Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. This post is part of a symposium at Project Syndicate.
Project Syndicate asked, “Is a Global Recession Inevitable?” Steven Roach says, “yes”; Anne Krueger says, “Depends…Certainly not inevitable”; & Jim O’Neill says, “Quite possible.”
My answer to the question:
No. A global recession is entirely “evitable.”
True, the odds of a downturn are high in Europe, hard-hit by the need to manage winter without Russian natural gas; China, where Covid shutdowns already turned growth negative last quarter; and Emerging Market and Developing Economies, many of which have debt troubles.
The slowdown applies even for the US. I still maintain that the two quarters of negative GDP growth reported by BEA do not signify that a US recession started in the first part of 2022. Three reasons: (i) Q1 GDP will be revised September 29; (ii) other important indicators like GDI and employment were positive; and (iii) the ruling is up to the NBER. But rising interest rates and the gloomy outlook among trading partners do mean that a US recession is much more likely than usual, at some point over the next two years.
But a “global recession”? The US is not the only place where a negative growth rule is not an agreed criterion to define recession. Consider global GDP. It has been rare in the post-war period for global growth to fall below zero, even for a single quarter, let alone two. Not even the severe downturns of 1974 and 1981 qualified. The explanation is that even in times of apparent recession, negative growth among Advanced Economies is usually outweighed by still-positive growth among Emerging Market and Developing Economies. (Two exceptions: the 2008 Global Financial Crisis and the 2020 Covid recession.)
The IMF’s most recent update projects GDP slowing, from 6.1 % in 2021, to 3.2 % in 2022 and 2.9% in 2023. That is a momentous slowdown. But it still leaves world growth unlikely to meet a two-negative quarters threshold. Even by laxer criteria like 2 ½ % growth, global recession is far from inevitable.
This post written by Jeffrey Frankel.
China does not seem to be helping world stability.
https://thehill.com/opinion/international/3619006-how-chinas-dim-prospects-may-turn-into-disaster/
“Russia’s terrible war generates headlines, but China’s growing debt crisis is mostly ignored. And yet, it will have profound negative effects on the global economy. In just three generations, Beijing built a middle class bigger than America’s entire population. But now Chinese many face ruination. China’s domestic real estate bubble, due to deregulation, is so gargantuan that much of its middle class has been damaged. “China’s debt bomb looks ready to explode and many warning signs suggest that a debt reckoning is imminent,” warns Nikkei Asia.”
One would think Princeton Steve would be all over this but he has ignored it. In the meantime, sane people like Macroduck and Moses have been covering this actual debt crisis.
I most certainly haven’t ignored it, and if China’s underlying growth were, say, 2%, I would expect an explicit downturn in China. But with baseline growth there running in the 5-5.5% range, a recession may produce growth in the 1-2% range, which would be a ‘recession’ by the standards of China in the last three decades, but still not necessarily enough to qualify as a recession by traditional US metrics. So, for China, I am wait and see, but I certainly have not precluded a wider financial crisis there. That would be the one that takes down Xi and the Communist Party.
Gee – that may be the first time anyone described a growing economy as being in a recession. Of course, a real economist might write growth below potential output growth. But writing clearly is not something you ever seem to do.
You’re not wait-and-see, Steve, you’re make-it-up-as-you-go-along.
Very interesting. I knew that 30% of Chinese GDP comes from housing and related. I did not know that “more than 70 percent of household wealth is tied up in real estate”. When prices start dropping and panic sets in that could be a major economic disaster. Xi will do all he can to postpone that panic until late November (when his power has been firmed up), but he doesn’t have much of any tools for that. He can step in and force the finish of all those projects that were run by bankrupt companies, but will that change the fear of all those people who’s retirement is tied up in empty condos? Any stampede begins with just a few starting to run – then the rest follow in panic not even knowing why they run.
I knew that 30% of Chinese GDP comes from housing and related. I did not know that “more than 70 percent of household wealth is tied up in real estate”.
I trust you have this right but I was wondering how one can examine Chinese data on these matters. I know BEA provides details on residential spending as a share of income for the US. And of course the Flow of Funds data is very useful for seeing the composition of wealth in the US.
Maybe you or Dr. Chinn knows if there is something comparable for the Chinese economy.
I doubt that for either. Remember, your inflating paper money. China’s real assets are tied up into exports based economy. What they need is boosting consumer spending, which is where the imbalance is. One, exporters don’t like it. 2ndly, covid scared western producers and hurt exporters in the future. China is basically going through what the U.S. went through in the 70’s in terms of the end of the export boom. China knows it can’t be a world’s reserve currency with such a unwillingness by their people to spend. So the better option is rebuilding a new curtain with Russia to undermine dollar imperialism and force reorganization of the global economy.
“Remember, your inflating paper money.”
???
“So the better option is rebuilding a new curtain with Russia to undermine dollar imperialism and force reorganization of the global economy.”
?????
This is all jibberish.
You almost had a cogent post, Gregory. Almost.
“Besides that, Beijing itself is owed $1 trillion by struggling governments around the world that cannot afford to pay back loans for Belt and Road Initiative projects. The result of this domestic and foreign borrowing is that this year China’s debt is expected to reach the equivalent of 275 percent of its GDP due to massive borrowing and economic slowdown. The United States, by comparison, is expected this year to reach a debt level of 98 percent of its GDP.”
Japan also has a gross debt/GDP ratio over 250% but that grossly overstates its net debt. This story wants to pretend that its $1 trillion in holding of foreign assets is sort of worthless but that is just silly. And how much of US government debt do they hold?
pgl,
Below is the latest data I can find on foreign holdings of US Treasuries.
China’s holdings have dropped to $967.8 billion as of June 2022 from $1,061.8 billion as of June 2021. About an 8.9% drop.
Japan’s holdings $1,236.3 billion as of June 2022 from 1,279.7 billion as of June 2021. About a 3.4% drop.
A recent Japanese holding high of $1,328.6 billion was recorded as of November 2021.
https://ticdata.treasury.gov/Publish/mfh.txt
Thanks. I did not know Japan held more than China with the UK in 3rd. I also did know how much was held in the Cayman Islands and other tax havens such as Ireland, Luxembourg, and Switzerland.
Their dimwitted zero-Covid policies are not helping them either
https://www.cnn.com/2022/08/30/business/china-covid-shenzhen-huaqiangbei-lockdown-intl-hnk/index.html
“It has been rare in the post-war period for global growth to fall below zero, even for a single quarter, let alone two. Not even the severe downturns of 1974 and 1981 qualified.”
Of course the Great Recession and the COVID pause do. But we are nowhere near either one.
Kevin Drum has a couple of topical posts up today. This one on how the right wing is contradicting its past stance on the FDA being too slow is interesting:
https://jabberwocking.com/fda-critics-are-finally-having-an-aha-moment/
Gee – the right wing now thinks the FDA is going too fast on getting us Omicron vaccines. Go figure.
Now he has a chart on the global price of natural gas. But there is not a global market. EU prices are much higher and Henry Hub prices are much lower than what his chart portrays.
https://jabberwocking.com/raw-data-the-price-of-natural-gas/
I decided to link to Kevin Drum’s post on natural gas prices since his source was FRED. But wait – he is reporting the EU price as if it were the global price. Kevin is usually not quite this sloppy.
Yes he must have been distracted by having to go for all those tests later today.
