical Economy™