Reader Steven Kopits writes in response to Are you better off than you were four years ago?: I donʻt think people are going to compare anything to the pandemic. Trump did not cause the pandemic, and frankly, most countries around the world suffered some sort of economic shock. I donʻt think thatʻs how voters are going to make comparisons. They will make comparisons with 2019. The numbers are a mixed bag. I’m not so sure… Let’s actually look at the data. Figure 1: GDP per capita now (blue), and five years ago (tan), both in bn.Ch.2017$ SAAR. Source: BEA. Figure 2: Consumption per capita now ..read more

Republicans and lean Republican respondents really, really, really don’t like economic conditions right now, switching “bigly” upon Trump’s election, contributing an outsize impact on the overall University of Michigan consumer sentiment index. Democrats and lean Democratic respondents think things are about the same as mid-2016 (under Obama). Figure 1: University of Michigan Consumer Sentiment relative to 2016M06 (bold black line), contribution from Democratic/lean Democratic (blue bar), from Independent (gray bar), and from Republican/lean Republican (red bar). NBER defined peak-to-trough r ..read more

GDP per capita, consumption per capita, disposable income per capita, unemployment, economic policy uncertainty, VIX, and Misery Index — plus median household income. Figure 1: GDP per capita now (blue), and four years ago (tan), both in bn.Ch.2017$ SAAR. Source: BEA. Figure 2: Consumption per capita now (blue), four years ago (tan), in 2017$ SAAR. Source: BEA. Figure 3: Disposable personal income per capita now (blue), four years ago (tan), in 2017$ SAAR. Source: BEA. Figure 4: Unemployment rate now (blue), four years ago (tan), in %. April observation is Bloomberg consensus. Source: BLS ..read more

Sharp reactions to Conference Board consumer confidence index today. Here’s some context for this movement, as well as that in the U.Michigan survey of economic sentiment. Figure 1: University of Michigan Consumer Sentiment (blue, left scale), Conference Board Consumer Confidence (tan, left scale), Gallup Economic Confidence (light green, left scale), all demeaned and normalized by standard deviation (for the displayed sample period); and Shapiro, Sudhof and Wilson (2020) Daily News Sentiment Index (black, right scale). The News Index observation for April is through 4/25/2024. NBER defined p ..read more

Talking about a rethink of the output gap, and the concept of the trend-cycle decomposition in macro policy tomorrow. Here’s a picture of the output gap from CBO, from two statistical filters (Hodrick-Prescott and Fleischman-Roberts/Fed Board), and the Delong and Summers (BPEA 1988) model. Figure 1: Output gap calculated using CBO potential GDP (black), HP filter applied to 1960-2024 (tan), Fleischman and Roberts/Fed Board 2 sided filter (light green), and pseudo-DeLong-Summers (1988) approach (blue). NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2024Q1 advance, CBO (Fe ..read more

That’s the almost gleeful conclusion in an article in the Washington Examiner last December. Now, it’s true they based that conclusion on a Legislative Analyst’s Office report. However, that conclusion was based on the (inappropriate) use of the (national level) Sahm rule to state level unemployment rates. And as Dr. Sahm has remarked, this is not the right way to go — rather one needs to examine the appropriate threshold for a given state before using it to infer a recession. Well, let’s take a look at some indicators. Figure 1: California Nonfarm Payroll Employment (dark blue), Philadelphia ..read more

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