In some ways, policy uncertainty — at least as measured using text — is not as bad as I would’ve thought. Here’s the Baker-Bloom-Davis index:
Recession coming? Or is it already here? Here’s a picture of the UK yield curve as of today, a month ago and 6 months ago:
…although it helps.
I never thought an advanced economy government could pursue stupider policies than that implemented under the Trump administration. Consider me corrected on this point – case in point, the United Kingdom in 2022.
Lackluster growth is nowcasted for Q3 by Atlanta Fed (0.3% SAAR), somewhat faster by Goldman Sachs (1.2%). It’s important to remember that the impact on the implied level of GDP might be dwarfed by the annual benchmark revision. And for the first time, the annual benchmark revision will come September 29th, rather than the end of July.
One term spread steepens sharply; only one spread has actually inverted. The five year inflation breakeven is falling. And risk is rising.
Doesn’t look like a recession in that month, nor in previous.
There aren’t many measures of euro area wide economic activity at higher than monthly frequency, to my knowledge. One series is the Woloszko (OECD) Weekly Tracker, based upon big data and machine learning, discussed here. VoxEU post here. This measure shows deceleration in the week through 9/17.
A (conspiracy-minded) reader writes: “Where is this being reported? Heck FRED doesn’t even graph real corporate profit growth. Shhhhh!”. But all one has to do is search for “corporate profits” (5 seconds) and then an appropriate deflator. I use the PCE deflator, and I get the following graph in FRED, which I download: