Interpreting Spreads

Here is a graph of two spreads oft-cited: (1) a term spread, the 10 year-3 month spread, and (2) a spread between a nominal rate and a real rate, the 10 year Treasury yield and 10 year TIPS yield, commonly interpreted as the inflation breakeven. (I leave the credit spread for another post.)

Figure 1: 10 year-3 month Treasury spread, % (blue), 10 year Treasury – 10 year TIPS spread, % (brown). Dashed orange line at declaration of national emergency, light blue dashed line at election, orange shading at Georgia election/Capitol insurrection. Source: Fed via FRED, and author’s calculations.

There has been some misunderstanding about what drives the spreads (e.g., term spread). Here is a short primer.

Term Spread:

Consider securities issued by the same entity, in this case the Federal government. If the level of the long term (n-year) bond is given by the sum of the expectations hypothesis of the term structure (EHTS) and term premium (tp):

then the 10 year- 3 month term spread is:

And the change in the 10yr-3mo spread, from one moment to another moment is:

With the three month Treasury yield pretty much constant, then the change in the spread can come from the change in the EHTS component, or change in the term premium.

Since both securities are issued by the Federal government, then there is no default risk included in the calculation (in any case US government debt is typically assumed to be default-risk-free).

What determines the term premium then, and changes therein? The typical interpretation is that the term premium on nominal bonds is due to the risk of unexpected inflation. If agents are risk neutral (or short and long bonds are perfect substitutes), then the term premium should be zero. Neither seems likely. Rudebusch and Christensen and Adrian-Crump-Moench provide near-real time estimates. Other estimates include that at the Fed Board. Cohen et al. (2018) surveys the literature on the empirical determinants of the term premium.

Hence, as discussed in this post, one cannot be sure about the reasons for the yield curve steepening.

Inflation Break-Even:

If the 10 year TIPS depends on expected future one year real rates and a liquidity premium (lp), then:

The liquidity premium is defined as the premium that arises because of the lower liquidity of the TIPS market; from Andreasen, Christensen and Riddell (2020):  “Despite the large size of the TIPS market, an overwhelming amount of research suggests that TIPS are less liquid than Treasury securities without inflation indexation

Hence the spread is:

If the term premium on nominal bonds and liquidity premium on TIPS were zero (or each moved in lockstep), then the gap between 10 year Treasurys and 10 year TIPS could be imputed to expected inflation over the next ten years. However, that is not likely to be true, so the commonly calculated breakeven is probably measured with error, which is likely to vary systematically over the business cycle.

Andreasen and Christensen (2020) argues that adjusting for the liquidity premium improves inflation forecasting.

Bottom line: When looking at spreads, one should be careful about the interpretation. A little research before pontification can make any debate more productive.


Torsten Slok’s view on the measured breakeven, today (not online):

Why are market-based inflation expectations trading higher?

There are four reasons:

1) As part of QE, the Fed is buying TIPS, putting upward pressure on breakevens.

2) Commodity prices are moving higher, putting upward pressure on traded and actual inflation.

3) We may get another fiscal stimulus, boosting growth expectations and inflation expectations.

4) The Fed adopted a new framework in August 2020 allowing inflation to overshoot the Fed’s 2% target. This introduced a new inflation uncertainty risk premium, pushing long-term inflation expectations higher.


The bottom line is that the move higher in breakevens is driven by Fed purchases of TIPS, higher commodity prices, fiscal policy, and the Fed’s new framework.

78 thoughts on “Interpreting Spreads

  1. Barkley Rosser

    Well, the nominal-TIPS spread looks to have the markets now forecasting the Fed-targeted 2% inflation rate, following the noticeable several hundred basis points jump of the ten year yield. All of this is consistent with the Jan. 7 remarks by Jim Bullard, forecasting an increase in the inflation rate, but not calling for any change in current policy. In short, while those market forecasts have often been wrong, if they are right then we shall be just about in la la land according to Fed policy targets, no need to change policy any time soon.

    1. Barkley Rosser

      Of course the “la la land” comment refers to inflation. Unemployment is clearly still too high, which is why Bullard is supporting the continuation of the current expansionary policy.

    2. Macroduck

      Poor, poor intellectual poser. Here, let me help you with fill in the gaps in your knowledge. (Apologies to innocent bystanders, but Barkley’ tendency toward pedantry and self-aggrandizement have erupted again. Steps must be take. He attacked me in comments to the previous post. I am responding.)

      So, Barkley the Bully, William of Ockham takes his name from his home town of Ockham. I can only assume you were ignorant of that fact, since you declared “Occam” to be “preferred”. A variety of spellings was common before normalization of spelling was the norm, and Ockham’s name was spelled in various ways, including Occam and Ocham. You may prefer one over the other, but your preference doesn’t make one spelling “preferred”. That’s just your ego talking.

      Just so bystanders are up to speed, I once suggested to Barkely that his verbal attack on another commenter here was excessive. His reaction was to engage in a campaign insult and denigration in this comment section which was among the most unhinged I’ve seen outside vile rightwing echo blogs. I did not take Barkley’s ugly behavior lying down. I eventually offered that I would step back if Barkley would. He replied with several paragraphs of self-justification, but did curtail his bile after that.

      In comments to the prior post, Barkley broke the truce in his accustomed manner. His comments about me, though not to me, were the same haughty, concieted, vile stuff he had engaged in before.

      Be warned: Last time this happened, Barkley would respond to any comment I would post here with the most trivial, nasty stuff. He’d insist on his own definition of the simplest words – neighborhood, for instance – in order to criticize my comments. He mocked. He insinuated. He dismissed. And he preemed and preened.

