As a share of potential GDP (CBO May 2022 estimates):
Figure 1: Cyclically adjusted Federal budget balance (blue, left scale), and Federal debt held by the public (tan, right scale), as a share of potential GDP. NBER defined peak-to-trough recession dates shaded gray. Source: CBO, NBER, and author’s calculations.
Note the decline in the cyclically adjusted budget balance (formally, budget balance adjusted for automatic stabilizers) declined during the Trump years, even before the pandemic. Debt held by the public rose as well. Since 2021Q1, debt-to-potential-GDP has been pretty stable.
(Why use cyclically adjusted budget balance. Because the budget balance is an endogenous variable. Why use potential GDP? Because GDP is an endogenous variable.)
“Note the decline in the cyclically adjusted budget balance (formally, budget balance adjusted for automatic stabilizers) declined during the Trump years, even before the pandemic.”
We have tried to make this key point to Bruce Hall many times but the poor boy refuses to pay any attention at all. So much that his preK teacher took away his crayons which must be the explanation for Brucie abusing the FRED database (Bruce thinks FRED is one of his class mates) to draw all sorts of misleading graphs.
“Why use cyclically adjusted budget balance. Because the budget balance is an endogenous variable.”
A point we have tried to get across to Princeton Steve many times. He does not read either as he continues to make the erroneous claim that the Biden reduction in the actual deficit is a sign we just had a massive fiscal contraction.
So please keep putting up these important posts even if neither Princeton Steve nor Brucie boy will bother to read them.
“Note the decline in the cyclically adjusted budget balance (formally, budget balance adjusted for automatic stabilizers) declined during the Trump years, even before the pandemic.”
Obama managed to increase this cyclically adjusted budget balance. Alas Trump threw that away.
Go back 50 years and we will see that Reagan massively decreased the balance but Clinton reversed the Reagan fiscal irresponsibility only to have George W. Bush throw away Clinton’s fiscal responsibility.
Notice a pattern? Republicans give us fiscal irresponsibility, Democrats reverse that trend until another Republican captures the White House.
I agree that GOP Presidents have been very bad in increasing the national debt during their terms.
Shocking that I agree with you, Shirley.
Biden fiscal responsibility: 12/2020 national debt $27.7 trillion; 12/2022 national debt $31.4 trillion; up $3.4 trillion in 24 months. It’s all at FRED.
Shirley? They call my Mr. Tibbs.
Q1 2021 GDP $22.3 trillion: Q4 2022 $26.1 trillion; up $$3.8 trillion in 24 months. That is 17.1 % increase, greater than the 13.3% increase of the national debt over same time period, under Biden. It’s all at Fred.
total public debt Q1 2020 $23.2 trillion; Q2 2020 $26.4 trillion; up $3.2 trillion in 3 months. That is 14.3% increase in 3 months, under Trump. It’s all at Fred.
GDP Q1 2020 $21.5 trillion; Q2 2020 $19.6 trillion; DOWN $1.9 trillion in 3 months. That is a 8.8% DECLINE in 3 months, under Trump. It’s all at Fred.
“I agree that GOP Presidents have been very bad in increasing the national debt during their terms.”
then why do you discuss a democratic president, and not a republican president? you are correct, big difference in fiscal responsibility when you compare them directly. why did you omit the poor performance?
Either Anonymous is nothing more than a dumb bot or he is deliberately writing utter BS to get attention. Either way – his comments are not worth our time.
Anonymous: confused —again?—over FY budget responsibility? Trump’s 2020-2021 budget included a total debt increase of $$1.5 Trillion. Subtract 1.5 from 3.4 (no calculator needed) = $1.9.
BTW, prepandemic, 2018 and 2019, Trump added $ 2.5 Trillion to the total debt.
You were saying?
Anon shares his utter confusion over this issue with Brucie boy Hall. Trolls of a feather flock together.
Good news from BLS
Economic News Release
Fourth Quarter and Annual Averages 2022, Preliminary
PRODUCTIVITY AND COSTS
Nonfarm business sector labor productivity increased 3.0 percent in the fourth quarter of 2022, the U.S. Bureau of Labor Statistics reported today, as output increased 3.5 percent and hours worked increased 0.5 percent … Unit labor costs in the nonfarm business sector increased 1.1 percent in the fourth quarter of 2022, reflecting a 4.1-percent increase in hourly compensation and a 3.0-percent increase in productivity.
