Comparing GDP, Employment to 2007

For my macro lectures next week:

Figure 1: Nonfarm payroll employment, in logs, normalized 2020M02=0 (blue), lagged and normalized 2007M12=0 (red). Source: BLS.

Figure 2: Real GDP, in logs, normalized to 2019Q4=0 (blue), Goldman Sachs 3/31 forecast (teal triangles), lagged and normalized to 2007Q4=0 (red). Source: BEA and Goldman Sachs.

28 thoughts on “Comparing GDP, Employment to 2007

  1. Moses Herzog

    Maybe it’s all the same to you Menzie, but I always think it’s kind when you share things from your class, especially if it’s graduate level as I think their level is higher than your average blog readers. Either way it’s interesting stuff.

  2. Willie

    Professor Chinn’s undergraduate students are probably beyond my level. That doesn’t prevent reading this blog and getting insight from it.

  3. Corey

    I was one of his undergraduate students and I was always impressed – still am.

    Am I beyond your level? Well – probably not, but I’m hunkered down for the times.

    1. Moses Herzog

      @ Corey
      If you majored in a business major (other than fluff crap like marketing) at U-W Madison and finished your 4-year, you’re probably better equipped than me, or at the minimum can lay claim to a better institutional education. I graduated from a 4-year university, but it is what would commonly be referred to as a “small” state university.

  4. David Wright

    Has anyone done a study on the effect of the stimulus?
    I mean, it’s 1 trillion in cash, right? Obama only got to spend 900 billion over a few years, as I recall.

    1. Moses Herzog

      @ David Wright
      Theoretically it’s a larger recession. But are we going to hear the whining about the debt?? The debt that got tagged on President Obama in 2008–2009 was caused by TBTF banks, Hank Paulson, and “W” Bush. donald trump cuts the CDC, doesn’t enact the federal powers for manufacturing medical equipment, withholds equipment from the states that some Chinese have to fill in the gap for (out of charity) and this federal debt gets tagged on who??? Wait for all the excuses from the orange creature. While the “strong woman” Pelosi buckles on corporate tax breaks and tells the middle class to go F— themselves because “We have to show we can enact legislation quickly”. Funny how the “strong woman” hands over money to the wealthy but gets shoved over like cigarette paper in hurricane winds when it comes to helping the working class. Strange how that always works out for “the strong woman” while she has a Republican president up against the boxing ring ropes. Again, the “strong woman” Pelosi always snatches defeat from the jaws of victory.

    2. Barkley Rosser


      You’ll have to forgive Moses. He has some weird fixation on Nancy Pelosi. At least this time he only accused her of being a shill for the rich rather than demented as he usually does.

      So we see a $ trillioin stim out of Congress, with latest reports that it is not being handed out quickly or efficiently, not something that looks to me the fault of Pelosi. Moses claims it is all for the rich, but last I checked it looks like about a quarter of it is, $500 million for the big corporations. Rest is split among states/local (about 4150 million, that due to Pelosi and Schumer), with most of the rest for those one time checks directly to people earning less than $100,000 (this supported by Trump and many GOPs as well as Pelosi and Schumer) and then a lot for unemployment insurance and small business loans and others. most reports had McConnell witrh a bill almost entirely for big business, but then Pelosii and Schumer made it clear this would not fly, so we ended up with this hodge podge that looks to be about a quarter for big business and the rest not.

      Offhand this does not seem to justify Moses’s gibbering, especially given that McConnell does control the Senate and Trump controls the WH. I would say Pelosii did not do too badly. She was in no position to single handedly write and impose what the total package would be. Those other parties would and did insist on there being some for big business, and it would have been a much bigger part of the pie except for Pelosi and Schumer.

      Really, Moses, just what is your problem with these older powerful women? it has been screamingly obvious for a long time you have a serious one here, really quite sick and frankly, sickening to read, completely out to lunch.

      1. Moses Herzog

        @ Barkley Junior
        It’s not going to protect you against COVID-19, but I think you should have some Metamucil Junior. Don’t worry, I can tell you’re very backed up, roughly up to your larynx, but this is a “no judgement zone” Barker. I bet your wife would see a drastic improvement in your mood:

      2. Moses Herzog

        Ohp!!!! It’s that damned “misogynist” Justin Wolfers again!!!!!.

        Barker Junior, can you please explain in your deep “skewed distribution” and “liquidity causes corporate bond defaults” kind of way, why Justin Wolfers is such a “chronic misogynist”?? I feel you are the only PhD with the dementia riddled, er, uh, I mean “profound analytical capacity” to explain Justin Wolfers’ misogynist hate of Nancy Pelosi?? Why is he this way?? If he disagrees with Barker Junior or proves Barker Junior patently wrong on multiple points of FACT I say that Jeffrey Wolfers is a “big misogynist”, who “hates strong women” and any other insult I can hurl at him.

