GDP Prospects

Atlanta Fed nowcast at 3.4% q/q SAAR:

Figure 1: GDP (black), GDPNow (pink square), GS (light blue triangle), Survey of Professional Forecasters (blue), GDO (gray), in bn.Ch.2012$ SAAR. Source: BEA 2nd release, Atlanta Fed, Goldman Sachs and author’s calculations.

 

26 thoughts on “GDP Prospects

    1. AS

      Barkley,
      Have you used Bayes Theorem to test the probability of recession given interest rate conversions?
      I have found several complicated papers about using Bayes Theorem regarding recession, but no simple version using interest rate conversions.

      If anyone has used Bayes Theorem to get a posterior probability of recession given interest rate conversions, it would be interesting to see your work.

      1. AS

        Don’t know why I said “conversions”. I meant “inversions”. Got football confused with economics.

        1. AS

          Thanks, just asking.
          I have asked you this question in the past but want to ask again.
          Do you prefer being called Barkley or Dr. Rosser?
          No intent of disrespect, having addressed my question to “Barkley”?

          1. Barkley Rosser

            AM,

            Oh, I am fine with being called “Barkley.” Thanks.

            The fuss over titles and names for academics here has arisen because various people here have had the habit of referring to one of our co-hosts by his professional title while calling the other one by his first name, with the latter having expressed unhappiness about this peculiar discrepancy.

            But, heck, I am not one of the hosts here, so no problem for me. Again, I am fine with “Barkley.”

          2. Moses Hersog

            First names are a “casual” way and “non-formal” way to refer or to “address” people. i.e. It’s a way to show friendship. OK I don’t view Prof Hamilton as my “enemy”. But I feel “affection” to or more “kinship” to Menzie. Barkley D-head is the only person here, who doesn’t “get” why I address Menzie on a first name basis. I feel I “understand” Menzie, more, after 7 years in China, MAYBE even understand Menzie’s Mom more….. (Menzie probably feels I’m just some kinda weird white guy, and that’s “A-ok” with me).

            I’m drinking now, it only took me 2 hours to type that. : )

          3. Barkley Rosser

            Moses,

            Yes, even D-head me gets it that you and others feel friendlier to Dr. Chinn than to the less frequently posting and more distant Dr. Hamilton. But the problem is that Dr. Chinn has himself expressed that he is uncomfortable with people calling him by his first name while they refer to his co-host by his professional name. Maybe it makes you feel good to do it, but he has said it does not make him feel good. He considers it to be treating him with disrespect, at least that is what he has said, even if you do not buy it and choose to ignore it and just keep doing what he says makes him uncomfortable, given you think you are so buddy-buddy with him.

  1. Ivan

    To get a recession you need consumers to slow spending. I am not seeing the kind of gloom and doom in the consumer class that would get us there. There are still plenty of jobs. Housing is down, but from a fairly high level so not a lot of people are upside-down on mortgages.

    1. Macroduck

      Jobs. Yes. When employment is rising at a health pace, that generally means either a sizable incremental increase in the budget of the household gaining an income, or new household formation. The former case means more money to spend after necessities. The latter means more spending on necessities – rent and household maintenance costs. In either case, new jobs mean considerable new spending. It’s possible for a recession to begin without hiring having slowed ahead of the fact, but the common case is that hiring slows ahead of recession:

      https://fred.stlouisfed.org/graph/?g=XjiU

      Prior to recent recessions, and ignoring the Covid recession, monthly hiring gains were down to well below 0.2% per month in the months prior to the recession. In the bad old days of recession fighting, on the other hand, monthly employment gains could remain a good bit higher in the final months of expansion. The Fed can apparently stop hiring abruptly.

      How about now? Depends on one’s prefered employment measure:

      https://fred.stlouisfed.org/graph/?g=XjkD

      Payroll hiring is slowing, but is still near 0.2% per month. The household series averaging well below 0.2%. (I left household employment out of the first graph because, though it usually behaves much like payroll employment, the series is noisy and obscures the pattern.) You remember that the divergence between household employment data (and labor tax revenues) on the one hand and most other employment measures on the other was discussed in an earlier post:

      http://econbrowser.com/archives/2022/12/is-the-establishment-series-overestimating-nfp-employment

      Very likely it’s just a coincidence, but the recent big divergence between household jobs and most other job counts began in April, just after the first Fed hike in March.

  2. ltr

    https://news.cgtn.com/news/2022-12-07/China-s-foreign-trade-volume-up-8-6-in-first-11-months-of-2022-1fz2v1jfIcg/index.html

    December 7, 2022

    China’s foreign trade volume up 8.6% in first 11 months of 2022

    China’s foreign trade volume increased 8.6 percent year on year in the first 11 months of 2022 to 38.34 trillion yuan ($5.5 trillion), indicating steady development, official data showed Wednesday.

    Exports rose 11.9 percent year on year to 21.84 trillion yuan, while imports increased 4.6 percent to 16.5 trillion yuan during the period, according to the General Administration of Customs.

    Exports of new energy products stood out among the categories. In the first 11 months of this year, China’s lithium batteries and solar cell exports increased by 86.6 percent and 74.3 percent, respectively.

    China’s trade with its major partners maintained steady growth momentum in the first 11 months. Trade with countries along the Belt and Road jumped 20.4 percent, and trade with Regional Comprehensive Economic Partnership member states climbed 7.9 percent.

    Trade with the Association of Southeast Asian Nations, China’s largest trading partner, increased by 15.5 percent during the period, while trade with its second-largest trading partner, the European Union, rose 7 percent from a year earlier….

    1. pgl

      OK my last comment on this race where I turn the microphone over to Christian Walker:

      https://www.msn.com/en-us/news/politics/herschel-walkers-son-christian-says-republicans-played-identity-politics-with-fathers-nomination/ar-AA151lzZ

      Christian Walker, a conservative social media influencer and son of Republican Herschel Walker, blasted his father and the Republican Party after Sen. Raphael Warnock, D-Ga., won the Georgia Senate runoff election. In several scathing tweets posted Tuesday night, Christian Walker berated his father’s run for Senate and accused the GOP of playing “identity politics” by nominating Walker Sr. because “he was the same skin color as his opponent.” He also laid blame on former President Donald Trump for lobbying Walker to get into politics against the family’s wishes. “The truth: Trump called my dad for months DEMANDING that he run. Everyone with a brain begged him: “PLEASE DON’T DO THIS. This is too dirty, you have an insane past… PLEASE DON’T DO THIS,” Walker tweeted. “We got the middle finger. He ran.”

    2. Moses Herzog

      It’s so weird watching him now, because I really liked him as a football player, and at one time, many years ago he seemed to be sending the right message to young people. But I think this is one of those deals where fame and money changes people. I honestly do believe Herschel has changed over the years, and obviously NOT in a good way. I think there are even some parallels between him and OJ Simpson. Americans (and I include myself in this kind of sin) hold our football players up so high. And when we do that, they start to believe what we the fans are telling them “you are special” “you are better than the crowd”. We the fans create these monsters. But I’m trying to hold on to the positives of this~~Herschel lost and Herschel was man enough to concede, And maybe Herschel learned something here in the process.

      It’s certainly nothing new Republicans using Democrat musicians songs without permission, which I am sure grates on them

  3. w

    Commodity prices down, lumber down, energy down, home prices declining… the Fed’ policy is starting to look rather absurd.
    Unless they just hate the idea of people having jobs and living in an economy with a growing GDP, they have little justification for continued rate rises. Those rises themselves contribute to inflation.
    About the only argument remaining for them is that they are building up “dry powder” to be able to offer cuts during the next recession… which they themselves are striving mightily to create.

    1. pgl

      I’ve been hoping that the FED backs off of its tight money for a while. Of course we still do not know whether the labor market has cooled off or not but my fear is by the time we do know, the damage will be done.

    2. Macroduck

      Yep. Bernanke used Japan’s experience to show that building up “dry powder” amounts to causing the problem you then have to solve. Lots of market types still talk about hiking rates in order to be able to cut, but central bankers generally know better. Which means the Fed has no excuse, I guess, maybe…?

      1. pgl

        Oh Brucie boy thinks he has raised a new issue. Sorry Brucie boy – Princeton Steve has been hammering the housing bubble nonsense for a couple of years now. He may be a boring nut job but at least he articulates a position. I see once again you cowardly cannot. One more time – if you think you have a point, MAKE IT.

        1. Bruce Hall

          LOL! Not a new issue. The issue is a projection of GDP growth (or did you go right to the comments without reading the post so that you could search out any comment I made?). Get a life, pgl.

