Section 122, invoked to place 10% tariffs, was written primarily to address balance payments issues under fixed exchange rates. By balance of payments accouting:
CA + FA +ORT ≡ 0, ORT is official reserves transactions, ORT > 0 implies decumulation.
So CA + FA < 0 requires total reserves to be decreasing. Is that the case?
The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 1.4% annual rate in the fourth quarter. That is a bit below the historical average growth of 3.1% and also below some analysts’ expectations for the Q4 numbers.
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Jim will have examination of the GDP numbers tomorrow, but here is the picture as of today, in the wake of the international trade figures, industrial production, housing starts, yesterday and today.
Most indicators suggest growth in output, spending aggregates (while employment is trending sideways). Housing is suggested as a leading indicator by Leamer (2007, 2015), but less a leading indicator recently (Green, 2022). Here’s a picture of residential fixed investment, which on average leads economic activity by approximately 7 quarters:
Total seasonally adjusted trade deficit averaged $75.1 mn, vs. 2024 $75.3 mn. The real goods trade deficit averaged $99.8 mn Ch.2017$ vs. 94.4 mn Ch.2017$. In other words, the real goods trade deficit increased (the same is true of the real goods ex-petroleum trade deficit).
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version was published in Project Syndicate.
Industrial and manufacturing production rise, surprising on the upside:
Primarily from the production function approach (discussion here).
September P/E ratio at 28.
Post-benchmark revision, here are changes in the BLS and ADP series: