Wisconsin, Tradables, and the Impending Trade War

I was wondering how Wisconsin, a steel using (not producing), manufacturing and export dependent state was faring as tariffs and retaliation loomed.


Figure 1: Coincident indices for Minnesota (blue), Wisconsin (red), and US (black), all in logs, 2017M01=0. Dashed lines indicate implied levels from May 2018 leading indices. Orange shading denotes Trump administration. Source: Philadelphia Fed, author’s calculations.

What about tradables, nationally? I’ll proxy using the manufacturing sector.


Figure 2: Manufacturing output (dark blue), manufacturing employment (teal, and average hours in manufacturing of production and non-supervisory workers, all in logs, 2017M01=0. Orange shading denotes Trump administration. Source: FRED and author’s calculations.

While employment continues to rise, output (the industrial production index for manufacturing) is down in May (preliminary). Similarly for average hours worked for production and non-supervisory workers. This implies the aggregate hours are down in May. Overall, all three indicators are above 2017M01 levels.

What about forward looking indicators? Whlie the nominal value of new orders continues to rise, those for consumer durables has fallen dramatically in May (preliminary).


Figure 3: New manufacturers orders for nondefense capital goods, ex.-aircraft (dark blue), and new orders for consumer durable goods (pink), both in logs, 2017M01=0. Orange shading denotes Trump administration. Source: FRED and author’s calculations.

As of May, the value of new orders for consumer durables (in nominal terms) are below those of January 2017. If the decline were to be sustained, then that would be worrisome. Recall, some tariffs and retaliation measures only took effect in June, and some additional will take effect midnight tonight Eastern time.

36 thoughts on “Wisconsin, Tradables, and the Impending Trade War

  1. pgl

    “some tariffs and retaliation measures only took effect in June, and some additional will take effect midnight tonight Eastern time”.

    So at best we can only forecast their effects. I know – let’s ask Kudlow to take the same model he is using for Federal tax revenues and apply this to the effect on Wisconsin’s economy from the trade wars. Boom time for Wisconsin. After Kudlow’s mentee (PeakyBoo) sees trade wars as leading to free trade.

    And I have decided to re-read Orwell’s 1984!

    Reply
  2. Moses Herzog

    For whatever it’s worth coming from an amateur economist (i.e. someone who took some basic courses, follows it closer than most, but is not qualified in the mathematical tools box etc), to me, in the current context (i.e. the inversion of the yield curve would have been more bothersome in past contexts, but inversion of yield curve is less worrisome in the current context, IMHO) the numbers related to a drop in consumer durables demand is much more concerning than the inversion of yield curve. I put much more weight on the graphs and numbers above as it relates to recession worries than anything we’ve seen in the yield curve to now.

    Reply
  3. baffling

    on a separate note, could trump have chosen a bigger dolt than scott pruitt? i bet corev and peak loser are both big supporters of that dunce. no ethical lapses in his department, right? as i recall, our dear leader would hire the best and brightest? what a revolving door of losers have appeared in his cabinet.

    Reply
    1. 2slugbaits

      Well, it sounds like Trump was in fact able to find a bigger dolt. The new acting director of the EPA is a former coal industry lobbyist who doesn’t think EPA should be regulating mercury effluents. What a guy. The Trump team at EPA is even more corrupt than Reagan’s Ann Gorsuch (mother of the SCOTUS justice). I’ll be anxious to see if the new guy can top Pruitt’s idiocy on how to do a benefit-cost analysis. Maybe Pruitt can get a job as a cook at Chic-Fil-A joint. He’d be so “blessed” and he wouldn’t have to work on Sundays.

      Reply
    2. baffling

      scott pruitt is the poster child of entitlement. he and peak loser should be best friends, living a life straight out of mad men. i do miss the days when rick stryker would chime in and defend somebody like pruitt with his mental gymnastics. if he could defend trump lying to achieve his means, i can just imagine his defense of secret phone booths and chick-filet jobs for the wife.
      unfortunately, 2slugs is right and i am wrong. trump could find a bigger dolt than pruitt.

      Reply
  4. Moses Herzog

    You know Pruitt will have some industry job waiting for him. Sort of the “invisible” golden parachute for oil and gas cronies. Some call it the “revolving door”
    https://www.nytimes.com/2018/07/05/climate/pruitt-epa-calendar-morris.html

    https://www.nytimes.com/2018/07/05/climate/scott-pruitt-epa-trump.html

    Knowing how Trump operates, he’ll wait 3–5 months and then rehire him as his new acting U.S. Attorney General or as his replacement for Rosenstein. As far as Donald J Orange Excrement is concerned Pruitt’s resume is “impeccable”.
    https://www.washingtonpost.com/business/heres-a-scorecard-of-the-scott-pruitt-investigations/2018/07/02/30a41254-7e25-11e8-a63f-7b5d2aba7ac5_story.html

    https://www.nytimes.com/2018/04/18/climate/scott-pruitt-epa-investigations-guide.html