Wait! EU natural gas prices fell by 21%?
https://www.msn.com/en-us/money/markets/european-natural-gas-prices-plunge-21-in-their-steepest-decline-since-march-as-latest-rally-overshot-fundamentals/ar-AA11em8t?ocid=msedgdhp&pc=U531&cvid=60d37569209de1a5f051dba7d1df277f
Kevin Drum needs to update his post when he gets a chance!
First, Drum has sourced his data from FRED, and if you look it up, it actually says “Global Price of Natural Gas, EU (PNGASEUUSDM)”.
https://fred.stlouisfed.org/series/PNGASEUUSDM
If you follow that further, it comes from the IMF’s Primary Commodity Prices.
https://www.imf.org/en/Research/commodity-prices
And if you click through to the associated spreadsheet, you’ll find that this means “Natural Gas, Netherlands TTF Natural Gas Forward Day Ahead, US$ per Million Metric British Thermal Unit”
Thus, FRED is using the Dutch TTF price as the ‘global’ price, much as we treat Brent as the global price for oil, even though there are many other benchmarks. I suspect the Fed is trying to be helpful here to allow those searching the database for a global natural gas price to find one. We all know about Brent and WTI, but I don’t think many of us are familiar with the Dutch TTF contract. I don’t think there is too much harm done here, but it is fair to say that the TTF price is not, strictly speaking, the global price, but rather the price of such natural gas as is traded internationally into Europe.
Pro forma, Drum has correctly sourced his graph, but admittedly, he would have done better to dig a bit further and note that it’s the monthly (not daily) TTF price.
You can find the daily price here: https://www.theice.com/products/27996665/Dutch-TTF-Gas-Futures/data?marketId=5419234
Discussion of TTF and other natural gas prices, in this post.
Good stuff. I will say this – Princeton Steve knows more about energy markets than our Bruce Hall. But I would suggest that is a low bar.
Ah, yes.
Natural gas is mostly non-tradeable except by pipeline and LNG tanker. LNG capacity is limited and adds quite a bit to the price of natural gas, from memory about $4 / mmbtu, allowing for transport from field to terminal, liquefaction, shipping by LNG tanker, and regas at the destination. This can be compared to US nat gas prices which were not so long ago in the $2.50 range. Importing LNG is not always economically attractive if local production or pipeline imports are available.
Of course, there are countries and regions where a lot of gas is imported, Asia and in particular China, for one. So natural gas prices would ordinarily be higher there and that is in fact the traditional destination of most LNG exports.
Of course, pipeline gas from Russia to Europe would ordinarily be cheaper than LNG, hence the dependence of Russian gas. However, under the current circumstances, European nat gas is something like 10x the price of US gas, and therefore import to Europe of LN gas from the US is economically viable.
This volumes, however, are constrained. All of gasification, LNG tanker and regas facilities are expensive, complicated and have long order-to-delivery times. So you can’t just turn the business on and off like a switch, hence the divergence between US and European natural gas prices.
Steven Kopits: Well, duh. That’s essentially what I wrote in the post.
Menzie ChinnPost author
August 30, 2022 at 9:07 am
Steven Kopits: Well, duh. That’s essentially what I wrote in the post.
In fairness to Steve – Bruce Hall still does not get the simple point. So I don’t mind Steve rehashing this as Brucie is indeed really, really slow.
They are complementary analyses.
Steve, what you’re giving us is not analysis. It’s marketing. The product is you.
And I don’t think anyone here is buying.
https://tradingeconomics.com/commodity/eu-natural-gas#:~:text=EU%20Natural%20Gas%20Dutch%20TTF%20Gas%20is%20a,%28GTS%29%2C%20the%20transmission%20system%20operator%20in%20the%20Netherlands.
This link which you referenced in that post provides the EU natural gas price on a daily basis. I noted some story where this price had recently declined. This link confirms that.
Thanks for providing this link as the IMF quote is a monthly average.
“If you follow that further, it comes from the IMF’s Primary Commodity Prices.”
Really? I would say I did not know that but I clearly do as when I write analyzes of this issue, I clearly label my sources. You generally do not but congratulations that you finally figured this out!
They do not call it “the Dutch disease” for nothing.
Econbrowser’s “Yoda” speaks, even as the Ukrainian counteroffensive erupts.
Wait – Max Sawicky told us Greenspan was Yoda! The force be with you!
ZŽZZZZZZZZ..wake me up when they actually do something.
I hear Putin has put you in charge of making sure that nuclear power plant has a major leak. I bet you are SO HAPPY that you get to kill more Ukrainians!
Uh, Johnny? Wake up, Johnny. Your wish came true today:
https://www.npr.org/2022/08/29/1119926747/ukrainian-attacks-suggest-long-awaited-military-offensive-in-the-south
Ukraine has been talking for weeks about a possible counteroffensive against Russian forces in and around the southern city of Kherson. Without the Ukrainian government saying so explicitly, a new round of Ukrainian military attacks on Monday suggested such a push may now be underway.
I hope this succeeds. Later in this story – it notes how Russian forces are making little progress when they are trying to go on the forces. Of course, JohnH thinks the Russians are winning. He would write this as his boss (Putin) has to lie to the Russian citizens.
JohnH,
Invasion situation still pretty murky, but Russian instagram sources have reported UKrainians moving line forward 10 kilometers in some places, which is more than Russians managed in Dpnbas in over a month, with you quoting a German general through an Indian diplomat on that at great length here.
That is consistent with the NPR story Macroduck shared with us. But wait – the Russians are allowed to use Instagram?
Moving 10 kilometers in a day would be consistent with other reports suggesting breach of first line of Russian defense around the city. Ukraine first attacked the supply lines across the river, then ammo depots and command centers on both sides in preparation. Russian generals and commanders fled to the safe side of the river as soon as the bridges first got attacked. Ukraine waited until the lack of shelling from Russian troops indicated they were low on ammo (the cut off was effective). Abandoned by commanders, low on ammo and even lower on will to fight, a lot of Russian soldiers may surrender rather than falling back. That means the second and third lines don’t get expected fall-back reinforcements and may not be as strong as feared. The closer Ukraine gets the better their ability to stop anything from crossing the river in either direction. Th
I read that the occupation mayor (or was it governor?) of Kherson posted a video saying Kherson will always be a part of Russia.
He posted the video from a hotel in Russia.
JohnH once again openly rooting for Russia.
You’re probably the most poisonous commenter here.
He is so bad that I bet Princeton Steve asks him to stop pretending they are BFFs.
One day later….ZZZZZZZZZZZZ.
What happened to the triumphalism of US media reports on Ukraine winning? Nowhere to be found. Doubts creeping in?
Zelensky’s job may be on the line…In a recent speech, “ Biden carefully distanced himself from the Kiev regime and focused on the people-to-people relations. Even if the Americans know the Byzantine corridors of power in Kiev, they cannot afford to be explicit like the former Russian president Dmitry Medvedev who predicted last week that the Ukrainian military may stage a coup and enter into peace talks with Russia. ”
https://www.indianpunchline.com/ground-beneath-zelenskys-feet-is-shifting/
when do we see pix of ukr infantry covered in russian blood and gore?
smoke from long range fires are losing my attention.
if the ukr infantry don’t close we will lose interest in sending 100’s of billions for the big guy’s kiev connections!
al vindman has a cib may be he can put some motivation in to them!
