Business Cycle Indicators, 30 May 2020

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$ (pink), all log normalized to 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (5/29 release), Bloomberg, and author’s calculations.

As of Friday, May 29th, NY Fed, Atlanta Fed and St. Louis Fed nowcasts for Q2 are -35.8%, -51.2%, and -49.75% (SAAR), respectively. IHS Markit is -42.9%.

17 thoughts on “Business Cycle Indicators, 30 May 2020

  1. spencer

    In the first quarter after tax economic profits fell from 8,7% to 7.6% of GDP. This is from an all time peak of 10.6 in the first quarter of 2012,

    Given that profits fell this sharply when the economic contraction was just starting it is hard to envision a rapid recovery.

    Profits are a very strong leading-concurrent of indicator of capital spending and employment. I would think firms would want to hold off on bringing employees back on board until the profits picture improved. This also holds for capital spending.

      1. Willie

        That boom you heard was the implosion happening. Implosions make a boom similar to explosions, doncha know.

    1. macroduck

      Transfers account for an historically large rise in personal income. The bulk of that rise was in the “other” category, representing stimulus checks. Those checks did not go out in one shot, so the rise may not completely disappear in May data. The rise in saving in April amounts to funds available to spend as the economy opens back up, good for recovery.

      State budgets are soon going to lock in big declines in spending because of big declines in revenue as a result of the decline in spending and employment shown in the figure above. Absent additional policy change, that will lock in a decline in state (and probably local) government spending for 12 months, which will create a substantial drag on the economy as it opens back up. Not sure what the balance will be between the drag from state governments and the lift from saving, but the rebound in activity would benefit from having both those spending streams headed in the same direction.

      Trump’s (and McConnell’s) opposition to federal support for state budgets seems to put dogma ahead of welfare, which is to say it puts support from Trump’s base ahead of support from the rest of voters. Seems an odd choice.

      PS. Apologies if this duplicates another comment. Internet connections are not great here.

      1. Barkley Rosser


        Presumably in the last sentence of your second paragraph you meant to say “dissaving” rather than “saving.” You were correct in your first paragraph when you noted that the rise in saving in April (which itself tended to lower output) made more future growth possible. But that greater growth will only happen if people stop saving and start dissaving out of those earlier savings, in short spending it to buy goods and services. If they continue to save, this may continue to pile up the possibility of more growth yet further in the future, but not in the period they are doing the futher increased saving.

        BTW, for the record I apologize for thinking you were Moses Herzog. You have always been more reasonable and better behaved than he. You have never to my knowledge made inappropriate remarks about women. You also generally stick to the topic under discussion, with your links doing so generally intelligently as well. As it is, it is well known that I am incompetent about ptoviding functioning links, and Moses had a tendency to link to worthless garbage, usuallyi without even identifying what it was, or if he did, doing so inaccurately.

        I also retract my use of “silly” that seems to have initiallly set you off on your wave of “ranting and raving while wrong.” I replace it with “analytically unsound and empirically incorrect.” I give you credit that when it is pointed out that you have made a factual mistake you are willing torecognize you have done so without excessive fuss (as I think I do as well), a sharp contrast with our old friend you admire so much.

        Finally, if you wish to indulge further in imitating your mentor-hero, feel free to call me “Barky Junior.” I am sure he would enjoy that. And in that case I shall reciprocate by calling you “Moses Herzog Junior.” Allt the best and stay well.

        1. macroduck


          Here you go again, letting your tiny, fragile ego drive you into the gutter.

          I stand by my earlier comments on your behavior here, comments which I believe to be amply supported by the evidence you have just provided. I see no need to enter into any exchange with you except to as a response to further attacks aimed in my direction. Any value there may be in your non-aggressive comments is simply outweighed by your regular slide into vile attacks.

          The readers of this comments section put up with enough nonsense as it is, so here is what I suggest. You refrain from any response to any comment I make, as well as from sly digs in other comments that I might construe as being aimed at me (yes, that requires you to refrain from slights to unnamed persons – something most people can manage easily enough), and I will refrain from reminding readers of this blog of your unsavory behavior. In other words, if you insist on showing the world your ugly side, I’ll help you.

          Up to you.

          1. Barkley Rosser

            Gag, Macroduck. So you have chosen to go the Moses Herzog Junior route some more. Ugh.

            You are welcome to your opinion about my ego and personality, whatever. However, I would suggest you deal with facts. Not a single actual fact that we have debated have you turned out to be clearly correct regarding. There are some that are matters of debate, which I think I have noted, such as whether or not Minnesota and Michigan are “neighbors” or not. Open question that one that depends on how one identifies the “neighborhood,” which there is no definitive way of doing between competing versions.

            OTOH, you have engaged in stating clearly factually incorrect things about what I have said here, combined with some pretty strong insults. Since you seem to have ignored it, in this imitating your great hero, you claimed that I was making critical remarks about the performance of the Michigan economy and against its governor, lumping me in with Bruce Hall and declaring that these remarks I supposedly made showed me acting like a “right wing troll.” The latter is a matter of judgment, and I leave it to others to decide if I have been acting like a right wing troll, but it is simply false that I said anything about the Michigan economy, and as I pointed out, I supported Gov. Whitmer against the attacks by Bruce Hall. You have not acknowledged any of this. You just out and out lied.