      I do not take kindly to bullies, and Barkley is a bully. I will respond and I don’t intend to use any more restraint than our loathesome, smug, self-righteous oaf, Barkley.

      So, until bombastic Barkley tucks tail, there may be unpleasantness.

      1. Barkley Rosser

        Oh wow, md, you have gone total “Moses Herzog” flunky whole hog. This screed should have been on the other thread where your dumb post about “Ockham says” something incomprehensible about fiscal policy is located. You (and Moses) were requested to explain your remarks as well as what on earth was their connection with William of Occam (I noted “Ockham” is also an accepted spelling, but “Occam” is certainly more widely used now). Neither of you has made a single effort to explain your initial remarks, as was requested, much less why on earth your remarks were labeled as being “Ockham says.” And you have certainly made no such effort to do any of that here either, just ranting on about who “William of Ockham” was, already which pretty much known by anybody remotely paying attention to this stuff. The question still remains what on earth he had to do with your incoherent remarks, however one spells the name of where he came from.

        Needless to say you have also offered not a shred of anything relevant to this thread. You have really seriously lost it here, macroduck. I doubt you will convince a single recent arrival here of a single thing you have asserted here, other than that indeed “Ockham” is an accepted spelling of “Occam,” which I already granted. Sheesh. Please try to get it together better in the future.

        Oh, btw, it is spelled “poseur.” But there I go again, being such a bully as all can see!

        1. Barkley Rosser


          It may well be that I am as you so colorfully put it a “loathsome, smug, self-righteous oaf,” but you are coming across as a pathetically silly snowflake who cannot take several of us, not just me, mocking you for your bizarre and still unexplained comment about “Ockham says” some gibberish about fiscal policy. Such a poor thing you are, so sad.

          1. Barkley Rosser

            Oh, I wish to apologize profusely to Macroduck, including on behalf of the other three people who made fun of him for his post. Of course when he wrote “Ockham says…” he was referring to Lord William Ockham, Baron of Monnypenny, Professor of Economics at both Oxford and Cambridge Universities, Winner of the Nobel Prize in Economics for his profoundly insightful studies of fiscal policy, and deeply respected former Chancellor of the Exchequer, whose regular column in the Financial Times is avidly read worldwide. Of course Macroduck was simply quoting the latest of his columns. Shame on all of us for not recognizing that, and further shame after Lawgiver Moses took time off from writing the Torah to point out how pathetically out of it we all were.

            And to all Bystanders here, as well as The Taxpayers Of Virginia, you must be grateful to Macroduck for taking his gloves off to fill in the missing pieces of information on my vile and loathsome conduct in reporting on a paper about the application of the ideas in economics of philosopher and theologian William of Occam. This was indeed oafish of me, someone without any credentials. Now you know, and we must simply hope that Macroduck did not get his hands hurt after taking his gloves off in performing this desperately needed public service.

          2. macroduck


            Yes, mocking. You are a bully, and that’s what bullies do.

            So, dear buystanders, here’s what’s going on. In comments to the prior post, a commenter who goes by “pgl” got a little puppy toward me. I replied, though offering no comparable insult in return. Barkley somehow took offense at comments which had nothing to do with him. He addressed me and another commenter, Moses H, in a total of four comments before I ever responded to Barkley, all four critical in various ways.

            So, I had said nothing to or about Barkley, Barkley spoke down to me in four comments before I responded. Now, Barkley declares that I’m a sensitive snowflake. In Barkley’s world, he may behave however he wishes but others are out of bounds d they respond in kind. Barkley is a bully, pure and simple. In Barkley’s world, what’s OK for him is decidedly not OK for others.

            You’ll note dear readers, that Barkley wants to link me to Moses H. In general, that’s fine with me, but that linkage does highlight an important bit of context to Barkley’s attacks. You see, Barkley and Moses are engaged in a long running flame battle here. Because I once suggested that Barkley was overboard in a comment to Moses, Barkley began attacking me, as well. One “take I down a notch” from me and Barkley went on the attack. So I’m the sensitive snowflake.

            Moses came to my defense in the the prior comment section and that sparked four responses from Barkley aimed at me without me ever writing a word to or about Barkley. So obviously, in Barkley’s world, I instigated this new round of aggression. My behavior is intolerable and must be attacked.

            In the first episode of Barkley’s attacks on me, some time ago, his method was to criticize nearly every comment I posted, often in trivial ways. Constant attack. He would attempt to demean me as often as I dated to show my electronic face here. Now, it seems he is at it again. That’s who our sensitive boy is.

            What I learned from the prior episode is that Barkley is a bully in the classic mold. Once he chooses a target, he will not relent. I don’t think bullies should be tolerated. I intend to respond to Barkley’s renewed attacks with the truth, as I see it. Barkley is a small-minded, preening, vicious bully and a coward. I see him as a sort of “emperor’s new clothes” figure, who can’t tolerate having his grandiose image questioned.

            Apologies to readers here for what is likely to be a good many off-topic comments. I have no intention of backing down from Barkley and I’m quite sure Barkley is incapable of admitting error. This could take a while.

          3. Barkley Rosser


            Oh LOL big time.

            The funniest thing in all this is that neither Macroduck nor Moses has responded to repeated requests for Macroduck to explain why he said “Ockham says…” in his post, which was what triggered the initial poking by pgl, much less explain more clearly what the post meant, although it did seem to try to say that while fiscal policy changes only slowly, markets price in expectations of those slow changes instantly. Is that it, md? Of course, even if that is it, a not completely ridiculous point, it remains utterly unclear what that has to do with anybody who might be referred to as “Ockham.”