You are a very sick person. Please stop writing your garbage comments here.
the point is military that do not close with the enemy are like ones usa supports for 20 years which fold in 3 days at the end.
like a year ago!
“(ii) other important indicators like GDI and employment were positive; ”
prof. frankel, i thought i read recently from an NBER member that the preferred measure by the committee was the average of GDI and GDP, not each separately, when determining whether a recession has occurred. given your experience with this group, could you confirm this or not? thanks
It’s right there in the NBER FAQs for the business cycle dating committee:
“The dating of the quarterly turning point dates also considers the average of real Gross Domestic Product (GDP) and real Gross Domestic Income (GDI)”
https://www.nber.org/research/business-cycle-dating/business-cycle-dating-procedure-frequently-asked-questions
And Princeton Steve is all upset that they do not give VMT a huge weight!
https://fred.stlouisfed.org/graph/?g=SZtx
August 4, 2014
Real per capita Gross Domestic Product for China, Germany, India, Japan and United States, 1977-2021
(Percent change)
https://fred.stlouisfed.org/graph/?g=SZtE
August 4, 2014
Real per capita Gross Domestic Product for China, Germany, India, Japan and United States, 1977-2021
(Indexed to 1977)
https://fred.stlouisfed.org/graph/?g=TcOG
August 4, 2014
Real per capita Gross Domestic Product for Brazil, China, France, Indonesia and United Kingdom, 1977-2021
(Percent change)
https://fred.stlouisfed.org/graph/?g=TcOM
August 4, 2014
Real per capita Gross Domestic Product for Brazil, China, France, Indonesia and United Kingdom, 1977-2021
(Indexed to 1977)
https://www.imf.org/en/Publications/WEO/weo-database/2022/April/weo-report?c=223,924,132,134,534,536,158,186,112,111,&s=GGXWDG_NGDP,&sy=2007&ey=2021&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1
April 15, 2022
General government gross debt as a percent of Gross Domestic Product for Brazil, China, France, Germany, India, Indonesia, Japan, Turkey, United Kingdom and United States, 2007-2021
2021
Brazil ( 93)
China ( 73)
France ( 112)
Germany ( 72)
India ( 87)
Indonesia ( 43)
Japan ( 263)
Turkey ( 42)
United Kingdom ( 95)
United States ( 133)
Speaking of China’s lock-down policy:
https://www.scmp.com/tech/tech-trends/article/3190525/shenzhen-shuts-worlds-biggest-electronics-wholesale-market?module=lead_hero_story&pgtype=homepage
More of the same.
And the lock-down problem isn’t the only drag on activity. Power shortages are closing factories:
https://www.bloomberg.com/news/articles/2022-08-23/worst-drought-in-decades-threatens-china-s-economic-recovery?srnd=premium-asia
And while Stevie got credit issues in the U.S. utterly and completely wrong (why do anything by halves?), China’s construction sector is creating serious financial market stresses:
https://carnegieendowment.org/chinafinancialmarkets/87751
Pettis is on fire these days
China’s Fragile Economy Is Being Hammered by Driest Riverbeds Since 1865
Factories shut down as extreme heatwave strains energy grids
Sichuan is hardest hit as hydropower output slashed by half
CoRev alert. When this mad dog stops barking as he chases his own tail, expect him to bark WEATHER (not climate change) and then note how we cannot rely on hydropower as coal is the only answer.
Loire River in France supposedly dry also, for first time in 2000 years, along with massive flooding in Paris.
Yes, we should ask CoRev how his non-model models of the climate are going.
Just smiling. At least you are sensitive to the real issue weather events are not climate events, and models tell us nothing when they are demonstrably wrong.
Is this current drought extreme/ Yes. Is it unprecedented? No!
“The earliest readable year on the Děčín stone is 1616. Traces of inscriptions relating to much earlier droughts, including 1417 and 1473, have been largely eroded over time. Ten later dry years, between 1707 and 1893, are also recorded.” https://www.theguardian.com/world/2022/aug/19/hunger-stones-wrecks-and-bones-europe-drought-brings-past-to-surface Taker a look at the pictures. They will probably be more appropriate for your level of understanding. 😉
I especially love the Guardian’s hypocrisy using an article to show there have been many more and even more severe droughts and then saying: “There can be no more hiding, and no more denying. Global heating is supercharging extreme weather at an astonishing speed.” Blah, blah and even more blah climate change.
And you folks blindly believe this trash?!?
CoRev posts a link he did not finish reading. Permit me to include the part he ignored:
After two years of wrangling, false starts and disappointments, it finally happened: America has passed its first-ever climate legislation, moving the country closer to its goal of a decarbonized future and taking a significant step toward helping the planet avert the worst scenarios of climate catastrophe. But it’s not a time to rest. We have always held power to account – on climate and every other major issue – from the fossil fuel companies responsible for heating the planet to the politicians representing their interests. The country responsible for the most greenhouse gas emissions in history has indicated it will change course; we will relentlessly report on what comes next, who will benefit and the remaining obstacles to progress. With daily reporting and analysis on the climate emergency, we aim to ensure that even more people are made aware of the dangers – and opportunities – of this moment.
Climate change is real but the barking dog madly chasing his own tail can only utter WEATHER WEATHER WEATHER!
CoRev,
Do you know what joint probabilities are?
No?
I can always rely in Bark, bark and now bark, bark Jr to respond ignorantly. Wow, “Climate change is real…” says the fool who claims every WEATHER EVENT is climate change, and can not define climate change.
Ans Jr’s left field question: “Do you know what joint probabilities are?” after stating this: “Yes, we should ask CoRev how his non-model models of the climate are going.” Let me answer the 1st question with an example: GCMs correctly predicting (Sorry, projecting, GCMs don’t predict) ANYTHING. My list of them is nearly empty, with the few successes being random coincidences.
Perhaps, you both can add to that list. I’ll wait.
covid, do you know what joint probabilities are?
“in China GDP is an input determined politically at the beginning of a time period. Once China sets its GDP target, local governments (and, until recently, the property sector) have had the responsibility of delivering enough economic activity to bridge the gap between the GDP growth target and what Beijing usually calls “high-quality growth”—that is, the underlying growth rate delivered by the private economy, consisting mainly of consumption, exports, and business investment. Bridging the gap between the two was not a problem for the Chinese economy during the first thirty years of the period known as reform and opening up (the late 1970s until the late 2000s), mainly because China was seriously underinvested in property, infrastructure, and manufacturing capacity, so the investment that the GDP growth target required was, for the most part, productive. It is probably not a coincidence that during these years China’s GDP growth almost always exceeded the growth target, sometimes by a few percentage points. This began to change ten to fifteen years ago, by which time China had largely closed the gap between the investment it had and the investment that the economy could productively absorb. When that happened, China should have dramatically lowered the share of production it reinvested, but to do so without causing a sharp drop in the growth of economic activity required rebalancing the economy toward greater consumption, which in turn meant transferring income from previously successful parts of the economy to the household sector.”
I’m not an Austrian economist by any means but the term malinvestment comes to mind here.
Rain has arrived in some of the drought areas. Flooding has required evacuation in some cities – maybe because parched ground doesn’t absorb rain well? Not enough to solve the hydroelectric generation problem, but fingers crossed the grain harvest is helped.
