That’s the song I was thinking about when I saw the headline in the WSJ, Trump Allies Draw Up Plans to Blunt Fed Independence: Several people who have spoken with Trump about the Fed said he appears to want someone in charge of the institution who will, in effect, treat the president as an ex officio member of the central bank’s rate-setting committee. Under such an approach, the chair would regularly seek Trump’s views on interest-rate policy and then negotiate with the committee to steer policy on the president’s behalf. Some of the former president’s advisers have discussed requiring that ..read more

From EIA, and BEA NIPA: Source: EIA via Forbes. Per WSJ, we’re pumping so much that parts of Texas are buckling and swelling. And here’s the US net exports of petroleum goods (in $) from NIPA. Figure 1: US Net exports of petroleum goods, in bn. $, SAAR (blue, left scale), and as share of US GDP (tan, right scale). NBER defined peak-to-trough recession dates shaded gray. Source: BEA, 2024Q1 advance release, NBER, and author’s calculations. On an economics note, increased production of petroleum products does not necessarily change the impact on inflation of an oil price shock (consumption per ..read more

That’s a term that is invoked in a CNN article today. I think of stagflation as weak growth combined with high inflation. A little context: As noted here, advance estimate for q/q GDP growth is 1.6%, below 3.4 consensus. But as discussed here, GDP+ is at 2.6%, and final sales to private domestic purchasers is running 3.0%. In addition we have the following key monthly indicators followed by the NBER’s Business Cycle Dating Committee. Figure 1: Nonfarm Payroll (NFP) employment from CES (bold blue), civilian employment (orange), industrial production (red), personal income excluding current tra ..read more

Following up on Jim’s post yesterday, thoughts on measurement error and prospects. Note that GDP surprised on the downside, at 1.6 ppts q/q AR vs. consensus 2.5 ppts. On the other hand, GDP+ grows faster, as does final sales to private domestic purchasers. Figure 1: GDP (bold black), GDPNow as of 4/24 (light blue square), GDPNow as of 4/26 (blue square), NY Fed nowcast as of 4/26 (red inverted triangle), April WSJ survey mean (light green), CBO estimate of potential GDP (gray), all in bn.Ch.2017$ SAAR. Source: BEA (2024Q1 advance), Atlanta Fed, NY Fed, CBO Budget and Economic Outlook (Februar ..read more

From Bloomberg: Upon signing the foreign assistance bill, this is what’s heading to Ukraine first tranche ($1bn): Stinger anti-aircraft missiles Small arms and additional rounds of small arms ammunition Additional ammunition for High Mobility Artillery Rocket Systems (HIMARS) Bradley Infantry Fighting Vehicles Mine Resistant Ambush Protected (MRAP) Vehicles High Mobility Multipurpose Wheeled Vehicles (HMMWVs) Tube-Launched, Optically-Tracked, Wire-Guided (TOW) missiles Javelin and AT-4 anti-armor systems Claymore anti-personnel munitions This is in addition to longer-range ATACMS. Also: The ..read more

Continues to rise, according the the Phildaelphia Fed’s coincident index, just out. The divergence with GDP continues to persist. Figure 1: Wisconsin Nonfarm Payroll Employment (dark blue), Philadelphia Fed early benchmark measure of NFP (pink), Civilian Employment (tan), real wages and salaries linearly interpolated, deflated by national chained CPI (sky blue), GDP (red), coincident index (green), all in logs 2021M11=0. Source: BLS, BEA, Philadelphia Fed [1], [2], and author’s calculations. The 3 month annualized growth rate of the Wisconsin coincident index is 3.7%; y/y it’s ..read more

Official is 5.3% y/y (consensus 4.8%), vs BOFIT 4.3%. Source: BOFIT (2024). The BOFIT alternative is based on reported nominal GDP and using alternative price deflator. The Fernald-Hsu-Spiegel CCAT is not yet available for Q1. As of 2023Q4, CCAT y/y deviation from trend was slightly above official GDP.   ..read more

From Peter Coy, in NYT:   “If you liked what Trump did on the economy the first time, you’ll like what he does the second time,” Stephen Moore, an unpaid senior economic adviser to the Trump campaign, told me. “He wants to hit the ground running. He feels like the clock is ticking.” “The difference between Trump and Reagan, and I worked for both, is that Trump is not especially ideological,” Moore said. “Reagan was ideological. Trump is a businessman. When you talk about issues with him, he deals with common sense.” Moore said Trump doesn’t always act on his threats of raising tariffs, w ..read more

There’s been a lot of discussion of overcapacity in Chinese production, and the resulting pressures in US and other markets. Here’s a picture of the Chinese real exchange rates. Figure 1: China trade weighted CPI deflated real exchange rate (blue), and US-China bilateral CPI deflated real exchange rate (tan), in logs. Up denotes increase in value of Chinese currency. Chinese CPI adjusted by author using X-13. Source: BIS, FRB, BLS via FRED.  In principle, I’d prefer to use PPI deflated real rates, or even unit labor cost deflated (see this paper), but those are harder to come by. The Chi ..read more

Yes, using either Chained CPI, or East North Central CPI: Figure 1: Wisconsin total wages and salaries deflated using chained CPI (blue), using official East North Central subregion CPI, adjusted using X-13 (tan), all in billion 2023$ at annual rates. NBER defined peak-to-trough national recession dates shaded gray. Source: BLS, BEA, NBER, and author’s calculations. The picture doesn’t really change if one expresses in per capita terms: Figure 2: Wisconsin total wages and salaries per capita deflated using chained CPI (blue), using official East North Central subregion CPI, adjusted using X ..read more