            Oh, and I easily and regularly accept that I am wrong when it is accurately pointed out that I am. And Moses has succeeded in doing so on several occasions, which he likes to dredge up here repeatedly even when they have nothing to do with an ongoing thread, just as is the case with your blast on this thread about things happening on another thread. Of course part of the problem with Moses is that he keeps dragging up stuff where in fact I was right but he somehow things I was not, with his constantly dragging these things up just making him look very foolish, something you are in very serious danger of having happen to you, if you keep this up, snowlflake.

            Signed, Terribly Mean Bully

        2. Moses Herzog

          @ Barkley Junior
          Highlighting another person’s misspelling of a word, which is quite an easy error if you look at the etymology of the word, in order to score rhetorical points, is awfully rich coming from a man who claimed one of his very alive colleagues, working in the same broad field of study he is, was dead. Did you want me to pull up that comment for anyone who doubted you did just that???

        3. Moses Herzog

          @ Barkley Junior
          Well first Barkley just went around telling everyone William Sandholm died of Covid-19, no big deal. It’s not like it wasn’t a big story in the Economics world at that time, so “Covid-19”, taking one’s own life, “it’s all the same really”. Ask Sandholm’s family and students, they’ll tell you it’s all the same really. And then of course, for the man concerned about accuracy in comments we had the very alive Alan Auerbach inserted as the replacement on the announcement of Kreuger’s death. Also a “very small story” in the Economics world when it happened. Well, Auerbach….. Kreuger…… Covid-19….suicide, it’s “all the same” really….. for Barkley Junior.

          But misspell poseur!!!!! Oh my God!!!!!! Can’t people be banned from blogs for that??? Because we know poor persecuted Junior likes to lobby the host to ban people who argue with poor Junior. Well, God bless the man with enough care, concern, and consideration to get the facts of the recently deceased correct. But personally, I say all the people who can’t spell poseur correctly be banished to hell.

          Just one man’s opinion.

          1. Moses Herzog

            Menzie, with an underlying respect to you, what’s the point in repeating a rumor about a man who recently died?? Can you tell me one single positive thing that comes out of repeating rumors about someone recently deceased?? I’m all ears here. The point is, if “Narcissist Prof X” in Virginia doesn’t know what the facts are on an emotionally sensitive situation then he needs to STFU. It’s real simple. And on the day that Jack**s dies, he wouldn’t want people doing that to him, so why do that to others??

          2. Barkley Rosser

            For what it is worth, Moses, Bill Sandholm was a friend of mine, although I had not seen him for several years. While we did not coauthor any papers, we had actual professional dealings, more than I have had with Menzie. Indeed, I connected him with the top evolutionary theorists in the genetics department at UW-Madison, for which he was most grateful. He also advised me on a couple of papers of mine, with his help, well, very helpful.

          3. baffling

            i kind of see things as a social experiment. the usual foes seem to be gone for the time being. rick stryker back to making some low budget films. corev recovering from the heart surgery brought on by decades of poor lifestyle choices. bruce hall staring aimlessly into the night sky at an old folks home. you get the picture, they are mia.
            meanwhile, some remaining liberals on this site have turned cannibalistic on themselves, lacking a target of their anger. the question is what causes such an eruption? true disagreement? or the loss of a common enemy? interesting nevertheless.

  2. pgl

    The following is often used as a measure of credit spreads but there seems to be an issue here:
    Moody’s Seasoned Baa Corporate Bond Yield Relative to Yield on 10-Year Treasury Constant Maturity

    My understanding that the Baa Corporate Bond Yield refers to corporate bonds with 20-year maturity. If the term structure slopes up then this measure is understating the credit spread. Since we have a series on 20-year government bond rates, why not use this series to do the calculation of the spread?

      1. pgl

        The work of Gilchrist and Zakrajsek is excellent. BTW – the links to their paper in your old blog post are not working for some reason.

        1. Moses Herzog

          If I’m not mixing up papers there’s an NBER link that still works for it. I think often after the working paper gets published they often “take down” the working paper links, even though often (*not always) you can barely distinguish the difference.

  3. Moses Herzog

    Damn it Menzie, if I have to research everything before pontificating……. wait……. losing…..power!!!……. getting…… weak!!!!……..

  4. pgl

    The 30-year government bond rate is up to 1.88% but the interest rate on 30-year mortgages has declined to 2.65%. A spread of only 0.77% is quite low. Housing boom!

    1. Barkley Rosser


      I have just advised a daughter who is looking at buying a house that we might be seeing a bottom for mortgage rates, given that the more important ten year rates seem to be gong up.

    2. Willie

      We are certainly seeing a whole lot of development and construction in my neighborhood. I have to wonder who buys a three story, 1200 square foot townhouse for almost a million dollars, even with interest rates as minimal as they are. Those “houses” are all stairs and circulation space, with not a whole lot left. I guess they have marble counters or something, so there’s that.

      The suburban developers have invaded this neighborhood and knock down an older house, stuff five or more “townhouses” onto the single lot, and then sell them for muchos dineros. Then scuttle back to the suburbs with the money they have mined out of the neighborhood, provided they sell these things. There’s a small room somewhere in these things for a home office, so I suppose they are better than a studio apartment or condo if you are working at home. But, if you work at home, why would you pay so much for so little when there’s plenty more for less money not all that far out of town? For people who aren’t going to commute, the economics of it make no sense. The behavior leaves me completely baffled, but they do seem to sell or the rush to knock everything down wouldn’t be happening.

