Category Archives: KAA Blog

Payroll employment rose by 339,000 in May

According to the Bureau of Labor Statistics, payroll employment rose by 339,000 in May, significantly larger than expected 190,000, making the total number of jobs added in the previous 12 months 4.1 million. However, despite this larger than expected increase in payroll jobs, the unemployment rate rose to 3.7%, a large 0.3% increase.

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Economic Pulse: Week of 6/2/23 (

Our national debt is now larger than our GDP, is it possible to reduce the debt

        The national debt is now at $31 trillion and will continue to rise. At this level, it is 119% of the country’s Gross Domestic Product. Yes, the national debt is larger than the GDP, and it has been since 2015. However, as high as the debt is, it is not the first time that debt has exceeded the GDP; at WWII’s end, the debt stood at 121% of the GDP. And much closer to the present, during the 2nd quarter of 2020, national debt rose to 135% of the GDP, even higher than after WWII.

The interest payment on the WWII debt was less than 1.8% of the GDP, which is obviously due to the very low interest rates of the time.

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Economic Pulse: Week of 5/19/23 (

The Lehigh Valley business sentiment index trending flat

The Lehigh Valley’s Business Sentiment Index, the BSI, has been moving between 58 and 60 since last October, and it stood at 59 in April, a statistical tie with its last three quarters. However, it is important to note that the index is 8% below its April 2022 level.

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The Lehigh Valley business sentiment index trending flat – Newsletter – Kamran Afshar Associates Inc. (

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Economic Pulse: Week of 5/5/23 (

The economy grew by 1.1% in the 1st quarter of 2023

According to the Bureau of Economic Analysis, the advanced estimate of the US economy’s 1st quarter growth was 1.1% at annual rates. The highly regarded Weekly Economic Index estimate of 1.1% was on the money, while the Atlanta FED’s prediction of 2.5% was well above the observed rate. The economy grew by 2.1% in 2022, after an extraordinarily high growth rate of 5.9% in 2021, resulting from the economic engineering of a huge money transfer to individuals. And initially, there were many concerns about whether people will spend the money or not. The transferred money drilled a hole in our pockets and was spent rapidly. But then we developed a taste for that level of expenditure, so we drained our savings by almost a trillion dollars and then added another trillion dollars to household debt to continue our splurge. Last year was the party’s aftermath, and we had to clean up. The most obvious consequence of that level of expenditures was the 9%+ inflation we experienced last June and higher interest rates as the FED started to apply its breaks.

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The GDP rose by 1.1% in the 1st quarter of 2023 – Newsletter – Kamran Afshar Associates Inc. (

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Economic Pulse: Week of 4/29/23 (

Consumer sentiment index is trending up

The consumer sentiment index, the CSI, which fell into its lowest level ever in June of last year, has been trending upward according to preliminary data for April, with the index’s moving average currently at 9% above its previous year’s level, as reported by the University of Michigan.

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Consumer sentiment index is trending up – Newsletter – Kamran Afshar Associates Inc. (

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Economic Pulse: Week of 4/21/23 (

Economic Pulse

Fridays at 5:44 pm, Mondays at 7:30 am on WDIY at 88.1

Hosted by Kamran Afshar

Dr. Kamran Afshar presents a synopsis of the week’s economic news with a detailed look at trends in the Lehigh Valley and the nation. Listen to Economic Pulse Fridays at 5:44 PM during All Things Considered, and Mondays at 7:30 AM during Morning Edition.

Economic Pulse (

Is Inflation really back?

The consumer price index (CPI), rose by 0.8%in April. A level not seen since 2008. Calculating this at annual rates, that is, if this rate continues for a year inflation for that year will be 9.2%! A year not withstanding, even if this 0.8% increase in the CPI was just a one month event, it would have been a cause for concern; coming on the heels of another 3 exceptionally high rates during the first quarters makes it an issue. Inflation at annual rate calculates at 6.0% during the first 4 months of this year and 4.2% over the last 12 months. This is also the largest 12-month increase since September of 2008.