Now you may have noticed in his dizzying nonsense about the labor market Princeton Steve told us that productivity was falling earlier in the year. Yea – his writing is usually an incoherent mess but thankfully Kevin Drum has commented on this issue in his usual clear and honest way.
Yay! Big January 2023 jobs report. Jobs up 517M, est. 185M, u/e 3.4%; wages up 03% MoM, 4.4% YoY; Labor Partic. Rate 62.4%.
Boo! Median weekly real earnings declined 3.4% since January 2021, per Bureau of Labor Statistics, Mr. Tibbs.
Hey dude – I could care less about your come ons so go try to pick up on some clown who cares.
Anybody else notice there was a Fed meeting this week? Some oddities have been identified in Powell’s answers during Q&A.
Powell wants fiscal stimulus in 2023, but knows the U.S. Congress isn’t sane enough to provide it, so he begged states and locals to jump in. States and locals are structurally pro-cyclical in fiscal policy, with some lag.
No disinflation yet in core services, and the Fed can ease in the face of a slowdown more effectively than maintaining disinflationary expectations, so can’t pause. (That’s borderline dishonesty. Powell is throwing away any perception of balance in the mandate that Yellen and Bernanke achieved. )
Powell said the terminal rate could be higher than the December SEP indicated, while market pricing is for lower – still trying to keep market rates high.
Asked about the Fed’s role in the debt ceiling, Powell correctly said ‘that’s a problem for Congress’ and also that “In terms of our relationship with the Treasury we are their fiscal agent, and I’m just going to leave it at that.” Some folk interpret that as saying ‘no’, some ‘yes’ to a trillion-dollar coin. So Powell handled that just right. He also rejected the tired old notion of prioritizing payments. Also just right.
The Fed is irrelevant. The market rejects them. Money is returning to bonds that left last year with the inflation scare. The 10 years medium price is about 2-4% in the post industrial world with less investment possible.
Let 2022 go. It was a mirage built on greed, port jams and Putin.
The great and powerful Bott has spoken!
I get the sense that this Bott has short circuited.
A lot of us have suggested JohnH works for Trump who in turn works for Putin. I think this confirms all of this:
‘Former president Donald Trump on Thursday suggested ending military aid to Ukraine would bring an end to the year-old war by encouraging negotiations that could be led by the United States.’
Well yea – if Ukraine just lets Putin’s pigs take over their nation, then the war will end for now. Hey if Mexico attacks Southern California, I guess we should just surrender and enjoy burritos.
Of course Putin would follow up his raping of Ukraine by trying to annex other Eastern European nations.
If pgl hates Putin so much, he should consider going to fight in Ukraine. I hear they’re so desperate that they’re drafting 60 year old men. They’d love a gung-ho old fart like pgl. But more than likely, pgl wouldn’t consider that option, because he’s just another chicken hawk like GW Bush, Biden, Cheney, and Rumsfeld. War is great as long as it’s other people’s kids who are dying!
So instead of acting on his beliefs, he’ll just sit on the sidelines and to impugn the motives of anyone who thinks that another pointless and futile military misadventure is the last thing that America needs.
Maybe I will go and fight but my squad will flew into Moscow, enter the Kremlin, and take down Putin’s pet poodle. Gee Jonny boy it will be a real pleasure watching you squirm.
BTW – you sat on the side lines in 2002/3 while the rest of us protested the Iraq War. And yet you routinely impugn the motives of others with your patented dishonesty.
Wrong again, pgl. As I told you before, my wife and I flew to DC in early 2003 specifically to protest the Iraq War. Washington was so heavily fortified that all streets from the designated protest route were blocked off by cops/soldiers in full riot gear—an occupation force. For all intents and purposes Washington had become an armed encampment in a war zone. That’s how the government reacts to peaceful protest—with overwhelming force.
A while after that I visited a highly polarized Latin American country shortly before a failed coup. Both sides were staging massive protest marches. They marched right past the presidential palace and parliament. Small numbers of police stood and watched, mostly bored, but also some with apparent amusement. The protests were very peaceful and festive.
The powers that be in Washington seem to think that overwhelming military force in response to peaceful protest is the only tool in their toolbox.
I concluded that the government in Latin America had lot more respect for their citizens that the powers that be in DC.
