With large budget deficits in place and projected going forward, as well as the expansion of the Fed’s balance sheet, there’s been some talk of inflationary pressures, and even hyper-inflation [0] McCain. I wondered if these fears were manifested in survey- and market-based expectations measures.
Yearly Archives: 2009
The deterioration continues
The Federal Reserve reported Friday that its index of industrial production fell another 0.5% in April, after having fallen 1.7% in March. Some analysts took comfort in the fact that at least the rate of decrease has slowed. But any decrease means we’re producing less than we did the previous month, and recovery requires growth, not a slower rate of decline.
Ready, Shoot, Aim
Or, how ignorance sometimes invalidates a critique.
I am always amazed at how often people jump to the most paranoid interpretations. One case in point is this article by Evan Newmark entitled Mean Street: Obama’s Big Fat Fibbing Budget on WSJ’s Deal Journal:
Where’s my recovery, dude?
A couple of disappointments in this week’s data.
Additional Reflections on the March Trade Release
My views on the short term prospects for GDP growth at home and abroad were little changed (relative to this post) by the information in the March trade release. Goods imports are collapsing, albeit at a slower but still substantial rate, and goods exports are declining, with high volatility.
Tracking the recession
Here are links to perspectives from others on where the economy stands at the moment.
The Administration’s Economic Forecast against Updated Alternatives
The Analytical Perspectives of the FY2010 budget have been released. Imbedded in the document are the Administration’s new forecasts placed in the context of newer forecasts from CBO and Blue Chip [text added 12:30] (see the Chapter on Economic Assumptions). They have also provided some insights into the sensitivity of the budget outlook to specific alternate economic scenarios (not something I recall the previous Administration doing, but I might be wrong), as well as coefficients of revenue and expenditure sensitivities (something done in previous Analytical Perspectives).
Inflation and relative prices
There are persuasive reasons why we’d be better off today with an inflation rate higher than what we’ve seen over the last six months. But while a uniform expansion that raised all wages and prices by the same amount would be helpful, what the Fed could actually achieve in the present situation may be something less desirable.
Three Pictures from the April Employment Situation
Revisions are downward (but getting smaller over time), the growth rate becomes less negative, but hours continue to decline rapidly.
This shoot is definitely growing bigger and greener
The Labor Department reported today that seasonally adjusted new claims for unemployment insurance fell by 34,000 to 601,000 for the most recent available week, resulting in a reduction of the 4-week average for this series for the fourth consecutive week in a row.