      1. baffling

        i can’t say we are seeing quite the same cost, but in houston you can get 2500 sq ft for under $750k inside the loop. It is just enough, although i miss our 100 year old home with a bunch of small rooms for offices, reading, etc. at any rate, i can be at my main office in about 10 minutes during rush hour. during the pandemic, my other office is 30 minutes away. but that will change once traffic really returns, and it will be well over an hour at rush hour. there is some discussion about work from home lasting, etc, and it may have an impact. but most folks will still need to go to the office often, and traffic will return. the inner neighborhoods are still going to be in demand. it takes about 1 year of hour long one way commutes before people look for ways to gain back the lost time. now if you can push self driving cars into the equation, i think you start to change the game a bit more. i will also point out there seem to be more empty nesters buying these townhomes than young families. many are sold elevator ready.

  5. AS

    Professor Chinn,
    The following is from FRED for series T10YIE
    “The breakeven inflation rate represents a measure of expected inflation derived from 10-Year Treasury Constant Maturity Securities (BC_10YEAR) and 10-Year Treasury Inflation-Indexed Constant Maturity Securities (TC_10YEAR). The latest value implies what market participants expect inflation to be in the next 10 years, on average.”

    Does this mean that we can calculate the ten-year compound inflation rate, lag the T10YIE by ten years and compare the two for accuracy of the implied forecast? Since the FRED data starts as of January 2003, could we then look at 2013 to compare the 2003 inflation breakeven implied forecast? If so, it looks like the TIPS spread was fairly accurate.

    I would appreciate your expert comments. Thanks

    1. Moses Herzog

      @ AS
      In the January 13 hardcopy WSJ, page A2, left hand side, there is something about Job advertisements you might take interest in. How to incorporate that into a forecast model, I do not know, but it’s worth a read if you can access it free. The data is put out by a company named “Indeed”.

      1. AS

        I saw the article, and tried to find data from Indeed, but could not find and data for download. I assume the data are proprietary and may be acquired for a fee.

        1. Moses Herzog

          @ AS
          Hmmmmm, I found some links I think maybe near what you want, and what are the cool lingo the kiddies are using now?? The data is even more “pixelized” than they showed at WSJ?? If the links work as good for you as they are for me I think you will like it very much (I’m hopeful you’ll enjoy)

          After you get there, find the broader category links like “State of the Labor Market”~~~”Demographics”~~~”Coronavirus” over on the right side of the web page. They’ve crunched some of these out from BLS data—I’m fearful it may be “redundant” if you already use BLS a lot for your downloads for your modeling data. But be sure to give it a good long look, you might find something helpful.

        2. Moses Herzog

          @ AS
          I should have included this earlier, as this appears to be the same data specified in the WSJ page A2 article. Knowing Menzie, if he was fishing around there he probably already found this and wondered why I failed to include it. If Menzie didn’t happen to sniff around the site, the link also includes some cities, one of which would be a “sleepy campus town” probably not quite as “near and dear” to his heart as Santa Cruz Cali~~~Madison Wisconsin. (OK, sorry, “sleepy” when the Badger football team isn’t playing a home game)

          PAY ATTENTION HERE Mr. “AS”!!!!!!! ~~~~I believe this is your beloved Data download, “updated regular”
 <<—-Menzie probably noticed this also and decided not to steal all of my thunder, which he knows all too well, I enjoy my thunder.

          1. AS

            Thunder on. You are the sleuth.
            I had some trouble deciphering the process to download the US data on jobs.

            Today’s release of the new claims for unemployment insurance FRED series, ICSA, shows an increase in applications. of 181,000. Per FRED’s calculation, the average increase for the month of December was 95,000. Interestingly, the change in private employment, FRED series, USPRIV, employment for December was a decrease of 95,000 jobs. Unfortunately for forecasting USPRIV, the change in ICSA does not always correlate that nicely with the change in USPRIV employment. There is about a negative 70% monthly correlation.

          2. Moses Herzog

            @ AS
            I assume you were referring to the “Indeed” advertising data being hard to download vs taking the data off the BLS page?? On the 2nd to last link I gave above, at the very bottom it gives a Methodology explanation near the very bottom of the page, which says the file is a CSV file, so whatever your set up is, (I forgot you use Menzie’s Errata er something yes)??? It also should give some set up on the files at the very top of the Github link I gave at the last. I forgot the name of the file, but all of those programs have a standard name for that file, “Help” file or something, but almost all of them have it, and it should be near the top of the links on the Github link.

          3. Moses Herzog

            “Read me” file was the name I was trying to remember. Unless they’ve changed that. They always change something to keep me confused.

    1. Barkley Rosser


      So Brainard disagrees with Bullard about where inflation is going. But you misrepresent his view. He did not express some horror about the prospect or call for some tightening of policy to combat it. Quite the contrary. He called for a continuation of the policy, which the Fed has agreed on to in fact to make the 2% inflation target be an average. They all want the inflation to rise above its current rate, with, in effect, Bullard more optimistic this will happen. As it is, the markets agree with him, with the nominal-TIPS spread now at 2%, or as pgl noted above, 2.06%, just about on target, following the recent upswing of the ten year rate. The market and Bullard may both be wrong (although we do see oil prices moving up sharply recently, with Brent crude now over $56 per barrel). But Bullard is not calling for any change of policy, and certainly not tightening, based on his forecast.