          Now if you want to say there is no relationship between a rapid rise in the Fed funds rate and a recession following shortly thereafter, well, I’ll let the Fed’s own graph do the talking. Even Paul Krugman would disagree with your contention that I’m wrong. But you can’t help yourself, can you?
          https://www.msn.com/en-us/finance/markets/the-fed-has-done-enough-and-really-really-should-pause-rate-hikes-top-economist-paul-krugman-says/ar-AA1418Jj

          1. pgl

            Oh gee – tight money might lead to a slowdown in output growth. Gee Brucie – you should write a paper on your new theory and submit to the AER.

            In other news – Brucie boy discovers gravity. And here’s the shocking discovery of the year. Brucie figured out the earth is not flat!

          2. pgl

            The Fed has done enough and ‘really, really should pause’ rate hikes, top economist Paul Krugman says

            Hey Brucie – try reading what I have been saying for WEEKS. Yea – I agree with Krugman. Or maybe since I beat him to this – Krugman is agreeing with me.

            Seriously Brucie – your reading skills are very below par.

          3. pgl

            The two minutes I spent listening to Krugman was worth it as he is so spot on. But come Brucie – admit it. You either did not listen or you had no idea what he said. After all, he is speculating that inflation is coming down which is why he is hoping the FED becomes less hawkish.

            But wait – Brucie looks at the cost of heating and starts decrying high inflation is going to take off again. Which is to say Brucie boy has no clue WTF even Brucie boy is saying.

  4. pgl

    Germany had its own 1/6/2021 moment:

    https://www.npr.org/2022/12/07/1141181011/heinrich-germany-coup-reichsburger

    The far-right coup plotters had mapped out their own government, with people chosen for cabinet-like roles if they succeeded in overthrowing Germany’s elected leaders. That’s among the revelations shared by German officials on Wednesday in an update on what they say was a conspiracy foiled by a massive anti-terrorism operation.

    At least 25 people are under arrest, including 22 suspected members of a “terrorist organization,” Public Prosecutor General Peter Frank said in a brief news conference.

    The conspiracy’s goal, Frank said, was to overturn “the existing state order in Germany based on democracy, using violence, and to replace it with their own state,” according to a translation by Deutsche Welle.

  5. ltr

    https://news.cgtn.com/news/2022-12-07/Developing-economies-debt-more-than-doubled-over-decade-World-Bank-1fzj3YqdVxC/index.html

    December 7, 2022

    Developing economies’ debt more than doubled over decade: World Bank

    The external debt of developing economies more than doubled from a decade ago to $9 trillion in 2021, the World Bank said Tuesday, warning the debt crisis facing these countries has intensified.

    The pandemic has forced many countries to borrow more, and World Bank President David Malpass warned that the world is facing another debt crisis.

    Many countries are already facing or at risk of debt distress with surging global inflation and rising interest rates.

    Worse still, global growth is slowing sharply this year, with an increased risk of a world recession in 2023 amid “one of the most internationally synchronous episodes of … policy tightening” in 50 years, the World Bank said.

    “A comprehensive approach is needed to reduce debt, increase transparency, and facilitate swifter restructuring – so countries can focus on spending that supports growth and reduces poverty,” Malpass added Tuesday.

    Speaking to reporters, he said the combination of high government debt levels and rising interest rates would cause greater absorption of global capital by advanced economies for a longer period.

    “For developing countries, this is a grim outlook … access to electricity, fertilizer, food and capital is likely to remain limited for a prolonged period,” he added.

    Meanwhile, under-investment in businesses is blocking future growth, Malpass said.

    The World Bank said in a release that the poorest countries eligible to borrow from its International Development Association (IDA) now spend more than a tenth of their export revenues to service their long-term public and publicly guaranteed external debt.

    This is the highest proportion since 2000, added the Washington-based development lender.

    The external debt of IDA countries also nearly tripled in the decade leading up to 2021.

    “On the surface, debt indicators seem to have improved in 2021,” the World Bank said, but “this was not the case for IDA countries.” …

  6. pgl

    Senator Turtle sticks his head out from his shell for a very brief moment:

    https://www.msn.com/en-us/news/politics/mitch-mcconnell-hits-donald-trump-over-call-for-termination-of-the-us-constitution/ar-AA14Z1ir

    McConnell criticized Trump’s suggestion that the U.S. Constitution be terminated and he be re-installed as president, saying anyone who believes that “would have a very hard time being sworn in as president of the United States.” McConnell, who criticized Trump last week for his dinner with an outspoken white supremacist, would not say whether he would support Trump should the Republicans re-nominate him for the presidency in two years.

    Actually McConnell has said he would support Trump if Trump were the Republican nominee. Profiles in Courage – not. More like Profiles in Cowardice.

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