Recession Indicators Reported as of 1/19/2019

I focus on the series highlighted by the NBER’s business cycle dating committee (BCDC).

Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (teal). GDP in BEA interpolated until October 2017, Macroeconomic Advisers thereafter, all log normalized to 2009M06=0 (NBER defined trough). Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers, and author’s calculations.

All last-reported observations of these indicators are rising, save perhaps real manufacturing and trade sales (October). Note we are in January, and we have personal income only through November, and monthly GDP through October. We have no readings of these series later than December (employment, industrial production).

So, best guess (I won’t pull an Ed Lazear and be more definitive) no recession in December 2018. What about in a year? Well, here’s the 10yr-2yr spread, and economic policy uncertainty (EPU) as measured by Baker, Bloom and Davis.

Figure 2: Ten year-two year spread, % (red, left scale), and 7 day centered moving average of Economic Policy Uncertainty index (gray, right scale). Light orange denotes Trump administration, orange line at beginning of Federal government partial shutdown. Source: FRED,, and author’s calculations.

A standard probit model using the 10yr-3mo spread laggged a year says the probability of being in a recessionary month in December 2019 is 27%. As discussed in this post, augmenting with measured policy uncertainty yields a higher probability.

Addendum: From Goldman Sachs today:

Source: Goldman Sachs, Learning from a Century of US Recessions, Jan. 20, 2019.

55 thoughts on “Recession Indicators Reported as of 1/19/2019

  1. Moses Herzog

    I think this is most likely the answer Pawel was fumbling for, which is probably why Menzie put it up. I don’t think we’re quite in that area yet, but it’s getting near that range where people can debate later “Was that where the recession started”?? I’m guessing late 2019 could be where we hit it, and I’ll be pretty surprised if we get to the end of 2020 not definitively feeling something. i.e. I will be surprised if we get to December 2020 without having hit a domestic USA recession.

    I’m trying to think of an analogy for this (“this” meaning this moment right now, Jan 2019, the economic condition) but it’s pretty hard for my feeble brain to manage that one. Like if the start of a recession was the county border line (between counties) and we used the metaphor that a recession starts when the tornado hits the border of the county, then right now it’s kinda like we’re getting reports of a funnel cloud two counties to the west of us, moving eastward, but it’s not on the ground yet and it hasn’t hit the county line yet.

  2. Moses Herzog

    Quite good articles here for any China watchers (not Chinese girl watchers, which is a whole different thing). This could also have significant impact on dollar currency exchange value and the timing of a USA recession.–cakeism-/

    For all those who want to wish Menzie’s Mom a “Happy Chinese New Years”, the article states that this year the Chinese New Years starts on February 4th.

  3. Moses Herzog

    Off-topic Menzie and some readers have taken a strong interest in the Puerto Rico Hurricane story, so I thought I would post this as an FYI. This woman who is resigning from HUD, by all accounts has been Puerto Rico’s biggest advocate and staunch friend inside the trump administration. It’s worthy to note she was in HUD long before donald trump was schlepping around White House grounds.

    From Washington Post. Tracy Jan, Josh Dawsey, Damian Paletta, and Arelis Hernandez reporting:
    “Last fall, Patenaude expressed concern over the Trump administration’s intervention in disaster-recovery money that Congress had appropriated for Puerto Rico and states hit by hurricanes.
    President Trump in late September grew incensed after hearing, erroneously, that Puerto Rico was using the emergency money to pay off its debt, according to two people with direct knowledge of Trump’s thinking.
    Trump told then-White House Chief of Staff John F. Kelly and then-Office of Management and Budget Director Mick Mulvaney that he did not want a single dollar going to Puerto Rico, because he thought the island was misusing the money and taking advantage of the government, according to a person with direct knowledge of the discussions who spoke on the condition of anonymity to describe sensitive internal deliberations. Instead, he wanted more of the money to go to Texas and Florida, the person said.”

    ………. goes on
    “Patenaude, who had visited Puerto Rico more than half a dozen times during her tenure, was about to make her final trip to the island as deputy secretary and wanted to ensure that Mulvaney’s team corrected any misinformation transmitted to the president, said a HUD official who was not authorized to speak on the record.”
    ……… continues
    “In her meetings with Puerto Rico’s governor and other officials, Patenaude made it clear the territory would need to establish an oversight structure and meet other conditions to receive federal funding, said Carlos Mercader, the executive director of the Puerto Rico Federal Affairs Administration in Washington.”