    If worse comes to worse Pruitt could get a job at a Trump hotel or Trump LLC helping Trump launder Russian mobsters criminally obtained money. It’s Don Orange Excrement Trump’s way of saying he’s not against ALL rapists and murderers. In fact, some of Don Orange Excrement Trump’s best friends are rapists and murderers.
    https://newrepublic.com/article/143586/trumps-russian-laundromat-trump-tower-luxury-high-rises-dirty-money-international-crime-syndicate

    Reply
  5. Moses Herzog

    Off-topic
    I don’t think Menzie will mind me sharing this. It gives some of the details on the “ICE” prisons where Mexican children and Central American children have been kidnapped and basically tortured and drugged in the name of “MAGA” and Donald J Orange Excrement:
    https://www.youtube.com/watch?v=2CUlDdNT-hE

    The journalist discussing is Lisa Desjardins (French name) who always does an outstanding job. There were at least 2 other journalistic gems on PBS NewsHour tonight you can find on Youtube. If Menzie or The Jimster post later tonight I’ll put those in the next thread.

    Reply
  6. Moses Herzog

    Nothing like hiring a guy who tries to cover-up rampant sexual harassment in his leadership role at his recent employer’s workspace. Maybe in some slow moments over french fries and a watered down McD’s coke Donald Orange Excrement and Shine can share some “Hey, I just grabbed her p*ssy!!!” yuck-yuck jokes together. Maybe Shine can tell us all how when he heard multiple women were being abused at FOX news he just thought that’s what “conservative” Republicans do.
    https://www.nytimes.com/2018/07/05/us/politics/bill-shine-white-house-communications.html

    Reply
  7. Moses Herzog

    Just saw that Ed Schultz has passed away. I always thought Ed was one of the good guys. Although one can question his joining the “Russia Today” programming, everyone has to pay the mortgage somehow, and I don’t think it affected (much anyway) the content of the stuff Ed Schultz tried to present. He was one of the “old school” guys that stood up for Labor, stood up for the working class, and stood up for workers’ right to unionize and assemble. Though not the most dynamic/charismatic on-air guy, Ed Schultz was always talking about things that needed to be talked about and holding the torch that led in the correct direction. I think he will be missed.
    https://www.youtube.com/watch?v=tmLDzIDQqkU

    Reply
  8. CoRev

    Yup! Pruitt is gone. Now, which Cabinet member will you folks attack? Oh — wait! Don’t answer that, because they are all your targets.

    On a supporting note, it has been refreshing to see more even handed Climate Science studies being published, and that is your biggest complaint.

    Reply
    1. baffling

      nobody “attacked” pruitt. he brought it on with his stupid behavior and lack of ethics. should they not have been reported? was his behavior appropriate? talk about draining the swamp-pruitt was the swamp. quit playing victim here, corev, it makes you look like a loser defending that dolt.

      Reply
    2. pgl

      We will and should attack any corrupt Cabinet member who undermines what this nation stands for. Which BTW seems to be every single one of them.

      Reply
    3. Anonymous

      It is not even handed, or fair and balanced, to air debunked climate science denialist garbage.

      Reply
    1. pgl

      The trade war with China has escalated and we are even in a trade war with Canada. What kind of doofus would write “Trump making progress on trade”. Oh wait!

      Reply
    2. pgl

      Any time PeakDishonesty provides his summary of an article – bet the ranch that the article undermines the summary:

      ” Commission official said the deal would have to cover about 90 percent of global car exports to meet World Trade Organization standards, meaning at least the EU, U.S., Japan, Canada, South Korea, Mexico and potentially also China would need to participate. Any pact that covers less than 100 percent of global car exports raises the possibility of some free rider countries benefiting from the agreement without cutting their own car duties.”

      Translation – the EU alone does not get us there. And Trump is doing all he can to tick off Canada, China, Japan, and Mexico. But there’s more!

      “A WTO official said they had not yet been briefed on plans for a plurilateral car deal, but said the concept would be possible. Still unclear is whether any such agreement would cover auto parts and non-tariff barriers that stymie auto imports.”

      They have not been briefed as Team Trump has no plans. All talk just like the incessant dishonesty we expect from Peaky!

      Reply
    3. 2slugbaits

      PeakTrader My understanding is that the EU proposal was nothing new and it included an understanding that Trump would lift the 54 year old tariff on imports of light trucks (currently 25%).

      Reply
  9. PeakTrader

    Still adding lots of jobs to reach full employment:

    U.S. Adds 213,000 Jobs in June
    Jul 6, 2018

    “The U.S. added 213,000 jobs in June, topped economist forecasts of 195,000. The unemployment rate ticked up to 4% from 3.8%, and average hourly earnings rose 2.7% from a year earlier.”

    Reply
    1. pgl

      “The unemployment rate ticked up to 4% from 3.8%, and average hourly earnings rose 2.7% from a year earlier.”

      Gee – the unemployment rate rose and you celebrate job growth? Hello??????

      Yes nominal wages rose by 2.7% but even you must realize that inflation was 2% since you wrote that the other day. Let us spell this out for you in crayon so you can get it. Real wages increased by a mere 0.7%.

