The Pound, 4AM London Time

As assessed probability of Brexit rises, the pound falls.


USD per Pound, last 5 days, as of 4AM London time. Source: Bloomberg.

Pound is down 9.29% against USD since London close (5PM local).

Drumpfarmageddon, Tabulated

Heretofore, I’ve approached in a piecemeal manner the assessment of the impact of massive tax cuts for the wealthy, building a really, really great wall, a final solution for the presence of undocumented immigrants, and the imposition a 45% tariff on Chinese imports. Moody’s Mark Zandi et al. have now done the hard work of trying to figure out what the macro impacts would be to implementing Mr. Trump’s agenda.

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Contextualizing the North Carolina Experience

Defenders of the Kansas and Wisconsin misadventures in supply side economics keep on pointing to North Carolina as the counter-example that proves tax cuts do prompt faster growth (e.g., [1] [2]). A quick look at the data provides the following observations: (1) North Carolina GDP growth has merely matched nationwide growth since 2013Q1, (2) NC GDP has just been revised downward so that 2015Q3 GDP is now 1.5% lower than previously thought, and (3) NC GDP is less than the counterfactual indicated by historical correlations with national GDP.

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Manufacturing and the Dollar’s Value

New industrial output numbers, including for manufacturing, confirm a slowdown in at least part of the tradables sector.


Figure 1: Real value of the US dollar against broad basket (black, left scale), manufacturing production (red, right scale), manufacturing employment (blue, right scale), all in logs, 2013M01=0. Source: Federal Reserve Board, BLS, and author’s calculations.

Both production and employment now on a slight downturn, despite recent dollar depreciation. The dollar is 14% higher in log terms relative to mid-2014.