    “Pam Patenaude showed the most commitment to Puerto Rico of any of the public officials inside the Trump administration,” said Mercader, who accompanied Patenaude on several of her visits to the island. “From the governor down, we are all grateful for everything she did.”

  4. baffling

    just a note to rick stryker, corev, bruce and peak trader. today we remember the legacy of an american patriot by the name of king, and we are referring to martin luther king jr, not your republican hero steve king. take some time and reflect on an american hero who helped changed the nation for the better, by providing opportunities for people through inclusion, rather than walling them out.

    1. please_stop

      who helped changed the nation for the better

      And was murdered for it.

      The far Right arguing about political and social freedoms, yet stay silent on the systemic efforts to impoverish citizens based on the color of their skin disdainful.

    2. pgl

      Dr. King would have turned 90 last Wednesday (Jan. 16). I certainly miss hearing his voice. His wisdom lives on forever.

      Speaking of rick stryker, corev, bruce and peak trader. They have been silent of late. Could it be that they had to find private sector jobs since the Shut Down? Is the Trump spin machine on furlough?

      1. Rick Stryker

        I haven’t notice the shutdown. Many people are no doubt observing that we could cut half the government and it wouldn’t make any difference.

        1. pgl

          Yes – that is Trump’s grand plan. Starve the beast. Too bad he is too much of a coward to be honest about it.

        2. Willie

          I have to travel for work. TSA problems have not been bad yet. They are government workers. They haven’t been getting paid and seem to appreciate the acknowledgement that they are there without pay. There are others who continue to work without pay. No, we cannot cut half the government and not feel it. If the USDA, TSA, FAA, IRS and all the rest who are not getting paid now disappeared, we would have lousy food, hijacked planes, crashing planes, and a completely unfunded country because why pay taxes if nobody’s looking? Some of us would still pay up, because we actually believe living in America is worth paying taxes for. Some people are just selfish and don’t care. And then there will be the economic consequences of having the better part of a million people suddenly out of the economy. It’s not a huge percentage of people, but when demand goes down in one place, then businesses react, causing demand to go down in other places.

          This isn’t rocket science. Ideology is blinding, unfortunately.

          1. Menzie Chinn Post author

            Willie: Some people (like Don) believe that if the ATCs walk off the job, the market will spontaneously generate new services at the airport. Problem solved! Such is the miracle of the marketplace.

          2. Moses Herzog

            Menzie, don’t forget our good “military man” commenter “ilsm” (you knew I wouldn’t forget right?). He’s about as ex-military as our boy Kopits is a Princeton man. The see-through part is what makes some of these characters on this blog so unintentionally entertaining.

            Isn’t it funny how they never see the irony, in forcing other government workers (who are there to perform a completely different job, the defense of our nation) to take the place of largely irreplaceable workers. Does it not dawn on them, that the people who are “coming to their rhetorical rescue” in their very weak arguments that TSA workers can be “replaced” are themselves government workers?? (This reminds me of Tim McVeigh hating the government, when the biggest paychecks he got in his entire life, were from the government )

            The argument (from “pro military” Republicans) that TSA workers can be replaced becomes “I can show you how useless these government workers are, by making other government workers (their ‘replacements’) less ready and prepared to do their original jobs.” Yes, you can ask some municipal fireman to do a municipal policeman’s job, and many firemen can probably put on a policeman’s uniform and perform many functions of the job. But what does that do for your city’s fire protection and fire readiness?? The ability to stretch out any logic to justify firing people who work most of their adult lives to keep your family safe in the air is really astounding.

            Well Reagan fired all those air-trafic control people……. just like Reagan shipped millions of jobs overseas for cheap labor costs that now the Republican illiterates have suddenly decided they want back, now that that train has left the station and is NEVER coming back

          3. Willie


            Yep, the all powerful invisible hand solves all problems, according to Rick types. Or should I say Rick typos, just to get into the spirit of his post.

