Deal/No Deal

Macro (GDP) implications of “no deal”.

Not sure there’s any specific comparison, but I can show the Goldman Sachs forecast from early September (in the WSJ survey) and the “no deal” forecast from a couple weeks ago.

Figure 1: Actual GDP (black), Goldman-Sachs early September forecast (blue), Goldman-Sachs “no deal” forecast of 23 Sept. (red). Growth rates applied to relevant level of GDP. Source: BEA, WSJ September survey, Goldman-Sachs, and author’s calculations.

The growth rate in the GS early-September forecast for Q4 is cut in half (6% to 3%, SAAR) in the no-deal scenario; of course, there are other things changing, but this probably gets at a general magnitude of effect.

I discussed the economic outlook and the implications of no deal on Wisconsin Public Radio today.

39 thoughts on “Deal/No Deal

  1. macroduck

    Explanation for Susan Page’s feeble efforts to run the VP debate by the rules, with a dash of Machiavelli –

    By noting repeatedly that Pence was not abiding by the rules, but making far less effort to restrain Pence than Wallace made to restrain Trump, Page allowed the record to show that Trump’s team cannot be relied upon to follow the rules. That justifies giving the moderator control over microphones at the final two debates.

    Trump faces a choice: debate under a constraint that serves as a reminder that he is an obstreperous school boy or refuse to debate. Since Trump needs a game changer and Biden does not, Trump needs the debate more than Biden.

    Meanwhile, Biden suggesting that Trump be over the virus before debating again keeps the focus on the fact that Trump has an STD*.

    *Stupid Trump Disease

  2. macroduck

    OK, so the GS “no deal” forecast addresses the claim that the economy is a problem for Biden once he’s president. Goldman (and Moody’s as discussed in an earlier post) assumes continued growth is the most likely outcome for the U.S. economy. Historically, growth has helped to assure re-election for incumbent presidents. Being elected while the economy is below full capacity helps Joe (and Kamala) and a No Deal Q4 doesn’t really change that. If Joe wins and gets the Senate, we get a deal in Q1.

    1. pgl

      Glad you mention Moody’s. In an earlier thread the Rickster went full partisan in a truly off the rails attempt to accuse Zandi of being partisan. His evidence? The Rickster starts off lying about that 2016 report and when called on his lies wrote a bunch of really dumb retorts. I won’t waste people’s time as one can go to the other post and comments.

      I will say this. He kept whining we said nothing about the Oxford Economics 2016 paper. But check out what he provided. A CNN/Money discussion which the Rickster cherry picked and lied about too. And yea I finally responded to this intellectual garbage from the Rickster. Funny thing – neither the Rickster nor CNN provided any link to what Oxford Economics wrote. So the Rickster is attacking a report he did not read.

      Then again I doubt the Rickster read the 2016 Moody’s report. Had he – maybe this moron might learn a wee bit of macroeconomics.

  3. macroduck

    Oh, and Kamala’s refusal to answer the Court-packing question was not a win for Pence on Trump’s behalf. It is a warning to Moscow Mitch. It is also a sign that Joe is coming to understand the country is best served if Democrats push back against Republican power grabs.

    1. pgl

      I fell out of my chair when Pence accused Biden of plagiarism with his COVID-19 plan. I bet Pence thought he was funny but in truth he came across as beyond stupid. Yes Biden is using the ideas of experts whereas Trump-Pence seem to be following the wisdom of Dr. Seuss.

      1. Dr. Dysmalist


        I enjoy your comments and respect your skills but HEY! I may be the only one but I sincerely believe that Dr. Seuss not only could have, but would have, designed and implemented a much better plan than the MAGAtbrains have done. There would have been less corruption too! Dr. Seuss was much more intelligent and honorable person than Donnie & the Sycophants are.

        1. pgl

          As a kid I loved Dr. Seuss. Maybe I should have picked a more fitting character for the clowns in the White House.

      2. Barkley Rosser


        I suspect this was a Pence effort to get at Biden by referring to his withdrawal from the 1988 race because of being accused of having “plagiarized” platform positions from Neil Kinnock of the UK Labour Party. But I suspect few caught that bit of oppo research, and even if it was not the greatest thing to do back then, it was a) long ago, and b) not remotely as bad as all the stuff Trump and Pence have been pulling.

        1. pgl

          I skipped this debate but I heard that every time Harris stated a fact Pence would say “that is your opinion”. I also understand that Pence told a lot of lies which I guess he would consider speaking the gospel.