“China’s southern technology hub of Shenzhen has shut down Huaqiangbei district, home to the world’s largest electronics wholesale market, as local authorities strengthened measures to contain a fresh Covid-19 outbreak, causing fresh disruptions to local supply chains.”
Oh dear – this may delay getting the next iPhone for a week.
https://fred.stlouisfed.org/graph/?g=gxkQ
January 15, 2018
Real Broad Effective Exchange Rate for China, Germany, India, Japan and United States, 1994-2022
(Indexed to 1994)
https://fred.stlouisfed.org/graph/?g=lwga
January 15, 2018
Real Broad Effective Exchange Rate for China, Germany, India, Japan and United States, 2007-2022
(Indexed to 2007)
https://fred.stlouisfed.org/graph/?g=RRwA
January 15, 2018
Real Broad Effective Exchange Rate for China, Indonesia, Brazil, United Kingdom and France, 1994-2022
(Indexed to 1994)
https://fred.stlouisfed.org/graph/?g=RRwc
January 15, 2018
Real Broad Effective Exchange Rate for China, Indonesia, Brazil, United Kingdom and France, 2007-2022
(Indexed to 2007)
https://news.cgtn.com/news/2022-08-29/Chinese-mainland-records-352-new-confirmed-COVID-19-cases-1cSWp59NXa0/index.html
August 29, 2022
Chinese mainland records 352 new confirmed COVID-19 cases
The Chinese mainland recorded 352 confirmed COVID-19 cases on Sunday, with 301 attributed to local transmissions and 51 from overseas, data from the National Health Commission showed on Monday.
A total of 1,344 asymptomatic cases were also recorded on Sunday, and 22,062 asymptomatic patients remain under medical observation.
The cumulative number of confirmed cases on the Chinese mainland is 242,307, with the death toll from COVID-19 standing at 5,226.
Chinese mainland new locally transmitted cases
https://news.cgtn.com/news/2022-08-29/Chinese-mainland-records-352-new-confirmed-COVID-19-cases-1cSWp59NXa0/img/a2ed2de73cc240aeb952731baa54972a/a2ed2de73cc240aeb952731baa54972a.jpeg
Chinese mainland new imported cases
https://news.cgtn.com/news/2022-08-29/Chinese-mainland-records-352-new-confirmed-COVID-19-cases-1cSWp59NXa0/img/35c2fe363566464b9e72ef2cfd451390/35c2fe363566464b9e72ef2cfd451390.jpeg
Chinese mainland new asymptomatic cases
https://news.cgtn.com/news/2022-08-29/Chinese-mainland-records-352-new-confirmed-COVID-19-cases-1cSWp59NXa0/img/6138eefbdeca4a88ac4578d85d004297/6138eefbdeca4a88ac4578d85d004297.jpeg
https://www.worldometers.info/coronavirus/
August 28, 2022
Coronavirus
United States
Cases ( 96,011,855)
Deaths ( 1,069,132)
Deaths per million ( 3,216)
China
Cases ( 241,995)
Deaths ( 5,226)
Deaths per million ( 4)
Nobel Prizes in US 400, in France 71, in Japan 29, in China 1.
https://fred.stlouisfed.org/graph/?g=ERCj
January 30, 2018
Consumer Prices for China, Germany, India, Japan and United States, 2017-2022
(Percent change)
https://fred.stlouisfed.org/graph/?g=OULh
January 30, 2018
Consumer Prices for China, Indonesia, Brazil, France and United Kingdom, 2017-2022
(Percent change)
Anybody else notice that ltr tend to flood comments most often when there is bad news for China mentioned at Econbrowser or in the press.
“Never mind the bad news. Look! China’s unicorn has had babies.”
Macroduck: Yes.
That’s her job.
1) Calling pandas unicorns is racist
2) project idea: scrape ltr’s comments and metadata (two,three years, idunno) and using some news metric like public Google search data build a model of the incentive structure at ltr’s troll farm. Maybe we can see when she got promotions! We can stop at, say, the end of this year and whoever’s model predicts the following year’s patterns best wins an expensive prize (funded of course by Menzie Chinn’s research account). There is nothing more fun that I can think of. Bonus: the troll farm might think this is some sort of sophisticated counterintel operation and panic. Would love to see how that looks in the data!
“China does not seem to be helping world stability.”
There is however all that science stuff being published, such as work on cancer treatment:
https://news.cgtn.com/news/2022-08-05/Chinese-scientists-develop-a-hydrogel-that-helps-burn-up-tumors-1cf406vDWO4/index.html
August 5, 2022
Chinese scientists develop a hydrogel that helps burn up tumors
Chinese scientists designed a hydrogel that may have a double effect in the fight against cancer. It helps burn up tumors more accurately and boost one’s anti-tumor immunity.
The study published * in the journal Science Advances described metal-based biomaterial shown to enhance the heating efficiency and restrict the heating zone under microwave exposure, a local tumor ablation strategy used clinically….
* https://www.science.org/doi/10.1126/sciadv.abo5285
https://news.cgtn.com/news/2022-08-08/China-makes-breakthrough-in-cancer-treatment-via-immunotherapy-1ckqACfojhC/index.html
August 8, 2022
China makes breakthrough in cancer treatment via immunotherapy
Chinese researchers have made a breakthrough in the treatment of cancer via immunotherapy, identifying a particular hormone receptor as a potential target, the University of Science and Technology of China (USTC) said.
The receptor, MC5R, acts with a hormone called α-MSH, which is produced by the pituitary gland, to promote the growth of tumors, according to a paper * published in the journal Science….
* https://www.science.org/doi/10.1126/science.abj2674
https://news.cgtn.com/news/2022-08-28/Chinese-scientists-propose-new-treatment-for-nasopharyngeal-carcinoma-1cRjVbec2Wc/index.html
August 28, 2022
Chinese scientists propose new treatment for nasopharyngeal carcinoma
A Chinese research team has proposed a new treatment strategy for low-risk nasopharyngeal carcinoma patients, showing radiotherapy alone was not inferior to concurrent radiotherapy and chemotherapy, according to Sun Yat-sen University in south China’s Guangdong Province….
The study * was published in The Journal of the American Medical Association (JAMA).
* https://jamanetwork.com/journals/jamaoncology/fullarticle/2768224
Off topic, UK fracking –
As is the case in most well-governed jurisdictions, fracking is currently banned in the UK. Two leading candidates for Tory leadership have said they’d lift the ban:
https://www.dailymail.co.uk/news/article-11155305/Households-25-discount-energy-bills-local-fracking-plans.html
The UK does have a few hundred earthquakes most years, but most of them are too small to be detected without a seismograph or some such. As Oklahomans have learned, fracking can change that. (Moses, correct me if I’m wrong.)
I don’t know anything about the hydrology of the UK, but until “the big one” hits, hydrology matters more than seismology in evaluating the risks of fracking.
And let’s hope the UK has the sense to regulate methane leakage better than the U.S.
The quakes comes from produced water reinjection, typically, not fracking.
Steven Kopits: Where is the “produced water” coming from?
Wells are fracked with water combined with some amount of additives. Per the linked website: “Fracking consumes a massive amount of water. In the United States, the average can run between 1.5 million and 9.7 million gallons of water to frack a single well, according to the United States Geological Survey (USGS).” My recollection is that we used a rule of thumb of 4 million gallons per well.
Gas and oil wells themselves can also produce water in some quantity.