      Reply
      1. CoRev

        Peak, see, tolcha so! “Gee – the unemployment rate rose and you celebrate job growth? Hello??????” From our predicable pgl.
        And for also predictable 2slugs: ” It’s not really where you’d expect it to be if businesses believed GDP growth was anything other than transitory”

        Aren’t their responses just amazing?

        Reply
        1. pgl

          You assume that because right wingers like you lie 24/7 – everyone does. Guess who noted that the rise in the unemployment rate was due to the rise in the labor force participation rate? Not you. Not Peaky. It was me.

          So take your usual childish behavior some where else.

          Reply
        2. pgl

          predicable?

          In addition to learning to read, you need to learn spell. Hint, hint – missing a t.

          C’mon CoRev – taking apart your nonsense has become WAAAAAAAAAAAYYYYY too easy. Try stepping up to the plate with something useful for once.

          Reply
        3. 2slugbaits

          CoRev I’d be interested in your explanation of the data. How else would you explain rising employment alongside flat labor productivity and flat capital investment? Or are you arguing for something off the neoclassical Balanced Growth Path?

          Reply
        4. baffling

          corev, what would you say if those were the numbers produced during the obama administration? peak loser constantly criticized similar reports during the obama years. why the change in attitude now? loser.

          Reply
    2. CoRev

      Peak, why do you always bring up this official info??? You should know by now the only important information in this report was the rise in unemployment from 3.8 to 4%. We could have seen whole series of articles highlighting this as BAD, BAD nw3s for the administration. But, no, you had to high light the good news.

      Oh, that concern goes double for highlighting the impending trade war: “EU considers eliminating car tariffs to avoid trade war” Raining on their parade of negative news, fake or not, is not allowed. 😉

      Reply
      1. pgl

        “You should know by now the only important information in this report was the rise in unemployment from 3.8 to 4%.”

        I guess you cannot read. I noted that this increase was due to a higher labor force participation rate as the employment to population did not change. Then again I know how to read the information at http://www.bls.gov. If you ever take off your Trump cheerleading miniskirt, maybe you will one day learn to read too.

        Reply
      2. pgl

        “EU considers eliminating car tariffs to avoid trade war”.

        Some one else managed to read only one line from this story skipping the rest. Well done CoRev – you are keeping pace with Peak’s Dishonesty! Keep up the good work!

        Reply
    3. 2slugbaits

      Hmmm….So we’re seeing some pretty good employment numbers. That’s good. And hourly earnings are up a little bit. That’s good. But wait. Labor productivity has been anemic over the last couple of quarters and nonresidential capital investment has been disappointing. Those things are not so good. What could explain these numbers? Well, the most likely explanation is that business sees an uptick in demand due to the tax cuts, but they don’t expect it to last very long. Why don’t they expect it to last long? Two reasons. CBO tells them that the bump in GDP is temporary and fades in 2019. The second reason is that they see a trade war on the horizon. Given those two possibilities the last thing you want to do is strand capital investment. So let’s look at the latest data from the Chicago Fed survey of planned capital spending in the next 6-12 months:
      https://fred.stlouisfed.org/series/CFSBCCAPXEXP
      It’s not really where you’d expect it to be if businesses believed GDP growth was anything other than transitory. The data suggests that businesses are choosing to hire more labor rather than add capital. This will increase employment numbers, increase wages somewhat, but result in weak labor productivity. A sugar high. Actually, it’s a lot like what we saw in Britain shortly after the Brexit vote.

      Reply
  10. pgl

    My goodness – PeakStupidity flunks again as flack for this White House as he could not be bothered to check the details of the Household Survey:
    https://www.bls.gov/news.release/empsit.a.htm

    Yes the unemployment rate rose from 3.8% to 4.0% but that is because the labor force participation rate rose from 62.7% to 62.9%. The employment to population ratio stayed at 60.4%, which is where it was back in September 2017.

    This was not an incredibly great employment report but it also did not suck. PeakStupidity’s “analysis” did suck. I expect Trump to fire him by close of business today.

    Reply
    1. CoRev

      Pgl, 2slugs, et al, you still don’t realize we don’t have to refute your arguments, because they are so transparently weak and predicTable. Pgl, since you are so enamored of the labor force participation rate rise. would you tell us why it rose.

      Reply
      1. pgl

        Actually you need to refute the real world to support the incessant lies you and Peaky pollute this comment section with.

        But this is really funny – I’m enamored with the labor force participation??? It is one of the many useful things the good folks at the BLS reports. Why don’t you learn how to read their reports. Too hard for you?

        Reply
      2. 2slugbaits

        CoRev I suspect that a more likely explanation is that you can’t refute the argument. You think my argument is weak? Fine. Show me. Explain the labor productivity numbers. Explain the weak capital investment despite the Trump tax cuts that were supposed to increase nonresidential investment. We all await your (by not mounting list) of working papers and draft AER submissions. But first buy a macro textbook.

        Reply
      3. baffling

        you cannot refute their arguments corev. you are simply too stooopid to understand what is happening once you lose the ability to recite your talking points.

        Reply

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