For a guy who continually complains about “pointless, futile military misadventures”, I keep waiting for you to apply that standard to Russia’s pointless military misadventures in Ukraine. Alas, pigs still aren’t flying and you sing and dance and say nary a word about your favorite current dictator.
At this point, you launch into “nobody ever says anything about the U.S. military mistakes” and then yada on…and on…and on.
That puts you into Don Juan H mode where your destiny calls and you go. You’ll even go in Spanish if called upon. Russian too.
I stand corrected. You made a single feeble attempt which failed. You are a joke at everything.
In case Jonny boy does not get it – this is how one protests:
The March on Washington was a massive protest march that occurred in August 1963, when some 250,000 people gathered in front of the Lincoln Memorial in Washington, D.C. Also known as the March on Washington for Jobs and Freedom, the event aimed to draw attention to continuing challenges and inequalities faced by African Americans a century after emancipation. It was also the occasion of Martin Luther King Jr.’s now-iconic “I Have a Dream” speech.
BTW – this was just one of Dr. King’s many marches and protests. Jonny boy flies into DC once and likely took the wife out to dinner and now he thinks he is an anti-war hero? Seriously?
“I hear they’re so desperate that they’re drafting 60 year old men. ”
actually, that is a better description of Russia. they are forcing anybody they can into the war. on the other hand, in Ukraine they are VOLUNTEERING to defend their land. no coercion or draft is needed. they are proud to fight for their country.
“he’ll just sit on the sidelines and to impugn the motives of anyone who thinks that another pointless and futile military misadventure is the last thing that America needs.”
exactly what is the misadventure? stopping a tyrant who will impose authoritarian rule on the rest of the world? you think America will not stand up against that? what a foolish political hack you are John.
Jonny boy’s anti-war creds are rather pathetic. After all – he is not against Xi invading Taiwan. Oh no – he is cheering that one on. One would think someone who is anti-war would be condemning Putin’s invasion of Ukraine. But not Jonny boy who actually delights in Russia’s war crimes.
OT, but US oil proved reserves were up 16% in 2021 (over 2020).
The reason almost certainly was price recovery. But of course the drop before was from price also (not exhaustion as the peak oilers crowed).
It’s also interesting to look at the whole time series. The all time record was in 2019. Not (!) something that Econbrowser predicted in 2007, when it was holding out the US as an already peaked region and example of what might happen in the World.
“Powell” wants fiscal stimulus. Oh come on. The last thing the U.S. needs. Powell has been a disaster for years. His bogus rate hikes are irrelevant. When unemployment falls closer to 3% and yry cpi is 1% in the fall, maybe the sheeps will move on.
you make no sense.
Wonkette watches Tucker Carlson so we don’t have to:
From Michelle Obama’s Thighs To ‘Where’s George Floyd When You Need Him,’ Tucker Is Losing HIS MIND
Yea – the former First Lady has stronger legs than girlie man Tucker so he has to attack during his latest racist rant. Reading this tirade sort of reminded me of the rants from Bruce Hall for some reason.
It looks like the Chinese military want to sabotage any improvement in relations with US
Whether this was fully approved by Xi or not will be evident if certain generals very publicly get retired. The ballon clearly has no military value so the only purpose would be to further cool relations with US and force additional budget allocations to the military.
The PRC says this is a weather balloon. Now if you buy that one – I have a bridge to sell you.
Do you suppose that that balloon is any more threatening than the US 7th Fleet staging maneuvers in the South China Sea.
Naturally, the hypocritical “patriots” here see no problem with provocative US behavior on the undemarcated high seas but go berserk when China stages a provocation in the undemarcated atmosphere.
It’s high time for both sides—including the US—to back off.
International laws are pretty clear, you are incorrect here John. as usual. there is no dispute about who may enter atmosphere above the usa. same for china. the high seas you are referring to are a completely different matter. china has no more claim to those waters than Japan. or Korea. or Vietnam. or Philippines. this was a piss poor argument on your part John. as usual.
Jonny boy has been snorting the helium in that balloon.
That balloon is now over Kansas. Maybe it is spying on the practices of the Chiefs to see how their QB’s ankle is doing. Who knew Xi was an Eagles fan!
Gee – are you hoping PRC soldiers rape hot Taiwanese ladies? Disgusting little poodle Jonny seems to be.
JohnH: I think airspace over CONUS is demarcated as sovereign airspace. You really are babbling now.