Produced water, including returned frac water and produced water from the well, can qualify as ‘hazardous waste’, sometimes from the additives used, but often because wells may contain materials which qualify as hazardous, for example, mildly radioactive rock, heavy metals and of course, crude oil or other petroleum liquids. This means that the produced water cannot be simply discharged into local waterways and must therefore be disposed of by some other means.
This can include filtration and chemical treatment pre-release. Another solution is evaporation ponds, but that’s slow and requires large lined pits. More popular is disposal of the water into exhausted oil or gas wells. In this case, the water is materially being returned to the source largely with the additives from the source itself, ie, heavy metals and radioactive rocks. Where are there exhausted oil and gas wells? All over Texas, Oklahoma, Colorado, Louisiana, etc.
The problem with reinjection has been that it is done under great pressure to force the water back in the well. Apparently, this can cause slippages of the underlying rock formations and resulting earthquakes.
https://www.nrdc.org/stories/fracking-101
https://www.usgs.gov/faqs/does-production-oil-and-gas-shales-cause-earthquakes-if-so-how-are-earthquakes-related-these#:~:text=Fracking%20intentionally%20causes%20small%20earthquakes,a%20M4%20earthquake%20in%20Texas.
You’ve dodged Menzie’s point – re-injection is part of the fracking process. Were it not for fracking, re-injection associated with fracking would not occur. You’re obscuring the ultimate cause by blaming the proximate cause.
As I point out, reinjection is emphatically not part of the fracking process. There are a variety of disposal options, one of which is reinjection. But that is not at all the only one. For example, in the US, much oil production comes from arid regions. If you want to frac a well, you have to bring in 4 million gallons of water in trucks, which is a lot. So one option is to reuse earlier frac water, which may or may not be filtered or treated, depending on the circumstances.
Therefore, it is fair to say that reinjection from shale and conventional oil wells can be part of the process of producing shale oil or gas (or conventional oil or gas), but this is not a one-for-one linkage and it is emphatically not part of the fracking process, just as fracking is not part of the drilling process. No industry professional would every conflate the two.
@ BlueStatesResidentKopits
We got it. The body’s producing of saliva, mucus, and gall is only a part of the body’s digestion process. But no one involved in producing feces would say that crapping/defecating is part of the digestive process. We got it.
As I’ve said before, the easy way to tell if someone is impersonating BlueStatesResidentKopits on a blog, is to see if there is no circle logic in the comment. If there’s no circle logic, it’s not Kopits.
“because the daytime sky is not really blue. How we know that is if we look beyond that, into space, it’s mostly black. Therefor if you could extend your vision past the blue sky, you’d see black space with some glimmers of light , so obviously it’s not blue.” Understand??
Also, as a footnote, BlueStatesResidentKopits says egg did not come before chicken, because you need rooster before chicken can make egg. That’s what CoRev’s farmer friend told Kopits anyway, so….. See?? Why does BlueStatesResidentKopits have to explain everything twice to you people??
“As I point out, reinjection is emphatically not part of the fracking process. ”
you lose credibility when you make these types of arguments, steven. this is using a technicality in a perverse way. nobody ever died from falling out of the airplane. it was the sudden stop at the end that killed them. technically true as well. but outside of comedy, an absurd argument.
“From the late-1970s onwards hydraulic fracturing has been commonly used in North Sea oil and gas fields…”
https://www.nesfircroft.com/blog/2019/07/a-brief-history-of-fracking?source=google.com
Professor Frankel,
As regards “Global Recession Is Not Inedible”, do you remember Euell Gibbons? He was of the same opinion regarding pine trees.
“Ever eat a pine tree? Many parts are edible.”
— Euel Gibbons
https://www.inspiringquotes.us/quotes/EJgK_xhDVKZ5E
Obviously it worked. He lived to the ripe old age of … 64!??
I recently linked to Agustin Carsten’s address to the Jackson Hole Symposium. To put a spring in Moses’s step and because the medium term is important, too here’s a link to Gita Gopinath’s address:
http://www.imf.org/en/News/Articles/2022/08/26/sp-gita-gopinath-remarks-at-the-jackson-hole-symposium
Five year horizon, as opposed to Carsten’s longer-term view.
No Marvin jokes this time, though certainly apt for Gopinath, too.
from imf paper:
“These risks may be intensified if the climate transition is delayed, ”
hmmm, whatever ‘climate transition’ may be there are risks to push immature technologies that require subsidy when the science/money should be chasing less risky projects or tech solutions with better potential.
i think premature dis-investing in csarbin energy will push energy prices up far more than the sanctions on russian oil/gas trade.
climate transition/green has potential for long, sticky inflation
the pandemic and war embargo are less cause for energy inflation than the preferential treatment of ‘not ready for sustaining an economy and quality of life’ green policy.
“i think premature dis-investing in csarbin energy will push energy prices up far more than the sanctions on russian oil/gas trade.”
How does building out infrastructure for competing sources of energy cause energy inflation? That doesn’t add up.
AndrewG, asks: “How does building out infrastructure for competing sources of energy cause energy inflation? That doesn’t add up.” Because existing sources do not need added infrastructure, but the competing sources that do, using LCOE, usually ignore or down play the need in cost estimates. That’s why statements such as renewables are cheaper than fossil fuel generators are lies. Levelized estimates remove the UNIQUE cost only needed by renewables.
The better method is Full Cost of Energy (FCOE), which compares actual full costs for each.
No it’s not comparing actual full cost. It completely ignored the trillions of dollars in cost from climate damage.
van
August 30, 2022 at 12:41 pm
No it’s not comparing actual full cost. It completely ignored the trillions of dollars in cost from climate damage.
Ah CoRev – we have been over this many times before. Oh wait – you think these costs are zero. Which is why EVERYONE here realizes you are an IDIOT.
CoRev,
a) You don’t understand FCOE (which you found only because you googled around for anti-green arguments) or LCOE, and
b) If you did, you’d know it’s irrelevant to current lifetime costs of renewable projects, which, for utilities, are much lower than any other energy sources, except possibly gas. That’s what the data says right now. That explains why investment in renewables is so high. It’s not “lies” – that’s idiotic.
Oh and:
c) You don’t know how supply curves work. If you did, you wouldn’t be so confused about all of this. Businesses don’t say, “Oh, I *would* produce some more at the currently low costs, but I’m afraid if I quadruple my output, my costs might go up!”
Read an intro micro textbook.
bishop ivan,
‘trillions of dollars’ in climate damage’ is shibboleth!
to foist billions in investment diverted from things that have positive life of system benefits.
in the 70’s people were selling investments that were negative real return based on inflated estimates of “damage”.
the trillions in climate damage are religion!
as if the windmills failing in eu are going to prevent any “climate damage”
Ivan, careful with the negative costs. That equation has two sides, which the climate change fanatics conveniently forget. If considering negative costs, when comparing renewables to fossil fueled sources, then also add the fossil fuel benefits, AND REMEMBER TO ADD THE COSTS OF THE NEEDED FOSSIL FUEL BACKUP to implementing renewables.
Nearly every time we see comments about negative externalities, we almost never see consideration of the negative externality of increased grid unreliability. Fossil fueled sources do not need renewables, but renewables NEED fossil Fueled backup, which need to be added to costs.
I’ll wait for your revised calculation.
