The Economy at Trump’s End

In recovery (as Jim noted using GDP), but not recovered. And maybe even declining for certain key indicators.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for January as of 1/30 2/1 (blue square), industrial production (red),  personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), consumption in Ch.2012$ (light blue), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (1/4/2021 2/1/2021 release), NBER, and author’s calculations.

These recent trends place in context fears of overheating the economy (e.g., as recounted in Irwin/NYT). The output gap using the most recent CBO estimate of potential is -2.9% (log terms), using the January 2020 estimate is -3.7%. The $1.9 trillion package that has been proposed is seen as risking overheating by some — but if maximal output is a better measure of the economy’s speed limit, then the slack is -4.5%.  The multiplier of 0.6 CBO uses for a period of social distancing means that, even with the $900 billion package signed at year end, overheating seems less of a concern.

Figure 2: GDP (black), GDP forecast from WSJ January survey (red), CBO estimate of potential in July (dark gray), in January 2020 (light gray), maximal output following Delong-Summers (teal), all in billion Ch.2012$. Source: BEA 2020Q4 advance, WSJ January survey, CBO, and author’s calculations.

Moreover, stimulus of aggregate demand is not the main objective of the recovery packages. Preventing the scarring effects of firm bankruptcies and labor force attrition is.

And, nonfarm payroll employment is 2.1% lower than it was the month Mr. Trump took office.


Update, 2/1 1:30pm Pacific:

The above indicators miss distributional aspects. Here are some additional indicators, not necessarily macro in orientation.

First, unemployment rates:

Second, poverty rates:

Source: Meyer-Sullivan.

Source: Meyer-Sullivan.

80 thoughts on “The Economy at Trump’s End

  1. ltr

    January 30, 2021



    Cases   ( 26,655,740)
    Deaths   ( 450,381)


    Cases   ( 10,747,091)
    Deaths   ( 154,312)


    Cases   ( 3,796,088)
    Deaths   ( 105,571)


    Cases   ( 3,177,879)
    Deaths   ( 75,862)


    Cases   ( 2,217,234)
    Deaths   ( 57,512)


    Cases   ( 1,841,893)
    Deaths   ( 156,579)


    Cases   ( 775,048)
    Deaths   ( 19,942)


    Cases   ( 89,430)
    Deaths   ( 4,636)

  2. ltr

    January 30, 2021

    Coronavirus   (Deaths per million)

    UK   ( 1,550)
    US   ( 1,356)
    Mexico   ( 1,207)
    France   ( 1,161)

    Germany   ( 685)
    Canada   ( 526)
    India   ( 111)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 8.5%, 2.8% and 2.4% for Mexico, the United Kingdom and France respectively.

  3. ltr

    January 31, 2021

    Chinese mainland reports 92 new COVID-19 cases

    The Chinese mainland recorded 92 new COVID-19 cases on Saturday – 73 local transmissions and 19 from overseas – the National Health Commission said on Sunday.

    Of the locally transmitted cases, 63 were reported in Jilin Province, 9 in Heilongjiang Province and 1 in Hebei Province, the commission said.

    No new deaths related to COVID-19 were registered on Saturday, and 135 patients were discharged from hospitals.

    A total of 19 new asymptomatic cases were recorded, while 910 asymptomatic patients remain under medical observation.

    The total number of confirmed COVID-19 cases on the Chinese mainland has reached 89,522, and the death toll stands at 4,636.

    Chinese mainland new locally transmitted cases

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    1. pgl

      Ah yes the BLS has a picture of your governor. Oh wait – this does not say what you claimed. But look more carefully Brucie – their footnotes do identify the most pathetic little boy ever. Bruce Hall!

      1. Moses Herzog

        @ pgl
        Speaking of Governors, the Governor of the great state of New York sure has been a living saint on this Covid-19 stuff. Or weren’t your “friends who died from this” paying any attention???

        Wait!!!! Wait a second!!! Hold on a moment. None of the above New York Times journalism can be possibly true because in “PGL’s Owner’s Manual of Life” it says specifically, and I quote: “New York based Democrats never behave poorly.” Whew!!!! I got flummoxed there for a very brief moment about the personal ethics of Andrew Cuomo. Boy, was that a close one!!!!

        1. baffling

          just curious, how do you think new york would have done with ron desantis as governor in march of 2020? better, same or worse?

          1. pgl

            You know – Uncle Moses was too drunk to read his own story. As in this from Dr. Howard Zucker:

            “The Times’s point is several staff left — true, and many others joined the agency with the talents necessary to confront this new challenge.” The proof, he said, “is in the performance numbers.”

            Cuomo often gets frustrated at local officials who do not step up to the plate. He wanted more efforts whereas Desantis and Trump called for less. But I guess that simple point eludes drunk old Uncle Moses.

            BTW – the AG scandal was not about the state of NY undercounting COVID deaths. It was about attributing them too often to the hospital where the patient died v. the place where the patient caught the disease. I’m all for assigning the proper blame but this was another aspect of this horrible tradegy that Uncle Moses totally misrepresenting. Not that he is lying – he just spends too little time reading the actual facts before going off. His new BFF has the same problem as does Bruce Hall.

