Estimating Potential GDP and Output Gap

 I have been very interested  in output gap estimating and researching the issue, because there are economic theory conflicts which muddy what governmental fiscal policy should be.  While I have not had the time to pull my research together in an article, I continue to follow the subject and add to my research.

The CBPP has a new paper out entitled "Real-Time Estimates of Potential GDP: Should the Fed

2018 Employer Withhholding May Turn and Bite You

The New IRS withholding calculator will not be available until February, the old W4's will continue to be used despite no longer reflecting the new tax law and 2018 employer withholding may result in under withholding  resulting in higher taxes owed at year end and possible tax penalties, particularly if there is more than one income in the family, you work at more than one job during the year, and/or you have multiple jobs at the same time.

You will need to proactively monitor and review your withholding, including using the new

2018 Tax Facts and Dates

 Morningstar has published a very succinct listing of 2018 tax facts, as a result of the new tax law, and important tax dates in the link above. The Pursuit of Financial Happiness(TM) has always been about information.  Some people, when reading our articles, do not read or dismiss the embedded links which provide not only pro but

Watch for Eonia Year End Spikes

In the last two days of November, the Eonia, which is the one day Euribor rate, spiked 6.1% and 6%, which is very unusual.  Bloomberg gave, as an explanation, that the National Bank of Greece had excess liquidity of 450 million euro which it loaned in the last two days of November to peers in its country, but would that cause two days of 6% spikes?  Was something else going on with eurozone bank liquidity?

The two regional Italian banks Carige and Creval have been struggling for additional funding, along with four other small Italian banks, to meet the ECB balance sheet liquidity rules and lower allowable NPLs (non-performing loans).  But any month end liquidity needs would have been relatively small.  However, new ECB bad loan rules will become effective January 1, 2018 despite significant opposition, particularly from Italy.  This will put additional pressure on Italian banks, because, while eurozone banks as a whole have 5% NPLs, Italian banks have 15% of that 5%.  The final compromise is to enforce the new NPL rules on a bank by bank basis, whatever that means.

Meanwhile, on 18 November Monte dei Praschi di Sienna, had to put $671 million (569.4 million euro) in reserve, before its new reorganization board meets for the first time in December, which

Job Losses Under New Tax Law Already Beginning

Under the new U. S.  tax law, corporate interest deductions are capped at 30 % of adjusted taxable income (ATI).  I have already seen a privately owned company (owned by a private equity firm) announcing major layoffs effective at year end and internally communicate the new tax law  will result in paying higher taxes.