Anyone who would write such utter gibberish has no business commenting on economics:
CoRev
‘August 31, 2022 at 4:05 am
Ivan, careful with the negative costs. That equation has two sides, which the climate change fanatics conveniently forget. If considering negative costs, when comparing renewables to fossil fueled sources, then also add the fossil fuel benefits, AND REMEMBER TO ADD THE COSTS OF THE NEEDED FOSSIL FUEL BACKUP to implementing renewables.’
My Lord – all these words and ZERO understanding of even the basics. We could get a dozen monkeys all smarter than CoRev typing away for a year and they would have trouble writing a coherent economics post. But at least these monkeys would not write the above babble. DAMN!
“immature technologies that require subsidy”
Estimated unsubsidized levelized costs of energy generation in the United States in 2021, by technology(in U.S. dollars per megawatt hour)
https://www.statista.com/statistics/493797/estimated-levelized-cost-of-energy-generation-in-the-us-by-technology/
What is “immature” about them?
Since when do oil, gas and nuclear not receive subsidies?
AndrewG, what the heck are you trying to say? “What is “immature” about them?” These are all new generation plants. That’s immature compared to the older generation plants. BTW, did you even notice that Combined Cycle gas was the lowest cost energy in your graph?
“Since when do oil, gas and nuclear not receive subsidies?” So they are subsidized. So what?
My argument is that using the LCOE is lying by omitting actual costs, misquoting or presuming life cycle equality, ignoring the need for backup or ignoring the unreliability forcibly added to a grid by emphasizing renewables, especially wind and solar.
Renewables require thermal backups. Thermal sources do not require renewables.
Convince me otherwise, by showing working versions that solve those problems.
“Since when do oil, gas and nuclear not receive subsidies?”
I guess you decided to just duck his question. Yea – you write a lot of gibberish but you make no attempt at being even remotely honest about this issue.
“My argument is that using the LCOE is lying by omitting actual costs”
Your argument is misunderstanding supply curves. I know 18-year-olds who could see through your argument.
“Convince me otherwise, by showing working versions that solve those problems.”
Current investment patterns say everything. It’s you who wants to close your eyes and call stuff that hurts your feelings “lies.”
AndrewG ducks the question “Renewables require thermal backups. Thermal sources do not require renewables. Convince me otherwise, by showing working versions that solve those problems.”requesting examples of ACTUAL working examples.
What he claims as exemplary is subsidizing farming, and not even close to fulfilling the question.
C’mon, you must be able to do better than that.
I see ole bark, bark has continued his comprehension problems. I said: ” So they are subsidized. So what?” and his response was: ” I guess you decided to just duck his question.”
No, I accepted it and asked another question that you ignored.
“No, I accepted it and asked another question that you ignored.”
No – what you wrote is utter gibberish. But hey – that is what you do in each and every comment. I might suggest someone check your brain as it is clearly rotting away.
Once again, we have a great example of the original meaning of “begging the question”. It’s in this sentence:
“i think premature dis-investing in csarbin energy will push energy prices up far more than the sanctions on russian oil/gas trade.”
How do we know disinvesting from greenhouse-gas-producing energy is premature? We don’t. That’s why Anonymous snuck it in, thereby “begging” the question of whether disinvestment is premature.
Funny thing – investment choices in hydrocarbon industries is overwhelmingly a private sector decision in the U.S. If investment is lower than you’d like, go talk to private investors and industry execs.
This sentence, meanwhile, is unsupported clap-trap:
“the pandemic and war embargo are less cause for energy inflation than the preferential treatment of ‘not ready for sustaining an economy and quality of life’ green policy.”
How, pray tell, does support for green energy drive up the price of greenhouse energy? Please, I’d love to see an explanation.
And while one does not want to rely on pure “post hoc ergo propter hoc” thinking, the timing of the pandemic and Russia’s invasion certainly make them better candidates for causing the rise in oil prices than support for green technology. May Anonymous would show us the event study behind his claim? Anything for a laugh.
md,
you are not getting me to consider investing.
the question is how does deploying premature, green, high school science projects which are not integrated to broader networks: maintain a suitable quality of life and what effective and suitable specifications are afforded and delivered by low tech readiness level ideas?
the debate is not how right the detractor but how close the investment proposal is to return, and what assumption.
[btw the world will run out of several mineral early in the deployment of green high school science projects, but green religion is not physics]
i won’t raise you to bishop ivan level bc he is brief
religion not analysis
[btw the world will run out of several mineral early in the deployment of green high school science projects, but green religion is not physics]
disclaimer: i do have a small position in one esg utitity……
Yes and the reason the private sector is not investing more in hydrocarbon is that they can see their own future being in question. They recognize that solar and wind is at least as “mature” as they are – and on track to become increasingly cheeper. People with actual insights on energy production and cost have pretty universally come to the conclusion that hydrocarbons cannot compete in the future – so they don’t invest that much in it.
Ivan claims: “…the reason the private sector is not investing more in hydrocarbon is that they can see their own future being in question. ” because the liberal governments promise to strand those fossil fuels investments. Except that those promises are constantly broken and wrong, with the same officials lying about the need to continue fossil fueled sources.
When electricity is gone or reduced this Winter is going to be eye opening for many, even here in the US. Getting what you wanted with your ignorant demands to get off fossil fueled electricity sources is going to be painful.
covid, when the natural gas system failed in texas, we saw that fossil fuel is not as reliable as you want to believe. it took out power to the entire state. fact.
Blame ERCOT and not gas. If you knew it needed to be hardened and failed to so direct….
VTW, aren’t Texans lucky they did have gas to fall back upon when the wind and solar was abjectly failing?
I will blame ercot AND natural gas. ercot is run by a bunch of texas republicans. as is natural gas. plenty of blame for both. ercot is a conservative dream.
It’s wrong and already outdated as a paper. The mouth gaping awe by the end of the year will be lolz.
“It’s wrong and already outdated as a paper.”
How? Did a woman hurt your feelings?
Great share, just read this quickly and highly recommend it. Gopinath grapples with broader issues about MP regimes, like: we let unemployment go very low in the wake of the GFC right up to Covid, should we do that again in the future? Her answer seems to be no. My favorite bit:
“Second, the pandemic experience suggests that in a hot economy, it is more likely for shocks to cause overheating at the sectoral level as various sectors hit capacity constraints. The high interconnection between sectors means that binding constraints in one sector—such as energy production—can easily translate into cost pressures for many other sectors.”
This sounds like a call for more hawkish discretion.
The stuff about structural change also sounds kind of hawkish. Sounds like she’s saying Covid forced producers to make more cautious planning decisions that reduce supply flexibility. We’re very familiar with the short-term impact of this, but Gopinath is saying there may be some long-run implications too – which if you think about it is very reasonable. Planning is about future production! And since up to 2020 we already made big strides in reducing frictions in global markets, things aren’t going to get much better any time soon – this may be the way things are for some time.
A perspective from India.
https://news.abplive.com/business/the-global-recession-analysing-and-understanding-the-current-geo-political-situation-1546620
Amidst stalling growth of the world’s three largest economies, India is standing tall with a high GDP growth rate and strong foreign reserves (Forex).
A recent survey by Bloomberg has claimed that despite the rupee breaching the 80 per dollar mark against the US dollar, India’s chances of slipping into a recession are very low. Although the IMF has lowered India’s GDP prediction from the current fiscal to 8.2 per cent from 8.9 per cent, the country will still remain one of the fastest-growing economies in the world.
