There seems to be some confusion regarding the distinction between trade balance in goods and services (a typical macro variable of interest) and trade balance in goods (more commonly reported, but less and less relevant on its own as countries become more service intenstive). In order help remedy this confusion, I plot below freely and easily accessible data, for those willing to expend a few calories to click.
My view is that if we pay hundreds of millions of dollars per year (we should probably spend more) on collecting and analyzing economic data, we should use that data. Yet, when Mr. Trump debates trade policy with the Canadian prime minister, by his own admission he makes up numbers.
Mr. Trump holds forth on how he interacts with other heads-of-state (from TIME):
And by the way, Canada? They negotiate tougher than Mexico. Trudeau came to see me, he’s a good man, he said we have no trade deficit with you, we have none. Donald, please. Nice guy, good looking guy. Comes in. Donald we have no trade deficit. He’s very tough. Everyone else, getting killed or whatever. But he’s tough. I said, well Justin, you do. I didn’t even know. Josh, I had no idea. I just said you’re wrong. You’re wrong. It was so stupid. [LAUGHTER]. I thought it was fine. I said, you’re wrong Justin. He said, nope we have no trade deficit. I said, well in that case I feel differently. I said but I don’t believe it. I sent one of our guys out. His guy, my guy. They said check because I can’t believe it. Well, sir you’re actually right, we have no deficit but that doesn’t include energy and timber. [LAUGHTER]. Well you don’t have timber, and when you do we’ll lost $17 billion. It’s incredible.
USTR notes that the 2016 bilateral trade balance between the US and Canada is +12.9 billion.
And yet there are still people (such as Rick Stryker) who will write:
I believe that Trump is the most honest politician we’ve seen or probably will see in our lifetime.
For this portion of the population, facts will remain irrelevant.
The Brownback-Kansas experiment, that is. Revised employment data for Kansas shows that employment was flat for nearly a year and a half, before crashing in mid-2017.
New state level employment data, benchmarked through September 2017, released yesterday indicate the manufacturing employment surge reported last year has been erased, as I predicted in this post. The October-January data do not incorporate additional information from the Quarterly Census of Employment and Wages.
Mr. Kudlow is apparently on the short list for new National Economic Committee chair. Maybe a good time to review some of his macro predictions.
Figure 1: Case-Shiller US National Home Price Index, s.a., deflated by CPI-all (blue, left scale), and real GDP, bn. Ch.2009$ SAAR (black, right scale). NBER defined recession dates shaded gray. Red line at 20 June 2005 comment on housing bubble, and pink line at 7 December 2007 on recession. Source: S&P, BLS via FRED, BEA (2017Q4 2nd release), NBER, and author’s calculations.
In a previous post, I documented the fact that the Fama puzzle had transformed post-global financial crisis, so that for most currency pairs, interest rate differentials pointed in the right direction for subsequent exchange rate depreciation, from 2006 through end-2015 (Bussiere, Chinn, Ferrara, Heipertz (2018)). Here I show that the new puzzle persists through the end of 2017, a period when US interest rates were rising.