        Is it just because Wolfers doesn’t have Barker Junior’s economics credentials??? Hmmmmm, I wonder…….

        I wonder what Wolfers’ background is?? Or maybe Wolfers’ Dad’s background can explain in a blog thread why Wolfers is “wrong” about Pelosi?? I wonder if Wolfers would embarrass himself by thinking his father’s background pertains to a dumb stance that “liquidity causes corporate bond defaults”?? Surely Wolfers knows that type of tangent when making an argument would cause blog observers hysterical laughter??

          1. Moses Herzog

            @ Menzie
            Haha, I thought you might mention this. That’s a fair comment. I can call Pelosi incompetent. I can call Pelosi derelict/neglectful in her duties as a political party leader (duties Mitch McConnell seems to be able to handle quite well, whatever their morality). The term senile might actually clear her on those two descriptions. I think she actually fits all 3 descriptions with a slam dunk in certainty. Professor Wolfers I suppose is more classy than me in that aspect (and probably others). But just because comments “get personal”, doesn’t necessarily make them any less accurate. And I think you may have noticed (what you think this demonstrates about me as a person I don’t know) I have used the term senile to describe people of either gender. (If the word “either” isn’t too “binary” for our current audience)

          2. Barkley Rosser

            Yes, Moses, Justin Wolfers is classier than you are, but that is not hard to do. However, he is a bit of a stuffed shirt (although I have never mert the guy). He and his wife are very telegenic and so run to the popular media to push crap views that they cannot get published in an academic journal. They did this precisely with their worthless garbage on the Easterlin Paradox. Their NBER paper ton this in 1991 happens to be the second most cited paper by Wolfers (coauthored with his wife, who is a better economist than he is), but that paper has never appeared in a refereed economics journal, precisely because it is crawling with blatant flaws such as using cross-section studies to attempt to refute an argument based on time-series analysis, the sort of thing Menzie here and in his classes is try8ng to teach people not to do. Instead they later ran to a popular magazine to spout the unreliable and indefensible arguments in this paper that smear the work of the truly honorable and distinguished Richard Eastrlin, with I think the wisespread publicity they got for that article (and, wow, look at their hair, they must be right) responsible for sending people to the original unpublishable paper to cite it..

            As it is, while I did not go double check on it, which, frankly is unfortunatley necessary to be really sure about something Wolfers says, I suspect he is probably right on this. And indeed, despite my harsh remarks about his deeply flawed paper about happiness economics, he is generally a fairly intelligent and serious economist whom I agree with most of the time if getting more publicity than he probably deserves (check out the hair, the hair!). The bottom line however is that this very minor bit of Pelosi doing a questionable favor for welll-off people in California and other high tax states is way offset by all the good that she and Sen. Schumer did in improving the bill that Mitch McConnell was putting forward. This was a smidgeon of it, whille 90 plus percent of what she was doing was admirable. Fine if Wolfers wants to point it out, but for you to somehow decide this is more important than all the good she did with regardi to this bill is just you being totally sick again. Wolfers is no misogynist, but you most profoundly are, and going on about how you think this or that public female figure is “hot” most definitely does not undo all the slime you have spewed about not only Pelosi, but other older powerful women as well.

            Oh, and if you are going to put up links, you might eeplain what they are. I simply will not open anything you post that does not have at least some explanation atteached to it. The vast majority of what you link to is just irrelevant drivel.

            And the bottom line is that Pelosi is doing a great job, not remotely senile. Carolyn Kennedy just gave her a Profiles in Courage award and said she is the most important woman figure in our political life today. Maybe that is not correct, but it is arguably the case How is it that you can be so wrong? What happened to you in your life that made you so utterly and disgusingly sick regarding these women?

        1. Barkley Rosser


          This is an incredibly minor piece of ths bill, although I grant that it helps higher income people in high tax states like California, which Pelosi happens to represent. But then the late William Proxmire of Wisconsin used to support higher dairy import quotas despite his professed opposition to government handouts to special interst groups because, well, as he put it in answering a question from a member of the UW-Madison economics department nearly half a century ago, “After all, I am the senior senator from the state of Wisconsin.” So, big deal.

          Funny thing is that I am not at all a fan of Wolfers. He is profoundly wrong about the Easterlin Paradox and has made a big play in the popular media with his incorrect attack on it. I know several leading figures in happiness economics who are quite disgusted by Wolfers’s conduct and argument on the matter. But that is not relevant to any of this and not worth getting into here in any detail. As it is, I certainly grant that he is a better known economist than I am as is his wife. But then, so is Peter Navarro., whoop-de-doo.

          Oh, and yeah, you did not get Menzie’s colleague to chime in recently to agree with your bizarre view of what has gone on in the repo markets, which I appreciate was quite upsettting for you. But then maybe you can find some You Tube comment by Justin Wolfers that does so, since he is such a great economist.