Reserve Bank of India Governor Shaktikanta Das on Friday, while announcing MPC outcome, said India’s GDP growth forecast retained at 7.2 per cent. Despite the economy still grappling with inflation, India’s real GDP growth projection for FY22-23 is retained at 7.2 per cent, with Q1- 16.2 per cent, Q2- 6.2 per cent, Q3 -4.1 per cent, and Q4- 4 per cent with risks broadly balanced.
The perspective from Canada.
https://storeys.com/td-economics-forecasts-recession/
On a brighter note, TD’s analysis also revealed that there are fewer recession indicators in Canada and therefore less risk to the Canadian economy. This is especially apparent when Canada is compared to other G2 economies, including the US and Europe, where recession indicators are flashing red.
This is far from the first time that we’ve heard talks of recession in Canada. Economists have been in hot debate about recession risk since June. And then, throughout July, an update from Chief Economist at Canada Mortgage and Housing Corporation (CMHC) Bob Dugan, a study by Senior Economist with the Canadian Centre for Policy Alternatives (CCPA) David Macdonald, and report from RBC have all concluded that Canada will see a recession in the months or years to come, with the divisive aspect being when a recession will hit, rather than if.
An article repeated many times at many sites.
https://finance.yahoo.com/news/global-economy-world-rising-risk-154321596.html
A myriad of purchasing managers’ surveys published on Tuesday from Asia to Europe to the United States showed business activity contracting and pointed to little hope of a turnaround anytime soon.
“Put simply, it’s the extremely high rates of inflation that is resulting in households having to pay more for the goods and services they have to buy which means they have less to spend on other items,” said Paul Dales at Capital.
“That’s a reduction in economic output so that’s what’s driving the recession. Higher interest rates are playing a small part but really it’s the higher inflation.”
Wait – you think you are telling us that everyone is about to see a recession? Now Brucie – do read your first two links. India is expecting strong growth. Canada is expecting strong growth. And a lot of the other national forecasts suggest growth continues in other reasons.
And your point is? Oh yea – you provide links that you do not bother to read. Got it!
Wait, you actually read the article? Congratulations. See? No global recession. India and Canada doing well to okay. Europe? Not so well.
We finally agree, global warming is not affecting everyone negatively.
https://www.irishtimes.com/news/environment/climate-crisis-may-trigger-recessions-like-one-caused-by-covid-scientist-predicts-1.4569345
(That’s sarcasm just in case your too literal brain can’t figure that out)
” global warming is not affecting everyone negatively”
You got this from the Irish Times article? Oh right – those 9 million people who died prematurely do not matter to Bruce Hall. He is that kind of guy.
When Princeton Stevie pooh told us housing was “cratering” by pulling all sorts of weird data that he totally misrepresented, some of us pointed out to this lying troll that real residential investment was higher in 2022QII than it was in 2021QI. Of course, his incompetent BFF had to jump to his defense with more misrepresented data including some quote about housing being 15% to 18% of GDP. Macroduck and I realized he got this from the National Association of Home Builders which includes the following BEA series:
https://fred.stlouisfed.org/series/DHUTRC1Q027SBEA
Personal consumption expenditures: Services: Housing and utilities
Now Johnny boy clearly forget to read what NABE said here or how they linked to BEA data so Macroduck and I filled in the incredible gaps in Johnny boy’s information. Now the FRED series (which is also in that NABE data) is nominal spending so the 7.6% increase in nominal spending on household services represent a very small increase in real spending.
But wait – real residential investment rose and real household services are slightly above where they were a year ago.
Is he what Princeton Steve and BFF JohnH describes as “cratering”? I guess getting the data correct is not their thing.
BLS: Job Openings “Little Changed” at 11.2 million in July | Calculated Risk, Aug 30
https://www.calculatedriskblog.com/2022/08/bls-job-openings-little-changed-at-112.html?m=1
BLS: “The number of job openings was little changed at 11.2 million on the last business day of July, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.4 million and 5.9 million, respectively. Within separations, quits (4.2 million) and layoffs and discharges (1.4 million) were little changed.”
HARRRDD REESEEEEETTTT!!!
“Jobs openings increased in July to 11.239 million from 11.040 million in June.
The number of job openings (black) were up 4% year-over-year.
Quits were up 2% year-over-year. These are voluntary separations.”
I have tried to get Stevie pooh to grasp the Beveridge Curve but it is clear he has not. Now if Bill McBride casts his data in terms of this time honored labor economics concept, maybe it will finally hit Stevie over his thick skull.
““Jobs openings increased in July to 11.239 million”
Job openings are twice the number of unemployed people. This is not a weak labor market no matter how the RECESSION cheerleaders spin it.
employment to work age population is ~ unchanged y on y at ~40%.
what wage level/contraction will bring job opening down?
Did your pet monkey type your latest comment?
Hires continue to exceed separations (quits + layoffs). This strikes me as a strong labor market.
97% of all economists agree that we will/will not have a recession sometime in 2022-23.
https://www.yahoo.com/finance/news/johns-hopkins-economist-predicts-whopper-132556802.html
“We will have a recession because we’ve had five months of zero M2 growth, money supply growth, and the Fed isn’t even looking at it,” he said. “We’re going to have one whopper of a recession in 2023.”
So Steve Hanke is rightfully upset that the FED is actually listening to Bruce no relationship to Robert Hall. You were the one screaming inflation is out of control. If Powell becomes Volcker II then we have Bruce Hall to blame for this gold bug monetary policy.
Take a bow Bruce – Trump followed your dumb advice on COVID and a lot of people died needlessly. And now your advocated monetary policy may give a recession. You are quite the policy advisor!
I bet Bruce Hall has no clue who Hanke even is. After reading the monetarist BS, I began to check out his background:
Hanke said on Monday that throughout world history, there had never been sustained inflation—inflation above 4% for more than two years—that had not been caused by excessive growth in the supply of money. “We had [that M2 growth] starting with COVID in February of 2020,” he told CNBC. “We had an unprecedented growth in the money supply in the United States, and that is why we are having inflation now—and that’s why, by the way, we will continue to have inflation through 2023 going into probably 2024.”
Hanke was on Reagan’s first CEA – the group that led to the most disasterous macroeconomic mess in my life time. Martin Feldstein and Bill Poole led the team from 1982 onwards to clean up the mess Hanke et al. left us.
Now CATO loves Hanke was the head of the Troubled Currencies Project which had advised on monetary policy for those Soviet states in East Europe as well as hyperinflation nations.
Of course Bruce Hall did not know that before he decided Hanke was his guru in terms of macroeconomics.
Bruce,
Are you aware that Steve Hanke is an off the charts super monetarist? He has occasionally been right about things, but more often than not way off.
BTW, I do not know what your “97% of all economists agree….will/will not…” means. Plenty of economists are forecasting we will have a recession sometime in the next year, with rising interest rates the likely culprit. But there is clearly no consensus, and Hanke is way off the deep end to one side on this.
Had he READ what Hanke wrote – he might have realized Hanke is an off the wall monetarist. I certainly did.
Maybe Brucie can start citing Judy Shelton, Lawrence Kudlow, and Stephen Moore!
I did not know that China has a publicly traded automobile company – BYD Co. (build your dream):
https://www.marketwatch.com/investing/stock/BYDDF/financials
Warren Buffet knew as he had Berkshire Hathway hold a significant share of its stock. Until now as they are cutting their holdings of BYD.