          You know if this were what happened – it reminds me of the silliness that emanates here from the Usual Suspects.

          1. Barkley Rosser

            Pence told a lot of lies and also interrupted and spoke too long repeatedly, although nowhere nearly as badly as Trump. Harris had excellent side glances at him. It looks like women in particular were turned off by his performance, and CNN poll had her winning the debated 59-38%. She played it cool.

          2. Moses Herzog

            @ Barkley Rosser
            I could nitpick here, but I will concede Harris performed much better than I expected she would leading up to the event.

      3. macroduck

        The plagiarism thing is an effort to call back to Biden’s first presidential run, when he (more likely his speech writer) borrowed from a Neil Kinnock speech. It’s grade school taunting, so becoming from someone in Pence’s position.

        1. Barkley Rosser

          It must also be recognized that Biden apparently plagiarized a paper in law schook, which is not a good thing, although not as bad as paying somebody to take your SATs for you as reportedly Trump did.

          Biden is hardly flawless, but, given the alternative….

          Increasingly I am thinkin that he is the Dem version of Gerald Ford, a not all that exciting or innovative politician, but a vast improvement over his seriously flawed predecessor, assuming that indeed Biden does win.

  4. Moses Herzog

    I’m wondering, is the slight upward slope in the red and blue lines on the far right portion of the graph assuming a Biden~Harris win, or is that line based on a “neutral” calling on election results?? As a self-confessed wannabe wish-I-was economist, I don’t make a habit of arguing with GS, but I see that call as highly optimistic without a Biden win, which I am only gauging at 40% at this moment.

  5. Moses Herzog

    If donald trump loses the election, I think it’s going to be interesting to see if there isn’t a criminal investigation of our good friend Peter Navarro. Why would Navarro be afraid to testify to a congressional committee on purchases of ventilators??

    Menzie, this isn’t one of my nonsense music videos I post when I’m sauced, asking you to extend some trust here. This is the ENTIRE video of Peter Navarro:

    Here is the Frontline show, which only aired a portion of the Navarro interview, but the parts they show in the Frontline show are probably the “highlights” of that interview:

    1. pgl

      Not just Navarro. Wilbur Ross. Jared Kushner. Bill Barr. Mike Pompeo. All of these clowns are involved in massive insider trading schemes. MAGA!

  6. Manfred

    Yeah, as if the whole trajectory of our economic future only depends on a “deal or no deal”.
    A twenty-plus trillion dollar economy, with hundreds of thousands of small, medium and big companies, it’s future only depends on “deal or no deal”.
    Very sad way of looking at things.

    1. Menzie Chinn Post author

      Manfred: GDP in 2020Q2 is $19.5 trn SAAR. $2.2 trn is 11.3% of that amount. If I cut your income by 11.3%, would your behavior change? If you say “no”, then you are indeed an odd one.

        1. Moses Herzog

          Maybe Manfred is an executive involved in poultry price collusion, and he can get white trash and poor blacks to spend 5cents more per pound for a pound of chicken or create price floors for chicken and the freezing fees. Of course PIlgrim’s Pride and Tyson will tell us all how important “the free market” is when we start discussing corporations paying taxes on externalities like chicken crap and waste byproduct being thrown into nearby rivers and waterways that kill fish and other important wildlife and resources.

          Maybe if Tyson and Pilgrim’s Pride endow a new Economics prof’s “chair” at Mercatus they can get some “economist” to tell us how screwing over low-income consumers makes the economy reach “maximum efficiencies”.

  7. pgl

    Oh dear – should we raise funds to help Bruce Hall hire a good defense team?
    Feds say they thwarted militia plot to kidnap Whitmer

    The FBI says it thwarted what it described as a plot to violently overthrow the government and kidnap Michigan Gov. Gretchen Whitmer, and federal prosecutors are expected to discuss the alleged conspiracy later Thursday. The alleged plot involved reaching out to members of a Michigan militia, according to a federal affidavit filed Thursday.

    1. pgl

      ‘Alleged FBI-thwarted plot to kidnap Gov. Whitmer came after Trump called to ‘LIBERATE MICHIGAN’
      Months after President Donald Trump egged on right-wing protesters to “LIBERATE MICHIGAN!” in a tweet, six men have been arrested and charged as part of an alleged plot to kidnap Governor Gretchen Whitmer.’