            You have been seriously lying in several of your criticisms of me, without admitting that you have done so. As for this latest bit, there is not a shred of anything factual in it, unless you think that accusing me of making “vile attacks” against you is somehow factual. Was it a “vile attack” to call your remarks about auto and work death and suicide that were analytiucally unsound and empirically incorrect “silly” a “vile attack”? Heck I withdrew that, but calling that a “vile attack” is pretty silly. You claim I have not responded to any of your comments, but I have and just did again, see regarding your utterly false claim that I was saying things about the Michigan economy and governor like those said by Bruce Hall. Lie lie lie.

            Why are you so effed up that you are engaging in a screed full of lies without a shred of truth in it? There is nothing in this post that is factually correct, just a lot of name calling when you are not stating more lies. This is truly pathetic. Now I am really worried about you, really. I do not dislike you, Macroduck, or have not. But you are working hard to make me do so.

            I did, of course, make one big insulting mistake: thinking you were Moses Herzog, which is certainly a terrible insult. But i have accepted that I was wrong about that and retracted it and apologized for doing so. And while you accuse me of directing “further attacks” in your direction, I note that I said several fairly complimentary things about you, which I am not retracting, although messages like this one certainly undermine my more favorable remarks.

            As it is, you owe me an apology for your lies. Really. You have just seriously flushed yourself down an immoral toilet.

            Oh, btw, my ego is not “tiny,” it is overblown and huge, which is admittedly a problem. You cannot even get that right. Call me an out-of-control egomaniac, and I shall agree. It is a fact: I think I am pretty smart and that I know a lot, although I am fully ready to admit I am wrong when I am shown to be, as I just did here recently when 2slugbaits corrected me on misunderstanding Menzie’s regression on unemployment and deaths and also when both Moses and pgl took me to task a bit further back for misspelling the last name of the late Ronald McKinnon. But you have not come up with anything like that, instead blundering and making either disputable or outright false statements. That is not the way to put my awful ego in its place.

            However, for the record, I apologize to one and all for my wicked egomania. It is truly a public menace.

      2. The Rage

        Checks went out in pretty much one gap. By June, personal income will be crashing.

  2. pgl

    Asians for Trump?

    “President Trump’s reelection campaign launched “Asian Pacific Americans for Trump” on Friday night as it seeks to boost its appeal to Asian American and Pacific Islander (AAPI) voters ahead of the general election.”

    Trump wants us to believe he has promoted the interest of Asian Americans while Biden just wants to divide us. As we say in Brooklyn – “I have a bridge to sell you”!

    1. Willie

      The fact that his campaign is making transparently absurd efforts to broaden the constipated orange guppy’s appeal beyond the hard core base that Trump panders to is a panic sign so far as I can tell. He is in trouble and knows it. But he is do used to bluster, bullying, and lack of discipline that i cannot see a whole lot coming from window dressing like that.

      Especially when he sneers at “jina” on a regular basis and says nothing about racist attacks on people.

      1. pgl

        Trump today said MAGA loves the black people. Yea as long as they keep quiet, cook the meals, do the dishes, and accept low wages.

      2. macroduck

        The political calculation is a tough one for Trump in part because so many votes are already baked in. He claims he’s the right choice for minorities, just as he did last time. He stokes his racist base just as he did last time. He engages in bombastic speech, just like last time. As if nothing has changed.

        Meanwhile, his voter approval numbers are stuck in the low 40s, as they have been through most of his tenure, but below where they were at the begin of that tenure. The economy is in a shambles. He had done harm to the economic interests of a good many of his supporters before the pandemic. He has been impeached. He has embarrassed himself in public. The list goes on. He lost the popular vote in 2016, and won the electoral college by a thin margin of actual votes. His polls in swing states are looking bad.

        The counter-balance to these negatives include incumbency (which tends not to help during recession) and voter suppression in Republican states. Incumbency has been used in unlawful ways in the past – Nixon won re-election handily while using federal agencies to hunt political enemies – and Trump is willing to take help from any quarter to win. He only pays a price for illegal use of presidential powers if he loses the presidency.

        I can only guess that Trump is rational enough to realize he needs his base because few other voters can be swayed at this point. His best chance of avoiding prison is another electoral college miracle, and that requires heavy turn-out from his base.

        1. randomworker

          40 million unemployed. 100k plus deaths. GDP in the toilet. Cities on fire. Everything is broken. He needs another miracle from the Russian intelligence community.

  3. Barkley Rosser

    The irony that is increasingly staring us in the face is that Trump is so shot-dighted that he does not seem to realize how his pandemic policies damage his economic effots to get reelected. So he has been running around demanding that all the governoes totally reopen their state economies ASAP. But for that to work he needs to have coronavirus stay under control at leat to some degree. But he undermines the nation’s ability to do that with his absurd anti-mask policies. This may make him feel like a real man and excite the stupider parts of his base. But even lots of Republicans, including those in the Senare,support wearing masks in public places, and if he convinces enough people not to wear maskes, well, we all know this could very well trigger a serious second wave that could lead us to a W pattern with a second round of the economy tanking prior to the election, which certainly would be the end of his chances to win. The guy seems to be shooting himself not on in the foot but in the face with this nonsense.

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