Or things got a lot worse in 2008Q4 than we thought
The 2011Q2 advance release and revised estimates [0] contained many unpleasant surprises (see Jim’s assessment; also [CR1] and [CR2] [John Taylor] [Izzo/WSJ RTE]). The below consensus growth rate, and downward revision in Q1 growth, have been discussed elsewhere. I want to focus on the implications of the revisions to the data going back to 2003 (with particular emphasis on data back to 2007).
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.3% during the second quarter of 2011, and revised down its estimate of first-quarter growth to an even more anemic 0.4%. We knew the first half of the year was disappointing, but this is even weaker than most of us were anticipating.
A picture says a thousand words. From the NYT today:
From a paper (Ungated/Scribed version here) by Shang-Jin Wei and Qingyuan Du:
China and several other economies in Asia are experiencing an increasingly more severe relative
surplus of men in the pre-marital age cohort. While the existing literature on the sex ratio has examined
its social impact such as crime, we aim to explore neglected implications of the sex ratio imbalance for
the real exchange rate. …
University of Oregon economics professor Mark Thoma has an interesting article on the direction economics should be taking.
An Historical Analogy applied to today’s debt ceiling crisis, with apologies to Barbara Tuchman
I thought it of interest to see the evolution of Federal debt held by the public, and exactly what Administrations were the most spendthrift.
I keep on hearing we have a spending problem, but no revenue problem, from you know whom. I decided to appeal to actual data. Below is a time series plot of Federal current expenditures and tax receipts plus contributions to Federal social programs, as a share of GDP, over the 1967Q1-2011Q1 period. The data are based upon the data definitions in the BEA’s national income and product accounts (NIPA), as of June 2011. Outlays are declining, and as of 2011Q1 are at 0.25, which exceeds the previous peak, during the Reagan era, at 0.241 (1982Q4). Federal tax receipts plus social program contributions are at 0.158.
Some Federal Reserve officials apparently have a rule of thumb for thinking about the impact of the Fed’s large-scale asset purchases. I was curious to compare those estimates with the numbers that would come out of my own research.
With some implications for the debate over assessing fiscal and monetary policies
Reader Brian writes:
DSGE’s aren’t the answer to everything, but I still find the microfoundations, careful treatment of expectations, etc. still attractive and, in my opinion, the best we have at the moment.