            The grim joke in my line of work is that building codes are written in blood. They came about after fires, collapses, and other disasters that killed a whole lot of people. Without enforcement, they are meaningless. Look at the fatality rates after earthquakes a few years ago in Haiti (not much public sector enforcement of much of anything) and Chile (strong public sector with rigorous code enforcement.)

            Yep, the private sector spontaneously generates all kinds of things – like maggots spontaneously generating in meat in the middle ages.

          4. ilsm


            I would just as soon that Red Army grunt, from the ’50’s TV propaganda, took his ax to your radio or TV. You have no idea what I did between 1972 and 2002!

            I have been ’round about ground and aircraft radars, and command systems as well as heavy and fighter military aircraft in a diverse technical management career much of which happened to be in AF uniform. I know a bit about ATC radars and “work stations”. DoD runs about 25% of the ATC enterprise in the US. Equipment, tech data and training is common!

            I also knew 3 fired PATCO controllers over the years. All were never to work ATC again but got in to the DoD side in a round about way.

            Reagan’s success in eliminating PATCO and expanding military assets in to the civilian system very likely could be effective today.

            You think I was protecting your liberties, you are wrong. If you think I was protecting your assets you are misguided. I do not care how you and pgl view Americans who served!

        3. 2slugbaits

          I haven’t notice the shutdown.

          Probably because you live in a gated community and have a gated lifestyle well insulated from the cares of ordinary people. I wouldn’t expect you to notice something like that. Upscale Republicans seem to have a fondness for that old plantation attitude about indentured servitude…they call it the good old days. As long as government workers are compelled to provide you with the things you value most (e.g., convenient air travel, protection of property rights, the rounding up of brown folks at the border, etc.) and do so without being paid, then I’m sure you are quite satisfied with the shutdown. And just think of all the white collar crime you can commit during the shutdown!!!

          1. Moses Herzog

            Seriously doubt Stryker is intelligent enough to command an income that gets him into a gated community.

          2. baffling

            moses, often times a person’s wealth is derived from their parents. donald trump is a case in point. peaktrader had wealthy parents who bought him a comfy career. it is quite possible rick stryker has never had to struggle financially due to his inheritance as well. he does struggle in other areas of life, however. some things simply cannot be passed on by one’s parents.

        4. noneconomist

          Of course, Rick, you haven’t noticed the shut down. That’s because the affected departments are not really, literally, shut down.
          If we’re going to have a shut down, let’s have one. Coast Guard? Docked. Border Patrol? Not patrolling. Secret service? Not serving.
          Air Traffic Controllers? Not controlling. Airport security? Hey, board at your convenience. Air Force One? Down. Not in service at this time.
          Anyone not being paid? NOT WORKING. In fact, not ALLOWED to be at work. Period.
          Replace everybody with the military. Sure. Whatever. (“Corporal, check those beef carcasses and get beck to me ASAP…”) Unless, of course, they aren’t being paid either. In which case, they’re shut down too.
          Put your money–and your deeply held beliefs?–where your mouth is. If government employees are unnecessary, don’t expect them to be somewhere when, as you see it, there’s no need for them.

          1. Rick Stryker


            I said half the government. Of course we need defense, air traffic control, border patrol, etc

            During the last shutdown, the Obama Administration worked hard to make it as painful as possible for people. Trump isn’t doing that.

          2. noneconomist

            No one should be working who is not being paid. If the government—and those agencies— is in deed shut down, that means it is. If we need those employees you mentioned but they’re working for no compensation, it’s a sham. And you should know that. Should.

    3. Rick Stryker


      Today is a good day for you and your fellow progressives to take a good, hard look in the mirror. The history of progressive support for civil rights causes has not been good. Learn the history of who supported eugenics sometime as well.

      1. baffling

        rick, i have always supported civil rights and i have never supported eugenics. i have no problem taking a good, hard look in the mirror. are you despised by the ugliness you see in the mirror, or are you too jaded and miserable to care?

        “I haven’t notice the shutdown.”
        rick, donald trump and his administration appear to understand the damage they are inflicting on the economy, as they have doubled their expected impact on the economy due to the trump shutdown. and as far as labor goes, i have never expected a government worker to work full time without collecting a paycheck, as appears to be the motto from the trump shutdown. but trump ran his private company in a similar way. trump and conservatives could fund the government, if they so desired, without holding a bunch of folks hostage. sad really.