Lehigh Valley business sentiment index zoomed up by 13.1% in April

The Lehigh Valley Business Sentiment Index, the BSI, recorded a 13.1% jump in one quarter in April 2021, its highest growth in 10 years. In response to the COVID-19 restrictions, the index plunged to an all-time low of 43.9, a drop of 30.4% in April 2020. Initially, the recovery was slow; by the last quarter of 2020, the index rose to only 48.5, still 25% below its pre-pandemic level. This year, the picture is different; with the rapidly rising vaccination rates, most businesses have started to, at least, think about going back to normal or something resembling that.
The BSI rose 5.5% in January and another 13.1% in April, reaching 57.9, which is 29.1% above its April 2020. This is good news; however, for comparison basis we have to use pre-pandemic references, thus for the April data we are going to use as reference April 2019. And compared to April 2019, the index is still a good 10% short.
The LV BSI is based on the Greater Lehigh Valley Chamber of Commerce-Kamran Afshar survey of Valley businesses done on a quarterly bases since 1998.


Lehigh Valley business sentiment index rose by only 3.1% in January

The Lehigh Valley’s business sentiment index, the BSI, made a smaller than expected recovery in January, rising by only 3.1%, a drop from last October’s 5.7% and last July’s 6.4% increases, after its historical 31.6% fall in April. Even after these three rises, BSI for January 2021 has only reached 50.9, well below its January 2020 level of 64.2. However, it has now exceeded its average level during the Great Recession. The diminishing rate of growth of the index is a cause for concern as it indicates a lack of enthusiasm among  Valley businesses.

In our model, the largest gain was in the index of plans for future hirings, which rose by 7.3% above its last October’s level, while still 5% below its January 2020 level. It should be noted that this index peaked in October 2018 and was already down by 10.3% in January 2020. The drop in the index was a dramatic 17.8%, according to our April 2020 survey. And while it is now only 5% below its January 2020 level, it is a significant 14.7% below its October 2018 peak in the Valley.  

One of the indicators that we calculate for our indices is their momentum. This indicator is the composition of the mass, strength, and direction of the index’s movement. And this indicator, which was at around 100 back in 2019 for future hiring, has dropped close to 60 as of January 2021. All of these indicate that despite its rise in January, the index of future hirings has a higher tendency to drop than to rise over the next 6 months.

The only index in our model which did not rise in January was the index of future purchases index, which dropped slightly in January, pushing it down to 14.3% below its previous January level.

This index’s momentum is now in around negative 80, a massive drop from positive 160 back in 2019. The index of future purchases is also more likely to drop in the next 6 months than to rise.

The hiring index over the last 6 months, which recorded a slight increase in January, is still 20% below its January 2020 level. This index’s momentum also dropped from an average of positive 50 in 2019 to an average of negative 40 by January 2021.

 The percent of local companies that reported net layoffs was around 5% during 2018 & 19, while the percentage of those with net hiring hovered close to 30%.  These ratios have changed dramatically; in January 2021, 21.5% of the participants in our survey had net layoffs, while only 12.5% of them reported net hiring. To put it simply, layoffs have increased by fourfold, while hiring dropped in half.

The index which has lost more than any other in our model over the last 12 months is the index of actual purchases, which fell to 42.6% below its January 2020 level. And its momentum is down from more than positive 200 in 2019 to around negative 300 in January 2021.

As was expected, the accommodation-food & leisure sector had the largest layoffs by far over the last 6 months, followed by construction and manufacturing.

The Finance-insurance sector led the plans for hiring over the next 6 months in January, followed by manufacturing and retail. And for the first time in almost a year, accommodation-food & leisure sector shows positive plans for future hirings.