      As it is, I am not making a forecast on this, although I am probably more open to the idea that Bullard will prove right than others here. Again, for all the wisecracks about “hyperinflation,” that is clearly not what he is forecasting, more like something the Fed would like to see.

      1. Barkley Rosser


        I have reread closely Brainard’s speech and in fact see pretty much full harmony with Bullard’s view, not any disagreement at all. The only point where she ventures to make a forecast about inflation she sees it, citing “staff reports,” as possibly rising above 2% sometime later this year, although probably only temporarily, this coming off a core PCE rate holding through end of November of 1.4%. This is completely consistent with Bullard’s forecast, and both of them support a continuation of the current stimulative policy. There is basically no daylight between their positions, although she spent more time talking about studies of long run interest rates and flat Phillips curves, while he spent more time talking about the future and possible supply bottlenecks.

        I realize that you are busy rewriting the Torah, Lawgiver Moses, but it seems you have lost the ability to read carefully, perhaps distracted by your concern for the temperature of Governor Brainard.

  6. Moses Herzog

    Thanks for the Torsten Slok addendum Menzie!!!!!!!! Likes me some Torsten Slok data drops almost better than me likes Jujube Chinese red dates in a medium sized dish with an accoutrement of 4-5 bottles of Harbin beer [ wistful sigh ].

    You know, say what you want about the defects of ZH blog, before Slok made the jump over to Apollo you could still ride the coattail of Slok’s wisdom sometimes over at ZH. Slowly but surely they are killing off what’s left of the golden age of blogs, Grab the crumbs that are still left kids. And remember “the 5 second rule” if you have to grab them off the floor.

  7. Moses Herzog

    These are interesting stories. I put more credence to the Politico story:

    I put less trust in this one, still it seems there are some connecting threads here worth looking into:

    When I first heard this story I assumed Ted Cruz would be one of at least two U.S. Congressman implicated. I think he deserves criminal charges of some sort, but how involved Cruz was (in pre-planning stages) remains to be seen.

  8. Moses Herzog

    Has the feeling of being a little abbreviated (I think unintentional, they were profiling multiple impeachment managers). Still a nice little profile, and I’ve always been impressed with Lieu whenever I see him on TV. I like some other Americans we know on this blog, he’s done his parents proud:

    I’d like to say something that I had intended to say earlier that the story on Lieu brought back to my recall, multiple days earlier threads on this blog. That I think it was extremely unjust and morally bankrupt that Korean American B.J. Pak was fired from his job. B.J. Pak took the moral and very patriotic ethical stance for his country, at a personal cost to himself. I think most educated and or broadminded “European Americans” or “whites” will view B.J. Pak as an American hero in their minds. And I hope….. although not as much attention has been drawn towards Pak’s patriotic self-sacrifice, I feel, although~~~ Asians can argue the number of white Americans aware of Pak’s patriotic self-sacrifice for America is still low in a general sense, STILL many Asian Americans might be surprised if they knew how many white Americans would hold Mr, Pak in very high regard in their minds, and indeed view Mr. Pak as a hero for his country~~or at the very least, a man of impeccable ethics. I hope more people will draw attention to this in the medium term future, and if Mr. pak would like to share his story, I hope one day that he does. because I would love to read it, and I think others would as well. B.J. Pak has more Americanism (and American “Exceptionalism”) in his left pinky toe, than donald trump has in his entire adulterating and fornicating body.
    “Pak’s resignation came a day after the release of an explosive audio recording of a telephone call in which Trump berated Georgia Secretary of State Brad Raffensperger, repeatedly raising specious claims of election fraud and insisting that the Republican official change the vote counts to show that Trump won.

    At one point in the call, Trump seemed to denigrate a federal prosecutor in Georgia, saying, ‘You have your never-Trumper U.S. attorney there.’ Trump did not appear to name anyone, but some associates of Pak believe the president may have been referring to him.”

  9. ltr

    January 13, 2021



    Cases   ( 23,616,345)
    Deaths   ( 393,928)


    Cases   ( 10,512,831)
    Deaths   ( 151,765)


    Cases   ( 3,211,576)
    Deaths   ( 84,767)


    Cases   ( 2,830,442)
    Deaths   ( 69,031)


    Cases   ( 1,980,861)
    Deaths   ( 44,404)


    Cases   ( 1,556,028)
    Deaths   ( 135,682)


    Cases   ( 681,328)
    Deaths   ( 17,383)


    Cases   ( 87,706)
    Deaths   ( 4,634)

  10. ltr

    January 13, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,245)
    US   ( 1,186)
    France   ( 1,056)
    Mexico   ( 1,046)

    Germany   ( 529)
    Canada   ( 458)
    India   ( 109)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.7%, 2.6% and 2.4% for Mexico, the United Kingdom and France respectively.

  11. ltr

    January 14, 2021

    Chinese mainland reports 138 new COVID-19 cases

    The Chinese mainland on Wednesday recorded 138 new COVID-19 cases – 124 local transmissions and 14 from overseas, the National Health Commission said on Thursday.

    The domestic cases were reported in northern and northeastern China: 81 in Hebei Province and 43 in Heilongjiang Province.

    Seventy-eight new asymptomatic COVID-19 cases were recorded, while 599 asymptomatic patients remain under medical observation. 36 patients were discharged from hospitals.