You should also refer to Chinese downing of a EP-3 in 2001 if you’re talking about provocative measures.
JohnH: those “uncaring hypocritical patriots…” yada, more yada…..and still more yada. “
“Pointless war” yada..more yada
“Military misadventures”. Yaaaaaaaaaada!
JohnH knows! He cares! Drum roll please.
THE EMPLOYMENT SITUATION — JANUARY 2023
Total nonfarm payroll employment rose by 517,000 in January, and the unemployment rate changed little at 3.4 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, partially reflecting the return of workers from a strike.
Actually the unemployment rate fell a bit even though the labor force participation rate rose slightly because the employment to population rose to 60.2%. The labor market remains strong despite all the attempts from Princeton Steve and his band of RECESSION CHEERLEADERS to pretend otherwise.
That’s fine. But the reality is that COVID shutdowns and the stimulus response to those shutdowns created the spike in debt under Trump (and the Democratic Party controlled Congress) and the continued stimulus under Biden has done nothing to eliminate the debt… even if the cyclically adjusted budget balance is returning toward Trump era levels. So what happens to this chart if we have a recession in 2023? That will depend on how much more “stimulus” gets pumped into the economy. Looks as if higher tax rates are needed so that the government can continue stimulating the economy.
As an aside, the 517K increase in employment which would be seen as great news except the Fed may see this as needing more rate hikes, somehow hasn’t fixed this. Just for pgl…
Maybe there is no “fixing”.
Interestingly, college enrollments have declined over recent years with some stabilizing this year. But if those 20-24 year olds left the labor force and are not going to college, are they just staying home with mom and dad and playing video games? Those fast food jobs seem to be disappearing (except maybe at Culver’s).
Are you bucking for another post from Dr. Chinn calling out your mendacity or what? Debt was rising faster than GDP even before this spike. Biden has brought down the deficit he inherited from your lying hero. So yea Bruce – keep the lies coming as I think our host is just warming up.
“As an aside, the 517K increase in employment which would be seen as great news except the Fed may see this as needing more rate hikes, somehow hasn’t fixed this.”
What needs fixing Brucie boy? Your brain? Nah – that is hopeless. Oh wait – you need some sort of generic Viagra? You having trouble getting Roman ready?
Brucie boy must think his linking to a FRED blog on labor force participation rates makes some Trumpian point but of course this incompetent little boy cannot tell us what this point is. Well, everyone with a brain (which excludes Brucie boy) knows we had a 63.3% before the pandemic and it is 62.4% now. Of course when Trump left office, this rate was a mere 61.3%:
Interesting! In just 2 years, Biden has got us half way back from the Trump disaster. Gee – Brucie! That was interesting but I hate to inform you that Kelly Anne Conway has finally decided to pull the plug on her most incompetent servant!
“Interestingly, college enrollments have declined over recent years with some stabilizing this year.”
that has been anticipated for a while. it is demographics. it will get worse because of the financial crisis years ago. fewer births as a result. better government response and safety nets would have resulted in fewer people choosing not to have children due to financial instability. but here we are…paying the price years later.
If you want a really good laugh, take a listen to how the folks at Fox Business reacted when the strong employment report from BLS came out:
Now I sometimes make fun of the Economic Know Nothings at MSNBC but damn – these Fox Business people are clowns.
Yes it is so incredible to hear her say that a jobless rate coming in lower is “weaker” – she is actually disappointed at how good the economy and job market is.
Revisions to 2022 payroll employment show 813,000 more jobs on December, 2022 than previously reported. The much-hoped-for straightening out of the discrepancy between household and establishment jobs data didn’t happen, despite households reporting about 1.6 million new jobs in just the last two months.
Oh, and January shows another 517,000 payroll job gain.
Brucie boy thinks the FED needs to “fix” this good news. I can only imagine what he really means by needing fixed. I guess we will have to watch Tucker Carlson tonight to understand what warped nonsense has entered Brucie’s broken brain.
Marjorie Taylor Greene claims she wants to debate Alexandria Ocasio-Cortez?
AOC – go for it. This should be so much fun!
Yes but only if it gets covered live on Fox news. No giving them the opportunity to do the usual clip and distort.
Marjorie Taylor Greene is demanding that Biden shoot down the Chinese spy balloon with the Jewish Space Lasers.