From Zerohedge
Given the long lag between recessionary indicators and economic recession, it is unsurprising economists gave up anticipating a recession. However, while the recession has not happened yet, it does not mean that it still can’t. We should pay special attention to data historically correlated to economic growth.
To recap, here are the indicators that the NBER uses to determine peaks and troughs, although not in “real time”.
Figure 1: Nonfarm Payroll (NFP) employment from CES (bold blue), civilian employment (orange), industrial production (red), personal income excluding current transfers in Ch.2017$ (bold green), manufacturing and trade sales in Ch.2017$ (black), consumption in Ch.2017$ (light blue), and monthly GDP in Ch.2017$ (pink), GDP, 3rd release (blue bars), all log normalized to 2021M11=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q1 advance release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (5/1/2024 release), and author’s calculations.
Everybody has their favorite indicator – Vehicle Miles Traveled, gasoline consumption, growth of full time workers, and so forth. I’ll just observe that the Lewis-Mertens-Stock Weekly Economic Index shows 2.05% — just at trend if trend is 2% — using data released through 18th of May.
The Baumeister, Leiva-Leon, Sims Weekly Economic Conditions Indicator registers -0.52% (i.e. about half a point below trend growth).
So the recession could still appear, maybe six months from now, maybe next month. A simple plain vanilla term spread model says May is the highest likelihood for a recession so it still could happen. Or not.
Fake Tyler Durden goes out of his way to cheerlead for a recession. And there’s:
What is crucial to understand is that the surge in monetary support acted as an “adrenaline” boost to the economy.
Sort of reminds me of the 2009 quip from Treas. Sec. Geithner about “sugar, sugar”.
Speaking of the way back machine let’s remember the Sept. 14, 2008 post from Donald Luskin who told us we could not be in a recession.
Partisan Expectations and COVID-Era Inflation
Carola Conces Binder and Rupal Kamdar
May 2024
https://conference.nber.org/conf_papers/f192768.pdf
We document that, during the COVID-19 era, the inflation expectations of Democrats remained strongly anchored, while those of Republicans did not. Republicans’ expectations not only rose well above the inflation target, but also became more sensitive to a variety of shocks, including CPI releases and energy prices. We then exploit geographic variation in political affiliation at the MSA level to show that the partial de-anchoring of expectations had implications for realized inflation. Counterfactual exercises imply that, had all expectations become as unanchored as those of Republicans, average inflation would have been two to three percentage points higher much of the pandemic period, ceteris paribus. The decline in inflation expectations after 2022 aided in reducing inflation from its peak.
Bruce Hall is a prime example of what they said. Brucie boy blames Biden for high inflation but it was the hysteria of people like Brucie boy that is to blame. MAGA!
Perception versus data.
https://www.cnn.com/2024/05/10/economy/us-consumer-sentiment-plunges/index.html
Blame the disconnect on the Boomers?
https://www.nbcnews.com/business/economy/affluent-americans-are-driving-us-economy-likely-delaying-need-fed-rat-rcna149849
I guess you did not realize that your second link blames the rise in income inequality which is sort of funny since your boy Trump choose to give massive tax cuts to those affluent spenders, which of course drove up the deficit which you somehow blame on Biden.
Yea Brucie Boy never thinks anything through!
Bruce Hall FYI, American spending money in Scotland is counted as an import and reduces GDP.
“Since retiring two years ago, Joan Harris has upped her travel game. Once or twice a year, she visits her two adult children in different states. She’s planning multiple other trips, including to a science fiction convention in Scotland and a Disney cruise soon after that, along with a trip next year to neolithic sites in Great Britain.”
Yea Bruce Hall did not even read (or understand) the very first paragraph of his own link. I heard that Swifties are flying to Europe to hear her concerts as it is cheaper to do so than to buy tickets for her US concerts via Live Nation.
The West is tapping Russian money to arm Ukraine. Much more could follow
https://www.msn.com/en-us/money/markets/the-west-is-tapping-russian-money-to-arm-ukraine-much-more-could-follow/ar-BB1mXoAJ?ocid=msedgdhp&pc=U531&cvid=488ab82e4f1241e994103dbfa45c2a3b&ei=12
Money generated by Russian financial assets frozen in Europe will soon start flowing to Ukraine, giving Kyiv a boost as it struggles to counter an advance by Moscow’s troops. Now, the West is trying to turn that trickle of cash into a flood. Finance officials from the G7 economies met in Stresa, Italy to discuss new ways of using the proceeds from some €260 billion ($282 billion) of Russia’s foreign currency reserves that were frozen by Western countries after the full-scale invasion of Ukraine in 2022. “Progress has been made … as far as the main issues are concerned,” Italian Economy Minister Giancarlo Giorgetti said Saturday during a press conference after the meeting, adding that there are some legal technical issues that still have to be resolved.
This should be seen as good news but Putin has hired Stevie Kopits as his international tax attorney to shut all of this down.
Observations of some ecological effects of the Bood XIX cicada swarm:
We hypothesize that cicada swarms may increase skunk fertility and the survival rate among skunk litters.
There is evidence from the Brood X cicada swarm in 2021 that birds opportunistically shift from eating caterpillars to eating cicadas during cicada swarms. Populations of some bird species increased following the emergence of Brood X:
https://www.science.org/doi/10.1126/science.adi7426
Mammals are aldo know to gorge on cicadas during swarms.