    The total number of the confirmed COVID-19 cases on the Chinese mainland has reached 87,844, and the death toll stands at 4,635.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

  12. ltr

    Harvard’s records a – 24.5% employment decline for low income workers as of December 13 compared to January 2020.  Consumer spending in high income neighborhoods as of January 3, 2021 is – 7.2%.  Small business revenue in high income neighborhoods as of December 30 is – 39.9%.  Shopping by my neighbors or myself is decidedly online, and we think that will continue.  This means restructuring employment.  Then too, though Paul Krugman argues that employment in this recession can naturally recover in the manner of recessions through the beginning of the 1980s, I think restructuring employment will need to be an express policy objective. or we will repeat the difficult employment experience of the last 3 recessions.

    1. JohnH

      Good info! Typical reporting analysis focuses on totals—overall unemployment rate. As a result, impacts on lower income folks get glossed over.

      The more information on the distribution of income, unemployment, wealth, etc, the better. Otherwise, the Very Serious experts will try to reassure us the all is well because a few are making out like bandits.

      1. pgl

        “Typical reporting analysis focuses on totals—overall unemployment rate.”

        Reporting where? Dick and Jane’s daily tabloid? Try checking out the detailed data provided at

        Could you please learn to READ before writing your usual pointless gibberish?

          1. pgl

            You obviously have not checked out the wealth of useful data from the BLS. But given your history of really dumb comments – we would not expect you to do any real research. Troll on dude.

          2. pgl

            BTW – where did these HARVARD dudes find their data? I bet they got it from the BLS. Which of course differs from you as you just make it up as you go.

          3. JohnH

            The question is not whether there is data buried somewhere or not.

            The question is whether critical data is prominently and widely publicized or not, a distinction pgl obviously cannot comprehend. Track the recovery correctly chose to publicize it, not leave it buried like the BLS did.

            One of the reasons that so many voted for Trump is not only that they perceived themselves to have been better off than ever pre COVID, but also that many low income people and their families got slammed by CCOVID lockdowns. The disparity between a high wage, urban Democratic voters and their low wage, rural compatriots is stark, something that partisan hacks like pgl would prefer to keep hidden, even though Democrats ignore it at peril.

          4. JohnH

            Opportunity Insights: “ Our mission is to identify barriers to economic opportunity and develop scalable solutions that will empower people throughout the United States to rise out of poverty and achieve better life outcomes.” Part of this effort is to publicize and disseminate information in a way that makes it extremely easy to see data and trends by income group, something pgl obviously cares nothing about.

            Meanwhile pgl’s beloved Democrats have failed for years to develop and communicate any kind of coherent economic message, though I must say that Biden is off to a good start.

          5. pgl

            “The question is whether critical data is prominently and widely publicized or not, a distinction pgl obviously cannot comprehend.”

            This is from the fool who has trouble grasping “See Dick Run”. I’m sorry that basic research is above your ability to read. Maybe we should have Dr. Seuss write Economics for Dummies for dumbass JohnH.

          6. noneconomist

            JohnH, please detail which party has “a coherent message” with a realistic chance of passing in both houses of Congress. (As you’ve announced many times here, you’re an idealistic third party voter, so such passage will have to occur without any third party support with idealists able only to kibitz and complain from the sidelines)
            BTW, you must be thrilled that Florida—power to the people!—now trails only 29 other states and D.C. in minimum wage and that by 2026, they’ll reach $15/hr.
            Unless, of course, brain dead legislative Democrats can somehow do better. Like California, where, admittedly, this year’s MW is only $5.35/hr. (Or $4.35 depending on number of employees) more than Florida. What were they thinking when they passed this legislation four years ago?

  13. 2slugbaits

    The Fed adopted a new framework in August 2020 allowing inflation to overshoot the Fed’s 2% target. This introduced a new inflation uncertainty risk premium, pushing long-term inflation expectations higher.

    That’s sounds reasonable and agrees with intuition, but if that were a significant factor wouldn’t you have expected to see a bump in the 10 year breakeven rate? Just looking at the graph it appears that the 10 breakeven was pretty flat throughout the 3rd qtr and right up to the Nov election. Was there advance word (insider trading?) about the new framework that would have already captured expectations before the August announcement?

    1. pgl

      Of course some economists such as Brad DeLong and Lawrence Summers have advocated letting expected inflation be 5%. Those neoliberals!

  14. Moses Herzog

    I got me some “cosmic crisp” Apples this morning. I don’t remember ever having tried them before. If they suck I’m suing the entire municipality of Yakima Washington.

  15. ltr

    Latin American countries have recorded 4 of the 13 highest and 6 of the 25 highest number of coronavirus cases among all countries.  Brazil, Colombia, Argentina, Mexico, Peru and Chile.

    Mexico, with more than 1.5 million cases recorded, has the 4th highest number of cases among Latin American countries and the 13th highest number of cases among all countries.  Peru, with more than 1 million cases, has the 5th highest number of cases among Latin American countries and the 18th highest number among all countries.  Mexico was the 4th among all countries to have recorded more than 100,000 and 130,000 coronavirus deaths.

    January 13, 2021

    Coronavirus   (Deaths per million)

    US   ( 1,186) *

    Brazil   ( 966)
    Colombia   ( 921)
    Argentina   ( 990)

    Mexico   ( 1,046)
    Peru   ( 1,158)
    Chile   ( 896)

    Ecuador   ( 800)
    Bolivia   ( 804)

    * Descending number of cases

    1. Menzie Chinn Post author

      Moses Herzog: There are many things I think should not be in the comments on this blog. If I were to weigh in on them all, I would be spending all my time commenting on comments. Here, I thought it necessary to indicate for all the source of this contention, in order to stop a hundred-comment-long-thread (so maybe people could stick to the topic of the original post).