      2. 2slugbaits

        Learn the history of who supported eugenics sometime as well.

        Yes, by all means learn that history. It’s the history of former Dixiecrats and “Boll Weevil” Democrats who became Republicans.

        1. CoRev

          2slugs, let me correct your statement: “Yes, by all means learn that history. It’s the history of former Dixiecrats and “Boll Weevil” Democrats who[se repenting offspring later] became Republicans.” I highlighted the party of record to show how deluded Dems are of their own history. Keys and Wilson are two of the more famous to support eugenics. It appears to have been supported by many on both sides of the political spectrum, even some famous black leaders of the time.

          I’ve lost interest in commenting lately, as it appears has many of the other conservative commenters here. There are so many better things to do than read/listen to the hate filled prevailing monologues.

          It won’t take too much longer to see Econbrowser become another AB, and the other liberal blogs which have become closed to or ignored by conservatives and middle grounders. It’s sad that was lively discussion has become so hateful/hate filled.

          1. Menzie Chinn Post author

            CoRev: It’s crazy that being for balanced structural budgets, bigger defense budgets, a Taylor-rule based monetary policy, a rules-based legal system, separation of church and state, Pigouvian approach to externalities constitutes “liberal”.

          2. CoRev

            Menzie, all you understood was the term “liberal”???? The message was focused on hatred/hate filled comments. Econbrowser it appears is losing commenters and that leads to viewers/view frequency.

          3. 2slugbaits

            CoRev Do you have any doubt which political party Wilson would support if he were alive today? He was a racist even by the standards of his own time. Most people put the structural break around 1965, not World War I.

            I’ve lost interest in commenting lately, as it appears has many of the other conservative commenters here.

            There’s a difference between smart conservative comments and MAGA hat inspired comments. The problem is that most intellectually respectable conservatives have torn up their GOP ID cards because of Trump. The GOP has become the party of know nothings, cranks and charlatans. Good luck finding an intelligent conservative economist who supports Trump’s tariffs. Good luck finding an intelligent conservative economist who seriously believes Trump’s tax cuts are good economic policy. Good luck finding an intelligent conservative who supports Trump’s foreign policy initiatives and his backing away from NATO. You know it’s bad when The National Review is the best that conservative America has to offer. I would like to engage with intelligent conservatives, but if conservatives brag about never reading a macro textbook, then it’s a little hard to take anything they say very seriously. Talking about long run economic growth without understanding the most basic aspects of the Solow model amounts to little more than just emotive ramblings.

            As to blogs, I’m not sure that there are any quality conservative blogs out there. Many are just money making sites more interested in clicks and eyeballs than serious content. And looking at their ads tells you all you need to know about their target audience. My sense is that most “conservatives” don’t have the slightest acquaintance with the history of conservative political thought. Did you ever read Burke? How about something as simple as Barry Goldwater’s “Conscience of a Conservative”? How about Robert Nozick (not to be confused with Robert Novak!)? The sad fact is that in today’s world a “conservative” no longer means someone who (for example) disagrees with John Rawls; it simply means someone who identifies with Tribe Trump.

          4. pgl

            “It won’t take too much longer to see Econbrowser become another AB, and the other liberal blogs which have become closed to or ignored by conservatives and middle grounders.”

            Angrybear is not closed to anyone unless that person chooses to serially personally attack other people. Were you banned for bad behavior?

            Ignored by middle grounders? Seriously? What a stupid comment.

          5. pgl

            “It’s sad that was lively discussion has become so hateful/hate filled.”

            Expecting comments be based on evidence, the truth, etc is hateful. Look – you can hold whatever views you like but when you flat out lie here, expect to be called on it.

          6. noneconomist

            CoRev: Good to know you’re without sin and have never cast the first stone in anger. Must have been someone else who called me “stupid.”

        2. CoRev

          2slugs, you have again confused history with your emotions. You” “Yes, by all means learn that history. It’s the history of former Dixiecrats and “Boll Weevil” Democrats who became Republicans. But, reality is: ” The height of the modern eugenics movement came in the late 19th and early 20th century.”

          You ask: “Do you have any doubt which political party Wilson would support if he were alive today?” Yes! Absolutely. Your own hatred shows in the inability to see your own errors.