      Didn’t Trump tell his Proud Boys to “stand by”. Just today Trump went after Governor Whitmer. It is a good thing that the FBI thwarted Trump’s liberation plans.

      1. The Rage

        The Proud Boys are nothing more than a Republican activist group, like Hasidic Jews of new york.

        1. pgl

          Speaking of NY Jews – the ones who live in central Brooklyn are not wearing masks. With positive test rates up – the government is scaling back openings there to which the locals have started acting like Trumpian fools. Me? I’m not leaving the sensible Park Slope hood.

          1. pgl

            Used to live at 6th Avenue and 16th Street but now at 6th Avenue and 2nd Street. On weekends they close 5th Avenue to cars to the shops can have tables out in the street. Nice!

          2. Moses Herzog

            @ pgl
            When I read about that in New York Times it pretty well shocked me. I expect this much from the local yokels in Alabama, Kentucky, and Arkansas. But Brooklyn folks who are inherently sharp and should be pretty well educated?? I guess this may qualify as a strike against traditional religion and how it effects cultural mindsets?? I completely respect orthodox and conservative Jews, but I mean are we really saying wearing a mask and washing your hands isn’t kosher now?? I’m pretty damned sure last time I checked Jews were neurotic about cleanliness and washing of hands, and rabbis don’t even want to make skin contact with females they aren’t married to, so where is the problem here?? I’m not trying to be a smart-ass jerk, this is an earnest enquiry.

          3. Barkley Rosser


            This is not a matter of conservative or even conventional orthodox, who wear masks. It is the Hasidism, who are a subset of orthodox, with there being three different branches of them in Brooklyn, basically their world center outside of Israel, even though one of the branches, the Satmar, do not accept the existence of Israel. Each of these has their own idiosyncratic rules and interpretations. I do not know what the basis for their refusal to wear masks is, but that seems to be the main problem, along with also continuing to gather in large groups for weddings and other special events. The other two Hasidic groups in Brooklyn are the Lubavitch and the Belser, each in their own neighborhoods, I am not sure if any of the three accept wearing masks or have accepted avoiding gathering closely in large groups..

            This is my understanding of the situation, although others more knowledgeable can correct me, especially regarding any differences in conduct between the three sub-groups of Hasidim in Brooklyn.

          4. Barkley Rosser

            The Satmar are in Williamsburg, the Belzers (correct spelling) in Borough Park, and the Lubavitch in Crown Heights, although in some other areas also. They are growing more due to efforts at converting other Jews, while Satmar and Belzers more keeping to themselves and growing simply reproduction, with all of them having high birth rates.

          5. Barkley Rosser

            I have checked further, and it seems that the epicenter of the problem in Brooklyn is Borough Park, where the Belzer Hasidim are. Apparently the Chabad in Crown Heights, HQ of the more outreaching Lubavichers, has taken this opportunity to criticized those not following public health directives. So indeed, this is an internal Hasid split.

            I do not know the position or behavior of the Satmar in Williamsburg. Again, somebody more knowledgeable than I am on all this can correct me.

  8. pgl

    In Rare Step, Esteemed Medical Journal Urges Americans To Vote Trump Out Of Office

    The Trump administration has “taken a crisis and turned it into a tragedy” in its response to the COVID-19 pandemic, The New England Journal of Medicine says in a scathing editorial that essentially calls on American voters to throw the president out of office.
    It is the first time the prestigious medical journal has taken a stance on a U.S. presidential election since it was founded in 1812.
    “When it comes to the response to the largest public health crisis of our time, our current political leaders have demonstrated that they are dangerously incompetent,” reads the editorial signed by nearly three dozen of the journal’s editors. “We should not abet them and enable the deaths of thousands more Americans by allowing them to keep their jobs.”
    The editors accuse Trump’s government of a massive public health failure — and of worsening the pandemic’s effects by prioritizing politics over sound medical guidance.
    The piece, titled “Dying in a Leadership Vacuum” and published Wednesday, does not mention President Trump or his Democratic rival, Joe Biden, by name. But it refers to the Trump administration repeatedly, and its footnotes cite news articles about Trump insisting that coronavirus risks are overblown, pressuring federal scientists, and politicizing the search for treatments.

  9. pgl

    White House COVID-19 protocols:

    (1) No masks,
    (2) Lots of people crowded in small meeting rooms.
    (3) Testing using an unreliable approach.
    (4) No tracing.

    What could go wrong?

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