Is California in Recession? (Part XIV)

December coincident indices from the Philadelphia Fed are out. Time to re-evaluate this assessment from a year ago in Political Calculations that California was in recession.

Going by these [household survey based labor market] measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis. [text as accessed on 12/27/2017]

The release provides an opportunity to revisit this question (the December employment figures are discussed here). It’s (still) unlikely that a recession occurred in 2017. However, growth has decelerated at the end of 2018.


Figure 1: Log coincident index in US (black), and in California (blue), both in logs, normalized to 2011M01=0. Blue arrow at timing of Political Calculations recession conjecture. Source: Philadelphia Fed and author’s calculations.

It would be nice if we had the leading indices to look prospectively; the Philadelphia Fed’s leading indices was scheduled for release on January 4, but was postponed due to the Federal government shutdown.

19 thoughts on “Is California in Recession? (Part XIV)

  1. Moses Herzog

    I’m usually disappointed in these video type presentations, but thought I would share this anyway. Let me, see, I’ll try to start it where it gets interesting because he sure as hell is having a hard time spitting it out at the start of his presentation. But this seemed like a semi-reliable source. As it’s dated it came out about 7 weeks ago, and I think they only do these every 3 months, so, until I can find some Berkley numbers or Stanford numbers this is the best I can do:
    https://youtu.be/FWTC1V1Hddw?t=95

    Reply
    1. dilbert dogbert

      Out here in the Gamma Quadrant of the Mid Sierra Foothills it is very depressing as it will rain for the next four days. Also to cap that my wife has abandoned me to go skiing. Then she will go to Silly Con Valley babysit the wonder child. She is depressed that she will miss the wonderful skiing on new snow next week. Home Alone!!!
      STAY AWAY!!! It is very depressing in California.

      Reply
      1. noneconomist

        It’s been mid 60’s most of the week. High 40’s at night. An hour away, snow is 12-15 feet deep. Depending on your forecast(er) another 3 or 5 maybe 7 feet expected through Monday. 3 to 5 inches of rain, which, sadly, will be diverted to the ocean. And to various local reservoirs.
        You’re on, dilbert . Very depressing.
        BTW, California’s congressional delegation is asking for updates on administration’s plans on thinning and prescribed burns in the 18 national forests here. Very little was done—especially with private contractors— during the shutdown.

        Reply
  2. Moses Herzog

    Another UCLA Professor, talking about international trade, and some of the things donald trump is not properly conceptualizing about the American trade deficit. This guy has a better start out of the gate, so I’m just gonna put the link from the start. This one is more OVERALL look at USA and not just California, but still worth a watch. Menzie can probably skip this, but people on my level might find it edifying.
    https://www.youtube.com/watch?v=wbmAxC3qjm8&list=PLtXj799QgfhQ86SZz77hDFyp07G6P6oqB&index=4

    Reply
      1. Moses Herzog

        @dilbert dogbert
        It was a fun little show—in a masochistic kind of way. Although I think if I was Delong I would have nearly blown my stack before the thing had even started, basically wanting to physically attack the bastard throughout the event. Listening to guys like Moore for about 5 minutes makes me a short-term believer in the NRA. When we get to the hour long version of Stephen Moore, then I go on to imagining I am “Joe” from “You Were Never Really Here” and just exited Ace Hardware with a new Ball-peen hammer. (this is humor people, come on)

        As far as your Cali blues are concerned, get yourself a full-bottle of bourbon and some meat to help your tummy absorb the alcohol (a bucket of KFC if you’re lazy and don’t mind highway robbery prices, or cook up some cheap $6–$7 chuck-eye steak on the oven, if you’re cheap and can stand over an oven about 12 minutes). Pop in your favorite disc or Netflix. Bourbon or vodka always works for me, (no more than one glass until you finish cooking). Before you know it, 12+ hours has passed by and you got a really good sleep.

        Reply
  3. Moses Herzog

    I hate to over-comment here, but things keep coming to me as I watch this, Maybe Menzie can push my comments to the end of the thread if he has that ability and then it won’t interfere with the evenness or the flow of the blog. I won’t take it personally at all if Menzie thinks it will improve the thread. But Ed Leamer’s ending comments really got my attention. Talking about democracy being admitted in to the ER of the hospital. I mean, my father, in his 80s (Octogenarian??) at the time, and even before President Obama’s 2nd term started (i.e. long before trump) said he foresaw the death of democracy, and my father said it in serious and somber tones. And I really wanted to laugh when he said that (I don’t think I laughed out loud, but in my head I was laughing, and thought my father’s statement overly dramatic). Now I wish my Dad was alive so I could say “You know, you were right.”

    Reply
  4. pgl

    “It’s (still) unlikely that a recession occurred in 2017. However, growth has decelerated at the end of 2018.”

    Of course if there were the CPI, Stephen Moore would be screaming DEFLATION!

    Reply
  5. pgl

    What does this all mean?

    https://www.bls.gov/news.release/empsit.nr0.htm

    THE EMPLOYMENT SITUATION — JANUARY 2019

    Total nonfarm payroll employment increased by 304,000 in January, and the
    Unemployment rate edged up to 4.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, including leisure and hospitality, construction, health care, and transportation and warehousing.

    Changes to The Employment Situation Data

    Establishment survey data have been revised as a result of the annual benchmarking process and the updating of seasonal adjustment factors. Also, household survey data for January 2019 reflect updated population estimates. See the notes beginning at the end of this news release for more information about these changes.

    ****************

    Yes the employment survey showed a good gain in employment. But the household survey showed a decrease. But wait the employment to population ratio rose from 60.6% to 60.7% as measured population actually fell. So why did the unemployment rate rise? Oh – the measured labor force participation rate rose. Better check those notes at the end of the release!

    Reply
  6. Zi Zi

    When we do Part X, could we always attach the link of previous Part IX, IIX, … in the current post for easy reference?

    Could we start looking State by State, County by County, at least those in the lower and higher 15% spectrum?

    If this is going to take too much time, you should actually teach these blog posts in the classroom. Make the hobby your job! — And the world needs this level of analysis.

    Reply
    1. Menzie Chinn Post author

      Zi Zi: Or you could just go to the “California” category in the Econbrowser menu.

      To my knowledge, the Philadelphia Fed does not compile sub-state level coincident indices.

      I do teach some of these blogposts in my classes, those having to do with macro, trade (since I teach those subjects), sometimes applied econometrics.

      Reply
    2. pgl

      “And the world needs this level of analysis.”

      Then you should do it. Start your own blog and cease telling other bloggers want they should write. Or has Trump decided to make Menzie your slave?

      Reply
    3. Moses Herzog

      @ Zi Zi
      Have you ever taken a jaunt down to your nearby Starbucks and in outraged tones demanded that they start serving coffee??

      Reply
      1. pgl

        The employees have taken classes on how to stay calm during such rants. Plus they are told to write ZeeZee on his cup of Joe!

        Reply

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