      1. Moses Herzog

        @ Menzie
        It wasn’t a criticism of you, or the way the blog is handled, and am genuinely grateful for the work you put into it~~~which you do quite well and is why I remain a strong fan of the blog. I was scratching an irritating itch I get from one of your other regulars here. I think you might be mildly surprised how often I allow a certain someone here to get “the last word” in, in threads if you back-checked, certainly over the last 3 months and even probably to the beginning. Usually it is on points of fact in which I have to drag it out~~or rather cannot let it go uncontended. I have let him get the last shot on cheap shot character assassinations like he does on macroduck above, because I feel most people will see it for what it is~~vs on factual matters they may not have the background and start to believe, similar to commenter baffling does that the man knows his head from his……..

        Surely you view macroduck as of milder nature in his comments than me, and I will easily concede, not as annoyingly proliferous in making blog comments. It might be an indication of something to you that Barkley even manages to be a little B**** to one of your most mild mannered commenters (i.e. not just me).

        1. Barkley Rosser


          Actually it was your intervention that soured the atmosphere on the whole Macroduck “Ockham” thread, piling in making personal attacks on people for being “confused” about what Macroduck had said, when in fact it was just plain confusing, and his “Ockham says…” was and remains mysterious and confusing, if not just totally ludicrous. Neither he nor you have explained any of it beyond Macroduck asserting the acceptability of the spelling of that name, something already accepted by me. People were making mild fun about his comment, but then you charged in getting nasty, which looks to me sto have et him off. Both of you claimed falsely that there were all these personal attacks being made, but all I did was actually get in to what William of Occam/Ockham argued and what at least one paper said was the relevance of his Razor to economics, with neither of you even mentioning the Razor. But all this was taken as personal attack, with Macroduck then flying off the handle, and bursting in over on this thread with a frankly completely off-the-wall rant that made you look almost reasonable. He somehow thinks that “bystanders” will be really impressed by this thread-jacking outburst, but, frankly, I think most such people will think that he is just completely out of his mind, a raving lunatic.

          And again, for all the claims he and you were being intellectually serious and not making personal attacks, neither of you has yet answered the simple question asked up front: what on earth did “Ockham” (or “Occam”) j have to do with his rather unclear remark (which also remains unclarified).? This is reminiscent of your refusal to ever tell anybody here what your forecast of the pattern of GDP behavior last year was, even after you were challenged repeatedly to “put up or shut up” on what it was, but, providing a model for the pathetic Macroduck, you have done neither while whining on and on about bs. Gag, you are such a hypocrite.

          Two more points. One is that without doubt you are by far the person way more than any other here who is violating Menzie’s reasonable request that people stop thread-jacking, just dragging in all sorts of stuff unrelated to the original post. You know this and de facto recognize this, sometimes sort of apologizing for doing it, but you keep doing it anyway. Again, you were a bad example for poor Macroduck, who really should have kept his ranting on the other thread rather than polluting this one with his raving.

          The other involves a matter that your pal Macroduck has brought up, the matter of bullying. He has gone on and on about how I am this big mean bully, which supposedly will be this big revelation for all of these suppposed “bystanders,” not a single one of whom has jumped in here to applaud him for his revelatory ranting. No, the answer is that indeed there is a problem on this site of a bully, a very bad bully, far worse than anybody else. And that bully is you, Moses Herzog, and I have no doubt that, with probably the exception of the pathetically deluded Macroduck, pretty much all of those bystanders know this and understand this.

          1. pgl

            I’m the one that question the strange use of this term. And by now I’m regretting doing so. You and Moses should take this over to Princeton Steve’s blog so the rest of us can ignore it.

          2. Moses Herzog

            @ pgl
            Banishing me to “Princeton”Kopits’ blog!?!?!?!?!?!? Wow you really are vicious and cruel. Mike Pence wouldn’t do that to donald trump. Hell, after he non-con boinked her ex-Wifey Ivana Trump wouldn’t banish donald trump to “Princeton”Kopits” blog. You’re just cold.

          3. Moses Herzog

            BTW, why is it so hard for you and pseudo-intellect Barking Dog of Virginia mountains, to understand that some words have multiple spellings (and/or pronunciations)??

            Now….. if you want to be a douche i.e a D*CK in desperate need of attention (probably because that person’s demeanor in class garners them little to ZERO respect) you can run around “correcting” people on which one is preferred. But to me, that only implies you are so damned dumb you do not have the word variant included in your lexicon.

          4. Moses Herzog

            @ Barkley Junior
            Your comments have been “market” down. Or as most people between the ages of 5 and 95 spell it, marked down.

            Barkley Junior says “an attack that also market an unprecedented display of the Confederate battle flag for in the Capitol building. However, all that looks to be working out well. MLK would be pleased and proud.”

            Yes, I bet MLK would get misty eyed looking at those pictures of the dude with the horned hat and QAnon merch. Oh, it’s “working out well” is it?? People in D.C. and nearly all of the 50 state capitols who have received multiple death threats and are cancelling their original inauguration plans from a few weeks ago might beg to differ with Barkley Junior on that. But hey, an old man’s delusional imaginings of things “working out well” I bet are highly entertaining to National Guard troops sleeping on the hard surface floor of our nation’s Capitol Building. They’re probably wondering how on Earth they got so lucky.

