Wisconsin’s unemployment rate has dropped to 2.8 percentage points in April. The national rate is 3.9 percentage points. Proof of Walkernomics success? Well, since on average Wisconsin’s unemployment rate is typically 0.9 percentage points below, the answer is “no”. Consider the Wisconsin and US unemployment rates.
Figure 1: Unemployment rate for United States (blue), for Wisconsin (red). NBER defined recession dates shaded gray; Walker administrations shaded orange. Source: BLS, DWD, NBER.
Remember?
“Borrowing and spending by the public sector will crowd out investment and growth in the private sector.” Paul Ryan, “Path to Prosperity” (April 2012).
If one uses a three year window, it’s three times: February, 1986, May 1995, September 1997. Three other times, a recession follows.
The last time around — when people were saying “this time is different” — was May 2005. Inversion occurred in February 2006 (and in November 2006, skepticism of impending recession). The recession is dated by NBER as starting in December 2007.
For additional discussion of the implications of a flattening yield curve, see Michael Klein’s EconoFact article, and (for cross country empirics) Chinn and Kucko (2015).
As oil prices start heading up, the usual questions arise regarding the macro implications. One view is that with the revolution in tight oil production, the US will experience less of a negative impact than before. This conclusion relies on a set of assumptions, possibly including the US being substantially less dependent on oil imports. Is this true?
Figure 1: US petroleum trade balance (blue), and negative of US petroleum imports (red). NBER defined recession dates shaded gray. Source: BEA, 2018Q1 advance release, NBER, author’s calculations.
Economic policy uncertainty as measured by the Baker, Bloom and Davis index is elevated (again) due to trade policy.
Figure 1: US Economic Policy Uncertainty index (blue) and centered 7-day moving average (bold red). Source: policyuncertainty.com accessed 14 May 2018, and author’s calculations.
or, Mr. Trump is a wimp
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
Back in mid-December, Political Calculations asked if California was in recession. Following last week’s state-level GDP release for 2017Q4 and Philadelphia Fed indices from a week and a half ago — it’s likely no recession occurred, and is currently not occurring.
Today, we are fortunate to present a guest contribution written by Ashoka Mody, Charles and Marie Visiting Professor in International Economic Policy, Woodrow Wilson School, Princeton University. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments.
The euro has appreciated 10 percent against the Swiss franc (CHF) over the past year. The U.S. dollar and the Japanese yen have not made similar gains vis-à-vis the franc. Tracking the franc’s movements relative to the major currencies gives an unusual window onto the deflation-fighting credentials of the world’s major central banks. It illustrates, in particular, the European Central Bank’s half-hearted efforts to fight the risk of price deflation. Financial markets have come to believe that the ECB will prematurely tighten monetary policy: hence, despite brief episodes of depreciation, the euro will tend to stay strong, hurting economic prospects in several eurozone member countries.
I keep on hearing about the supply-side miracle associated with the the Reagan era tax cuts. What do changes in estimated potential versus actual output suggest?
Figure 1: Year-on-year growth rate of real GDP (blue), and of potential GDP (red), calculated as 4th differences of logged values. Dashed lines at effective dates for Economic Recovery Tax Act of 1981 and Tax Reform Act of 1986. Source: BEA, CBO.