          Menzie, that’s now two unrelated comments. If you want an echo chamber of tribal comments and commenters, like AB, it’s OK.

          1. baffling

            corev and rick stryker both use a convenient argument of republican and democrat when discussing support of issues such as civil rights. the problem is, the political parties tend to change platforms over time. it is more instructive to consider, for instance, the conservative movement. over time, it had elements in both the democratic and republican parties, but as of today dominates the republican party. the party name is just political branding. what one should be concerned about is the political philosophy. and it is really hard to make the argument that those in the conservative ideology were strong supporters of civil rights, among other issues that rick and corev would have you believe with their talking points. a little dated article helps to shed some light on the dynamics of conservatives and political parties, and where the conservatives actually came down on the issue of civil rights

      3. Moses Herzog

        @ Rick Stryker
        Republican Senator Strom Thurmond was a strong supporter of eugenics. And I guess Senator Thurmond worked VERY HARD to hide the fact his oldest daughter was bi-racial. Was that the history you were referring to Mr. Stryker??

        Strom Thurmond was a “super cool” pro-eugenics and anti-segregationist Republican though. Daddy Strom made his mixed race daughter that he never publicly acknowledged drive more than once from California to Atlanta to receive money from him (presumably so she wouldn’t emit too much noise).

        If you ever get confused about what the once divorced and philandering Republican Ronnie Reagan, THREE times divorced Republican Rush Limbaugh, or perennial office-lady molester Bill O’Reilly REALLY mean when they talk about “family values” then Strom Thurmond is an ideal example.

        1. pgl

          “THREE times divorced Republican Rush Limbaugh”.

          There were 3 women stupid enough to marry this loud mouth fatso? YUK!

          1. Moses Herzog

            FOUR counting the current wife. They last roughly 6-8 years, so, I expect the divorce announcement by the end of 2020. One of the deeper questions running in my mind lately is “Which will happen first, America’s next domestic originating recession or the Limbaugh divorce??”” it’s really 50/50 right now—but if either Rush or Wifey #4 are on “Entertainment Tonight”, “TMZ”, or “Access Hollywood” saying “We are the happiest we’ve ever been” that’s like the kiss of death for any celebrity marriage, so then you can subtract 9 months off the current Vegas over/under.

        2. Rick Stryker


          No. Eugenics had its heyday among the progressive intelligentsia in the decades before and after WW1.

          1. baffling

            certainly not in my lifetime rick. you are simply playing a game of association. but this takes us from the important issue. you do not accept that martin luther king jr is a national hero, while steve king is a despicable bigot.

          2. noneconomist

            Yes, and those conservative Democrats/Dixiecrats we’re heavily populated with the same fundamentalist (now evangelical) Protestants who’ve happily switched political allegiances. Faunus, Thurmond, Maddox, Barnett. Good Southern Baptists doin’ God’s work.
            Yes, those progressive Southern Baptist Democrats.
            Wallace? A Methodist! Go figure

      4. pgl

        I had to look up the term eugenics: “the science of improving a human population by controlled breeding to increase the occurrence of desirable heritable characteristics. Developed largely by Francis Galton as a method of improving the human race, it fell into disfavor only after the perversion of its doctrines by the Nazis.”

        Comparing the Civil Rights movement to eugenics is even more disgusting than the abuse of “I Have a Dream” by Pence. But The Rick went there. Go figure! Then again – The Rick strikes me as the only one here that would support eugenics.

      5. ilsm


        These modern progressive only care about the dream. They ignore the pacifism, economic justice etc. While they wage wars of choice for the most recondite arguments, they demand King’s ‘dream’ to apply to anypone shunned by the Judeo Christian tradition and culture.

        Back to adult day care!

    4. 2slugbaits

      While it’s appropriate to recognize MLK and his non-violent approach to social and political change, I think it would be bad history to ignore a complementary figure, Charles V. Hamilton Hamilton co-authored Black Power with Stokely Carmichael.
      Hamilton is a clear eyed political theorist and he thought MLK was guilty of putting too much faith in white liberals. Hamilton also confronted the dark side of the civil rights movement. It wasn’t just marches and non-violent demonstrations that got the attention of whites. As a political scientist he recognized that a “tit for tat” strategy of not just turning the other cheek but slapping back can be an effective way of convincing Birchers and KKK members that lynchings aren’t a good idea. No bad deed should go unpunished.