          5. Barkley Rosser

            Wow, Moses, you really are bulying, lying and misrepresenting beyond your usual manner here.

            For anybody who reads my Happy Birthday MLK blogpost on Econospeak, you will find that “Moses Herzog” is completely misrepresenting what was written there. What I said very clearly was that MLK would “pleased and proud” that his successor as a minister at the Ebenezer Church in Atlanta, Raphael Warnock, was elected to be a senator from Georgia ten days before this birthday. Why on earth did you think you could get away with lying about this? Wow, you are even a worse scum than I thought. This is seriously outrageous.

            As for “Occam/Ockham” I never said the latter was not allowed; I said the first is “preferred,” which it clearly is in the very simple sense that it is used way more, which is evidenced by that is the spelling in the paper by Becchio you and MD have both ignored. If MD had really wanted to be clear, he could have put “William of” in front of “Ockham,” but he cannot even explain why he made any reference to the man at all, instead falling bac on whining about allegedly being bullied because he was asked about it, boo hoo.

            I was just joining in minor fun with that, which the two of you have turned into some capital offense. But the serious substantive point remains that however you spell his name neither of you has explained what his name was doing attached to the front end of this confusing comment about fiscal policy, which pgl now regrets making a snarky remark about. It remains totally unexplained, although people asking about it and noting simply that “Occam” is more widely used than “Ockham,” has somehow led Macroduck to go frothing at the mouth on this thread with wild accusations that all this was bullying when by far the biggest bully around here is you, “Moses Herzog,” which you have just verified with this total misrepresentation of my post about MLK’s birthday. This one is really beneath contempt on your part.

        2. baffling

          usually my response is to somebody who does not know what they are talking about, but pretends to know. i don’t think i have ever had to correct 2slugs or menzie.

          1. baffling

            2slugs, you are the commenter i learn the most from and enjoy the most. you also stay above the fray, which is hard to do on this blog at times, i will admit. please keep up the good work.

    2. ltr

      Glenn Greenwald @ggreenwald

      From the start, COVID has ravaged Brazil as horribly as any other country, if not worse. Bolsonaro’s vaccine opposition means the vaccine still isn’t available. And now, hospitals in the key Amazon city, Manaus, are so filled they are *out of oxygen*.

      Hospitals become “suffocation chambers” in Manaus
      A lack of oxygen cylinders in Manaus has caused dramatic situations in local hospitals, with patients having to be manually ventilated.

      2:34 PM · Jan 14, 2021

  16. ltr

    January 13, 2021



    Cases   ( 448,447)
    Deaths   ( 13,359)

    Deaths per million   ( 1,938)


    January 13, 2021


    New York

    Cases   ( 1,212,324)
    Deaths   ( 40,184)

    Deaths per million   ( 2,066)

    1. ltr

      January 10, 2021

      At Elite Medical Centers, Even Workers Who Don’t Qualify Are Vaccinated
      Administrators and young graduate students have been inoculated at leading research hospitals, contrary to state and federal guidelines.
      By Apoorva Mandavilli

      A 20-something who works on computers. A young researcher who studies cancer. Technicians in basic research labs.

      These are some of the thousands of people who have been immunized against the coronavirus at hospitals affiliated with Columbia University, New York University, Harvard and Vanderbilt, even as millions of frontline workers and older Americans are waiting their turns….

      [ The public health failings have been there from the beginning, and need careful examination. ]

    2. ltr

      January 13, 2021



      Cases   ( 520,060)
      Deaths   ( 3,817)

      Deaths per million   ( 415)


      January 13, 2021



      Cases   ( 448,447)
      Deaths   ( 13,359)

      Deaths per million   ( 1,938)

      Israel has a population of about 9 million, Massachusetts about 6.9 million.  Notice the difference.

      Also, Israel has already vaccinated 70% of those over 60 and 21% of citizens in all.

      1. Barkley Rosser


        I have just read of a major outbreak of Covid in PRC with a large lockdown being imposed. I note no reporting on China here as you usually do. Whassup there now?

  17. ltr

    “I have just read of a major outbreak…”

    Reports on China have been posted here every single day for months, including the report for January 14 which is posted above on this thread and which I will post again as asked. Also, the report on China for January 15 will be posted.

    January 14, 2021

    Chinese mainland reports 138 new COVID-19 cases

    The Chinese mainland on Wednesday recorded 138 new COVID-19 cases – 124 local transmissions and 14 from overseas, the National Health Commission said on Thursday.

    The domestic cases were reported in northern and northeastern China: 81 in Hebei Province and 43 in Heilongjiang Province.

    Seventy-eight new asymptomatic COVID-19 cases were recorded, while 599 asymptomatic patients remain under medical observation. 36 patients were discharged from hospitals.

    The total number of the confirmed COVID-19 cases on the Chinese mainland has reached 87,844, and the death toll stands at 4,635.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

      1. Moses Herzog

        The “lockdown” itself (not necessarily the transmission) is probably more severe than they are saying, because local area officials get into job protection mode or CYA mode if they think the fallout will eventually be tied to them. I’m more interested in the persecution of journalists and citizen activists than a random lockdown of a city though. Lockdown of sections of a large city is small fry type news (for those not directly affected) and very common.

        1. baffling

          my point to ltr is that there is more coronavirus activity going on than what he has been reporting. i have not heard from dalian since the new year, so do not know the current conditions today. however, i also know others who were supposed to travel to dalian at the end of last month. they were not permitted to do so. so the lockdown was pretty extensive. and the virus was not clustered in one location in dalian. it had spread throughout the city.

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