The emergence of Brood XIX in May, 2024 is coincident with unusual foraging behavior among juvenile striped skunks (Mephitis mephitis). In May, 2024, Juveniles have been observed during foraging in areas where they had never before been seen, bothering robins and competing with them for food. Robin bothering does not appear to be recreational, especially not for the robins.
So as not to influence their behavior, researchers have not approached the subjects to determine what foods are the object of competition between juvenile skunks and robins.
Juvenile skunks have also been observed foraging outside the garage, around the front stoop and in the shrubbery beds of the researchers’ residence.
During the course of this study, reseachers have become reluctant to exit the residence. Please send groceries.
I can’t decide which is more superb about the above blog comment, it’s truly edifying features, or the comedic ending line.
I can’t be the last middle aged/ creepy uncle on planet Earth who still loves reading “MAD” magazine, can I?? Don’t answer that.
Yesterday’s storm threat ended up mostly melodrama for me. Picked up Menzie’s book today (my 2nd copy). I am just too lazy to hunt down my first copy in the closet and there was a Memorial Day discount at one of my favorite bookstores so went ahead and got it. I’m rationalizing two copies of the book because the first is hardback and this one can be my paperback travel copy. Also picked up a book on the Huston family by Lawrence Grobel for about $6. Picked up a biography on Molly Ivins on Saturday for about $8.35.
Glad you survived this round of storms.
Thanks for the kind words.
I’ve always been lucky this way. Either that or one or two beings from the yonder heavens are looking out for me. Probably a mixture of both. As we get deeper into the summer the tornadoes tend to thin out. I’m thinking mid-June should be relatively in the clear in my region. So two weeks left really,
Interesting study came out recently, shows tornado alley has shifted east from texas/oklahoma to tennessee/louisianna areas. Tornadoes suck anyways.
Thanks Moses – didn’t know that Menzie had a book – “Lost Decades: The Making of America’s Debt Crisis and the Long Recovery” – I will see if Madison Public Library has a copy. (I know I should buy a copy – seems like the least I could do to support Menzie would be to buy a copy – rather than the hippie way of relying on public library !)
My 2nd copy I got at “Half Price Books”. You could try “Goodwill” (although those places don’t carry very many academic books). You know if you buy books 2nd hand you can still argue you are supporting the author because the secondary market in effect does support the publishing industry. And you save a few bucks besides. Menzie has a new text out, like most textbooks it’s a little high. Maybe in 5 years you try to get a used one of those. I’m sure Menzie likes money as much as the next guy but my guess is he gets near as much thrill out of fixing the misunderstandings of what Krugman calls “zombie economics”. You spread “the good word” of “the faith” and get people thinking the accurate/factual way about things down at your local breakfast diner etc, I bet Menzie would appreciate that more than anything.
BTW, I’m not a hippie (not that there’s anything wrong with that), when I pick my books up on the cheap I like to accurately refer to myself in more modern vernacular—I’m a slacker. I’d say Hobo but I never hitched a train.
For our China watchers here (you know who you guys are)
https://www.ft.com/content/6dda7fcb-e7ab-481f-b522-88465568c4d7
Paper on U.S. house prices:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4830240
Enjoy!!!!
The FT piece on China is useful. I’ve been looking for this sort of assessment since the announcement was made.
The policy effort appears to focus on using central government credit to ease the strain on both builders and lenders, and on making individuals whole, in the sense that they are more likely to get a completed residence after paying for it.
Both are good ideas. Getting homes completed is a fairness issue, good for social cohesion, as well as for creating actual wealth out of sunk resources. The fact that housing is already overbuilt doesn’t help, but probably can’t be helped.
Helping local government financial institutions get out from under bad debt is also a good idea. They are a big part of China’s economic and financial structure, and there is some serious sand in the gears right now. Local governments can be no better economic shepherds than the direction they are given from Beijing, and that direction has been questionable under Xi.
Housing construction can be made less of a drag on growth, but very likely cannot return to being a growth driver. Bad debt can be taken off the hands of local goverment and private entities – the extent of balance sheet improvement is a big issue.
That leaves the question of what will drive growth in China. Big consuming countries seem reluctant to expand imports, but may not have all that much control. Domestic consumption will naturally be a drag until the cycle turns. Balance-sheet recessions tend to be followed by lackluster expansions. Lots more work for a heavily-indebted country to do.
I check ZH almost daily.
I find their position pretty weak most of the time. They compete with Jim Cramer!
One item I saw today probably on ZH
Clinton campaign said “It’s the economy stupid”; now it’s seems the Dems are saying “it’s a good economy stupid”
ZH has called recession for the past 18 months!
The thing about constantly getting it wrong is that it’s based on using wrong approaches. The most common error being to start with the conclusion and then cherry-picking your way back through data and reality until you have “proven” your predefined conclusions. However, even that approach can sometimes produce the correct fact-based conclusion – if by some miracle the conclusion you started with happens to be true.
The reason our host has a much much better batting average than ZH is that he is a scientist who begins with the question and an open mind regarding the likely answers, then lets the data guide him towards a final conclusion.
You guys knew I couldn’t let this go without being a smart-aleck, right??
File this one under “Blog Headlines We Never Expected From Professor Chinn”
it’s the classic “I wasn’t wrong – someday, somehow the data will tell us something about the future! – in the meantime invest in gold or whatever I am selling today”
Nailed it.