The price of a McDonald’s hamburger in the United States has inflated 3.75 percent annually over the last seventy years. McDonald’s has grown from a tiny hamburger stand in Des Plaines, Illinois, to the second largest fast-food chain on earth. Scale economies alone (never mind process and productivity improvements) should’ve allowed the price of a burger to decline materially over this period.

Why didn’t it? What forces and institutions have conspired to inflate the cost of a simple meal by more than thirteen times over two generations? Continue reading →

The conventional wisdom about Friday’s disappointing jobs data was that there was a little something for everyone. And, for once… the conventional wisdom is right…

They are called ‘Blow‘ – Jobs Joey!

The headline jobs number fell below Wall Street’s expectations, suggesting a softening of the labor market. The average workweek slipped as well, which is often the first sign of an employment downturn. Employers tend to reduce hours of their workforce before they start actually sending out the pink slips.

On the surface, this is bad news for the Biden campaign, which has hitched its wagon to the far-flung notion that the Biden presidency has been a blessing for the American economy. Weakening job growth makes that a harder sell – as would the spread of labor strife from Hollywood to the UAW. Continue reading →

The partnership could be bad news for pharmacy benefit managers

Little by little, pharmacy benefit managers (PBMs) are getting their comeuppance and American consumers are getting their due when it comes to the cost of prescription drugs.

Mark Cuban’s Cost Plus Drugs has cut a deal with Kroger that will give consumers in 35 states the power to find the lowest price for a prescription drug.

Anyone who’s watched ‘Shark Tank’ knows that Cuban is a take-no-prisoners kind of guy and he apparently sees an opportunity when it comes to high-priced drugs.

The Cost Plus business model is simple. It marks up each drug by 15% and adds a $3 pharmacy fee where applicable. The company makes a profit and customers can finally get their prescriptions filled without taking out a loan. (Continue to full column…)

Jerome Powell

The U.S. Federal Reserve raised its benchmark lending rate on Wednesday to the highest level since 2001 to tackle above-target inflation, and signaled the possibility of further increases ahead.

The quarter percentage-point rise lifts the key lending rate to a range between 5.25 percent and 5.5 percent, the U.S. central bank said, adding that it will “continue to assess additional information and its implications for monetary policy.”

The rate-setting Federal Open Market Committee (FOMC) used similar language when it voted to hold rates steady in June, and the latest statement suggests that policymakers are mulling another pause at their next meeting in September. Continue reading →

“Rather than collecting taxes from the wealthy, the government is paying the wealthy to borrow their money.” ~ New York Times, July 7, 2023

Titled “America Is Living on Borrowed Money,” the editorial observes that over the next decade, according to the Congressional Budget Office (CBO), annual federal budget deficits will average around $2 trillion per year. By 2029, just the interest on the debt is projected to exceed the national defense budget, which currently eats up over half of the federal discretionary budget. In 2029, net interest on the debt is projected to total $1.07 trillion, while defense spending is projected at $1.04 trillion. By 2033, says the CBO, interest payments will reach a sum equal to 3.6 percent of the nation’s economic output.

The debt ceiling compromise did little to alleviate that situation. Before the deal, the CBO projected the federal debt would reach roughly $46.7 trillion in 2033. After the deal, it projected the total at $45.2 trillion, only slightly less – and still equal to 115% of the nation’s annual economic output, the highest level on record. Continue reading →

A month ago, the fake debt ceiling fight ended and Congress suspended the federal government’s borrowing limit for two years. Since the debt ceiling deal, the US Treasury has added a staggering $851 billion to the national debt.

Within a week of the debt ceiling suspension, the national debt cracked $32 trillion and as of June 30, it stood at $32.33 trillion. Continue reading →