      I went to something of an elite lily white high school in the Chicago suburbs. One year I took an honors seminar in political theory and Black Power was one of the books we read. My teacher was one of Hamilton’s grad students at Roosevelt University, so he invited Hamilton to come talk to us one afternoon. Someone asked Hamilton why he thought it was worth his while to come to a lily white school when one of his main arguments in Black Power was that blacks should not count of the support of liberal whites. I loved his answer: Missionary work among savages. Ouch! A line well worth stealing.

      1. Moses Herzog

        @ 2slugbaits
        I think I remember you telling that story here before, but IT IS very well worth repeating. I like that. One of the things I like about blacks is (if I may be so bold to mention a general characteristic here) is, they tend to be more direct and not apt to blow smoke up your skirt when you talk to them one-on-one. Hamilton probably knew something there, that is the whites who weren’t racist would get a chuckle out of it, as they saw a lot of truth in it. And the whites that were angry/upset at that statement, were exactly the ones the statement was targeting. Which is what makes it such a classic line.

  5. Moses Herzog

    Some videos I recommend watching, maybe this weekend when you have the time. They are a little long, so maybe save it for some dead time on the weekend or maybe if you can get the audio to play in your car or on your earphones on the metro bus while you’re commuting. You don’t have to necessarily watch them (although that’s also fun) but just listen to their words:

    This last one isn’t so directly related to slavery or civil rights. But I think it stresses how education for minorities, education for white trash, education for any downtrodden group is ALWAYS the key to getting out of certain circumstances. And Dunbar High School is a great example of how far any group can go, when provided a strong education foundation:

  6. baffling

    rick stryker, have you yet learned the difference between an american hero, martin luther king jr, and an american traitor, steve king? wondering if you approve of the hate speech provided by steve king. oh, and by the way, i understand you approve of donald trump lying, even to congress. but do you approve of donald trump telling his underlings to lie to congress as well, to protect him from bad press?

      1. Moses Herzog

        I stumbled upon this wandering around on Twitter. It does have some vulgarity in it. How to say?? Vulgarity I could get on here if I added some asterisks, but no F-bombs, in that range there. But this may be the best rant I’ve seen from an old white dude since my father passed away in 2012 Menzie. Hey Menzie, when old white dudes get it right for once you can’t deny us getting those few old white dudes their chance at the blog podium can you?? He lives in the south too Menzie. How many old white dudes in the south you meet like this Menzie??

      1. baffling

        no TDS, just want to get on record whether a trump supporter deems it acceptable for the president to coerce and pressure a subordinate to lie to congress. simply a hypothetical-have not accused the president of this act….yet. there appears to be a simple and straightforward answer, but for some reason it is hard to get a trump supporter to come up with an honest answer. you are welcome to participate ilsm.

  7. pgl

    “Rick Stryker
    January 22, 2019 at 2:47 pm

    I said half the government. Of course we need defense, air traffic control, border patrol, etc

    During the last shutdown, the Obama Administration worked hard to make it as painful as possible for people. Trump isn’t doing that.”

    Rick’s last statement is a lie and he knows he lied. More telling is his opening statements. Yes boys and girls – Rick wants to eliminate the FDA, the EPA, Social Security, and Medicare. What a guy!

  8. pgl

    Does The Rick have any clue how the Federal government spends its money? In reference to his applauding the Federal shut down he writes:

    “I said half the government. Of course we need defense, air traffic control, border patrol, etc”

    Let’s check with BEA:

    Table 1.1.5. Gross Domestic Product

    For 2018QIII, defense purchases alone were $784 billion while nondefense purchases (which includes air traffic control, border patrol, etc.) were only $545 billion. Of course I would check for the fourth quarter but guess what – the BEA is shut down thanks to the Idiot in Chief?

    Now if The Rick thinks defense, air traffic control, and border control is only half of Federal purchases, maybe he is the idiot in chief!

  9. baffling

    anybody find the irony in the trump shutdown, where democrats are fighting to keep government from growing while republicans want to grow government spending by $5 billion dollars!

    1. mrp

      It would be interesting to see what people would vote for if indeed they could trust and verifiably know what they were voting for.

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