Remember when Nobel Prize winner forecasting Princeton Steve told us we where in a RECESSION because consumer confidence had declined. What’s the latest?
https://www.conference-board.org/topics/consumer-confidence
The Conference Board Consumer Confidence Index® increased in August, following three consecutive monthly declines. The Index now stands at 103.2 (1985=100), up from 95.3 in July. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—improved to 145.4 from 139.7 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—increased to 75.1 from 65.6.
“Consumer confidence increased in August after falling for three straight months,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index recorded a gain for the first time since March. The Expectations Index likewise improved from July’s 9-year low, but remains below a reading of 80, suggesting recession risks continue. Concerns about inflation continued their retreat but remained elevated.”
“Meanwhile, purchasing intentions increased after a July pullback, and vacation intentions reached an 8-month high. Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.”
I think this is the hard reset.
How the eff did New York City ever allow RUDY to be the mayor?
https://news.yahoo.com/rudy-giuliani-complains-cops-aren-162551843.html
Rudy Giuliani claimed that police officers are, by his assessment, having a “hard time” because “they can’t punch you”. Donald Trump’s former personal attorney and a man once hailed as “America’s mayor” made the controversy-stirring remarks while appearing on conservative television and radio talk show host Joe Pags’s programme, The Joe Pags Show, in an episode where the pair of men discussed New York City Mayor Eric Adams’s response to crime.
Eric Adams strikes me as a much better mayor than RUDY ever was. And our mayor is cleaning up a crime problem he inherited. So we do not need RUDY running around being drunk and grossly irresponsible. But you know – the new mayor has probably let his police know that if they ever run into RUDY, it is OK if they punch this drunk old man in his face.
https://www.nytimes.com/2022/08/30/opinion/europe-prices-oil-gas-supply.html
August 30, 2022
Europe’s Gonna Party Like It’s 1979
By Paul Krugman
You probably have to be a senior citizen to remember the gasoline shortages of 1979. I am, and I do. I also remember how demoralizing they were. Then as now, outside a few big cities, America was a highly car-dependent nation, and waiting in long lines, not knowing whether you would be able to fill up, was deeply disconcerting.
What caused those shortages? The precipitating event was the Iranian revolution, which sent world oil prices soaring. But an oil price surge in itself needn’t mean gasoline shortages; it could — as we’ve seen recently — just mean higher prices at the pump….
[ The economic history of which I am aware, tells me that Paul Krugman should be referring to 1974 and not 1979. So far as I understand, there were price caps on oil and resulting shortages and rationing in 1974 but not in 1979. ]
https://fred.stlouisfed.org/graph/?g=Tf60
January 15, 2018
Price of Oil, 1968-1982
(Indexed to 1968)
That is not inflation adjusted but it gives the idea. Oil price in 1979 were much higher than they were in 1974 so the Nixon imposed set of confusing price controls bit harder in 1979 before Carter eventually got rid of them.
Gerald Ford was President in 1974. I did not recall price caps from this free market type. Jimmy Carter was President in 1979. I do recall his attempts to limiting the increase in the price of gasoline.
https://www.brookings.edu/opinions/energy-price-controls-been-there-done-that/
OK – my memory was a bit off. The price controls were imposed by Nixon when oil prices were not that high. Carter got rid of them but only after they had done serious damage to oil markets.
If you look up inflation adjusted oil prices, they were twice as high in 1979 as they were in 1974. So this may be what Krugman remembered – the Nixon imposed price controls bit more harshly in 1979 than they did in 1974.
And it was a Democrat who got rid of these price controls – not St. Reagan. Of course Carter had the good sense to have a windfall profits tax.
Hey, how come you missed this one ltr? Aren’t you a regular Krugman reader?
OPINION
PAUL KRUGMAN
Of Dictators and Trade Surpluses
Aug. 22, 2022
https://www.nytimes.com/2022/08/22/opinion/russia-china-trade-surpluses.html
According to a new NBC News poll, U.S. voters now consider “threats to democracy” the most important issue facing the nation, which is both disturbing and a welcome sign that people are paying attention. It’s also worth noting that this isn’t just an American issue. Democracy is eroding worldwide; according to the latest survey from the Economist Intelligence Unit, there are now 59 fully authoritarian regimes out there, home to 37 percent of the world’s population.
Of these 59 regimes, however, only two — China and Russia — are powerful enough to pose major challenges to the international order.
The two nations are, of course, very different. China is a bona fide superpower, whose economy has by some measures overtaken the United States’. Russia is a third-rate power in economic terms, and events since Feb. 24 suggest that its military was and is weaker than most observers imagined. It does, however, have nukes.
One thing China and Russia have in common, however, is that both are currently running very large trade surpluses. Are these surpluses signs of strength? Are they evidence that autocracy works?
No, in both cases the surpluses are signs of weakness. And the current situation offers a useful corrective to the common notion — favored, among others, by Donald Trump — that a country that sells more than it buys is somehow a “winner.”
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BTW I absolutely *love* when Paul Krugman goes Econ 101 on his posts. Of course he’s mastered the basics (and has a JBC and a Swedish thingy to prove it) and is right on the money, but what’s so striking is just how persistently useful the basics are in understanding the world. (I’d argue, same with probability, stats and econometrics at the intro level; it’s less the case for intro to macro.)
College students: take economics! Better yet, become an econ major!
‘take economics.’
We have routinely asked the likes of JohnH, Bruce Hall, Princeton Steve, and CoRev to take a basic economics course. Clearly none of them have.
“One thing China and Russia have in common, however, is that both are currently running very large trade surpluses. Are these surpluses signs of strength? Are they evidence that autocracy works? No, in both cases the surpluses are signs of weakness.”
This reminds me of the utter macroeconomic stupidity we routinely get from Princeton Steve. The basic Keynesian trade model notes that as an economy sees strong aggregate demand growth, its imports rise. Conversely, an economy in recession tends to have reductions in its imports. I thought everyone knew this but poor little Princeton Stevie watches our trade deficit rise and goes bananas that this is a sign of RECESSION.
Paul Krugman may well be correct. There was a price cap on oil in 1974, * and there may have been a cap on oil or gasoline in 1979 but my notes only describe selective gasoline rationing in several states and what I find on the internet is confusing to me.
* https://www.fordlibrarymuseum.gov/library/speeches/750028.htm
January 15, 1975
Gerald Ford: I plan to take Presidential initiative to decontrol the price of domestic crude oil on April 1. I urge the Congress to enact a windfall profits tax by that date to ensure that oil producers do not profit unduly.
https://en.wikipedia.org/wiki/1979_oil_crisis#:~:text=Richard%20Nixon%20imposed%20price%20controls,(%24100%2Fm3).
Richard Nixon imposed price controls on domestic oil. Gasoline controls were repealed, but controls on domestic US oil remained.
The Jimmy Carter administration began a phased deregulation of oil prices on April 5, 1979, when the average price of crude oil was US$15.85 per barrel. Starting with the Iranian revolution, the price of crude oil rose to $39.50 per barrel over the next 12 months (its all-time highest real price until March 3, 2008). Deregulating domestic oil price controls allowed U.S. oil output to rise sharply from the large Prudhoe Bay fields, while oil imports fell sharply.
Thanks for this. I just wish the Wiki authors expressed those oil prices in inflation adjusted terms.