        1. Moses Herzog

          @ Willie
          You ignore many things, which is why Pelosi is still in office—people like you who want Congress to help, but can’t be bothered to learn what is in the legislation, or why certain leaders cave and others don’t. McConnell’s constituency (the wealthy) pay attention. You read headlines, think someone with a “D” by their name in the caption of a TV interview is your “friend”, and then wonder why you get shit on all the time. You put up with it, McConnell’s backers don’t—and he gets a phone call and other problems when he doesn’t come through for his interest group. When Pelosi shares some of that same interest groups as McConnell and happily allows herself to get run over by a military tank, you go “Yeah, but she’s on ‘our side’!!! ” You don’t want to make the effort the way say a Justin Wolfers does to know what is or what isn’t in the legislation. You can’t be bothered with anything more than waving a pompom. Which is why it’s hard to respect your opinion on anything.

          1. Barkley Rosser

            More sickness out of you, Moses. Pelosi is doing 90% what is needed. Without her there, GOPS would be running roughshod over Dems in Congress and getting their slush funds fot Trump to hand out to especially favored rich with little for anybody else (although they seem to like those direct checks that will show up maybe next September for the poor). You wank on about the 10% showing your serious mental illness.

            I have no idea what you have linked to, but unless you tell us what it is, I would recommend nobody waste their time with any of it.

  5. spencer

    I always had a forecasting rule that worked very well in the old days of the four year cycle.

    The recovery — from the bottom back to the previous peak — took the same amount of time as the fall in output.
    That is if the economy fell 6 months it would take six months to regain the prior peak –if 9 months down than 9 months up.

    Interestingly, this worked for the 1933-37 recovery that took 3 years after the 3 year downturn.

    the consensus never used this rule of thumb as it was always for a weak recovery. I’ve long suspected that
    forecasters tended to call for a weak recovery because no one would ever believe a forecast of a strong or normal recovery.
    So individual forecasters would jump on the weak recovery forecast as this would be less likely to lose clients.

  6. Willie

    As I recall, deflation was a concern during the Great Recession. What with travel off by more than 90%, oil prices way down, lumber prices way down, and not much demand for anything except healthcare, medical supplies, and toilet paper, I wonder if deflation is going to be a problem this time around. Even with the Fed and the bailouts, it seems like demand evaporated, which could drive deflation, at least for a while.

      1. Willie

        I don’t think there’s any likelihood that we won’t see disinflation for a while. But, inflation has been subdued at best, which means you can’t get much disinflation before you cross over into deflation. It’s a question of whether or when we cross the line.

    1. macroduck

      It may be easier to look beyond the recession than to forecast its length and depth. Deflation or disinflation may well be a consequence of the recession. Behavioral patterns changed after the 2008 recession and are likely to change this time, too.

      Entering the labor market after a serious recession is bad for real income. Today’s recent grads and students are facing weak earnings for a decade or so. That should be disinflationary. If households save more in response to the recession, that will also tend to be disinflationary.

      Weak income among young workers will reduce demand for starter homes, a pattern that is familiar in the current expansion.

      This recession combines a demand shock with a supply shock. Unlike some earlier supply shocks, this one is not the result of capital destruction (think “war”) so most of the inflationary impact of a supply shock is likely to be temporary. Capital can be put back to work once labor is available. The rest of the recession and recovery will feature weak demand with no serious shortage of productive potential. That’s deflationary.

      Real household income growth began to decline with the 2000 recession and continued to fall on trend until the drop in oil prices from the high in 2014. The more recent plunge in oil prices seems largely the result of temporary circumstances – a pandemic and a price war. If the recession is long, then demand for oil (and housing and household durables…) will remain weak, which is deflationary, but eventually, oil prices will rise in response to rising demand. Eventually, the current lift to real incomes from low energy prices will abate. All else equal, the current positive income effect from oil will become negative. Overall inflation will outpace core inflation.

      Low interest rates will persist, a reflection of low overall returns to capital and low inflation. That will limit the effectiveness of central banks’ stimulative efforts in coming cycles.

      There is likely to be a reduction in the birth rate, at least temporarily, in response to the pandemic. Events which lead to higher than normal deaths tend to reduce fertility for some time. That effect can be larger than the lowering of the average age of the population due to the pandemic, at least in developed countries with good medical systems (so maybe not the U.S.?) so the average age may rise. An older population tends to push down interest rates.

      And so on. Most of the frequenters of this comments section understand the implications of each of these likely longer-term effects on the pandemic on the economy.

      1. 2slugbaits

        macroduck I’m thinking of other effects:

        1. A move away from dense population centers in favor of more suburban and exurban sprawl. This is a bad news story in terms of managing climate change.

        2. Less willingness to use mass transportation. Again, bad news for the climate.

        3. The 2020 Census understates urban population counts leading to even more of a GOP advantage in the Electoral College.

        4. Small liberal arts colleges will fail while large universities will see more students taking online courses.

        5. A lot of cities that funded large sports stadiums will end up holding the bag.

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