Purchasing plans index dropped a slight 2.8% in January 2021, while actual purchases over the last 6 months rose by 4.9%. However, despite rising over the last two quarters, the index is still 42.6% below its January 2020 level.

The Valley has recovered/replaced 87% of all the jobs it lost in March and April of last year. And the finance and manufacturing followed by the accommodation-food & leisure sectors have the largest plans for expanding employment in the next 6 months.

And while all sectors except retail and real estate reported lower revenues over the last 6 months, the picture for the next 6 months is much more positive. And except for the accommodation-food & leisure and education sectors, none of the others expect their revenues to shrink in the next 6 months.

Our local business survey still shows a heightened level of concern with the future of the economy. However, we also observed positive signs among the local businesses regarding their hiring and purchasing plans for the next 6 months.

Lehigh Valley’s Inflation rate was 2.2% for 2020

Prepared by KADAC @ DeSales University
Director: Kamran Afshar, Ph.D.
Student Assistant: Brandon Reese

Lehigh Valley’s inflation rate in 2020 was 2.2%, according to the Kamran Afshar Data Analytics Center (KADAC) @ DeSales University.

During the 1980s and 1990s, the inflation rate in the Valley was often less than the national average. Between 2000 and 2007, the Valley’s inflation rate started to exceed that of the national average. Data collection was suspended between 2007 and 2017.

Data collection was restarted in 2018, with an updated basket of goods and services for the Valley. Lehigh Valley’s inflation rate was 2.2% in 2020, which is 0.9 percentage points higher than the 1.4% inflation at the national average. According to Lehigh Valley’s CPI, between December 2018 and December 2020, local prices have increased by 5.9%, compared to 3.7% at the national average.

Food prices rose by 5.5% in 2019 in the Valley, significantly higher than the national average of 1.8% for that year. In 2020, local food prices rose by 4.4%, a little higher than the national average of 3.9%. Fruits and vegetables, a sub-category of food, increased by 18.1% during 2019 and 2020; this is significantly higher than the national average of 1.8% during the same period. Another sub-category, food away from home, rose by 5.6% in 2019 and 7.0% in 2020, compared to 3.1% and 3.9%, respectively, at the national average.

In 2019 shelter costs in Lehigh Valley rose at a higher 5.3% in the Valley compared to the 3.2% at the national average. In 2020, the equation was reversed; the Valley’s shelter inflation rate was a negative 1.4% compared to a positive 1.8% at the national average. A 2.9% decrease in the sub-category of rent and rental costs in the Valley compared to a 1.9% increase at the national average was the most prominent cause of this rate divergence. Over the last two years, shelter costs in the Valley have increased by 3.9% compared to 5.1% at the national average.

Medical care costs in the Valley, rose at a faster pace than the national average, which is consistent with historical data.

Transportation costs rose by 0.8% in 2019 in the Valley compared to 1.9% at the national average. In 2020, Valley’s transportation costs rose 1.3%, compared to a drop of 2.4% at the national average. The main reason for this difference in 2020 was that motor fuel costs nationwide dropped more than those in the Valley.

One of the interesting flip-flops among the inflation rates that we observed in 2020 was the inflation rate of apparel, which historically has been negative or, at best, very low. Apparel costs in the Valley rose by 9.8% in 2020, after dropping 6.5% in 2019. Nationwide, however, apparel costs dropped in both years, resulting in a 5.1% drop compared to the Valley’s 2.7% rise for 2019 and 2020.

The rate of inflation rose by 5.8% during 2019 and 2020 in the Valley. During the same period, inflation at the national average was 3.7%.

CPI, or the consumer price index, reflects the change in the cost of an average urban basket of goods and services purchased by consumers. Higher inflation means prices are rising at a higher pace. And the price of almost all the items in the consumer basket of goods is based on their supply and demand. Since Lehigh Valley does not appear to be subject to any negative supply chain issues that push its prices up, the Valley’s higher inflation rate is most likely the result of relatively higher consumers in the Valley than the national average.