          2. Moses Herzog

            To be honest, I’m not familiar with Desantis, other than a very quick skim read of stories. My very surface level analysis would be Desantis would have done worse than Cuomo. But I don’t think we have to compare lowest common denominators to know if a governor of a state managed the situation well. The work should be judged on its own merits. Evers I believe has done a good job, but with a Republican legislature literally sabotaging Evers’ work, the pragmatic results fall short of the true grade Tony Evers should get, which to me, is no lower than a B-plus score, and probably higher than a B-plus.

          3. baffling

            “But I don’t think we have to compare lowest common denominators to know if a governor of a state managed the situation well.”
            true. but when you evaluate a governor, it is also fair to acknowledge what was known/unknown at the time decisions were made. cuomo did make some poor decisions, but he was reacting to an unknown situation. hindsight is 20/20, but he was flying pretty blind.

            “To be honest, I’m not familiar with Desantis, other than a very quick skim read of stories.”
            this may be true, but i find it quite hard to believe considering the variety of information you post on this blog, moses. but if true, you really need to check it out a bit more. desantis was in the ignore and refuse to acknowledge reality camp. florida got pummeled as a result. they took no lessons learned from nyc, and basically repeated all of them months later. can you imagine what would have happened in NYC if there had been no lockdown?

        2. pgl

          Are you this effing stupid? I told your trolling rear end that I am not addressing your hate filled crap any more. Move on troll before I come over and barf all over your rugs (which likely would be an improvement).

      1. Moses Herzog

        For those even half paying attention, the only thing surprising about the orange abomination’s choosing of lawyers (or his strange version of separating the wheat from the chaff, more like separating the chaff from the chaff, to make certain he has the worst chaff) for his 2nd impeachment trial is that TV boy Jay Sekulow and Alan Pedowitz aren’t leading the team. Why they got demoted is anyone’s guess. Maybe Pedowitz is busy with early court briefings for Ghislaine. He never takes his underwear off though, so he’s got that going for him.

          1. Dr. Dysmalist

            Actually, Kevin is no longer at Mother Jones (he retired), but the MJ site has a link to his new private blog home.

          2. Moses Herzog

            Someone isn’t paying attention. I’ll give pgl shit about a lot of things, but he knows what Drum is writing and where I think. He’s now over at bagglyloo, or wagglyloo, or mugwamp…… er something. I got the RSS feed a couple days ago. It has nothing to do with illness Drum is going to go where he smells the money, he must think the subscription model is going to get him more the Mother Jones salary

          3. pgl


            Dr. Dysmalist – Sunday was his last day at Mother Jones and it was a busy one. I should have been clear that I was talking about this post. But it is too late for Bruce Hall as Trump has hired his new legal team, which is pushing 3 arguments: (1) inciting a riot to overthrow the government is protected free speech; (2) impeaching a President for treason is unConstitutional as long as it did not involved a blow job; and (3) it would be divisive to stand up to white supremist as they go after people they do not like. I think I have his “defense” but who knows.

          4. pgl

            Moses writes: “It has nothing to do with illness Drum is going to go where he smells the money, he must think the subscription model is going to get him more the Mother Jones salary”.

            Wrong again – Kevin has already stated that his new blog can be accessed for free. Check it out.

    2. pgl

      Bruce Hall’s buddies are doing all they can to increase the number of COVID19 deaths in California:

      Dodger Stadium’s mass COVID-19 vaccination site was temporarily shut down Saturday afternoon when anti-vaccine and far-right groups descended upon one of the largest vaccination sites in the country, according to the Los Angeles Times. The LA Times reported that some of the anti-vaccine and far-right groups who showed up at the Dodger Stadium carried signs discrediting the COVID-19 vaccine and shouted at people at urge against getting vaccinated. There were no incidents of violence.

      Hey Bruce – I bet you will be happy when over a million Americans die of this virus.

      1. noneconomist

        Sad prospect: there are close to 40 million living in California. If 95% follow proper guidelines, that still leaves 2,000,000 nitwits to assert their god-given right to be be nitwits.

        1. pgl

          Of course Trump would tell us that Californians could rely on herd mentality whatever the heck that means.

      2. baffling

        to be honest, there is absolutely no defense of antivaccers who shut down a vaccination site. that is not freedom of expression or any other freedom. nobody has the right to keep somebody else from receiving a vaccine. sure, if you do not want it then do not take it. that simply moves me up one position in line for the vaccine, i don’t mind at all. but if you actively keep me from receiving the vaccine, it should be considered a crime.

    3. 2slugbaits

      Bruce Hall We all understand that you’re angry with Gov. Whitmer for not allowing you to satisfy you alcohol and gambling problems, but you really should be thanking her for likely saving your sorry ass life. The virus reproduction rate is now and has been below 1.00 for quite some time.

      So grow up and calm your anger. We don’t want to see you at one of those “Stop the Steal” rallies of QAnon crazies.

      1. pgl

        Too late – Bruce has been on hoping to score a date with Marjorie Taylor. Of course she is married to some dude named Mr. Greene but hey Bruce needs for the first time since Bush was President.

      2. baffling

        bruce hall is going to end up in the hospital just like corev, who has yet to acknowledge his fault in the quadruple bypass surgery resulting from decades of poor lifestyle choices. one benefit of corev’s surgery is the silence from him. perhaps we get the same from bruce? old folks with anger management issues are a coronary risk.

  4. JohnH

    More hopeful news. It appears that the Democratic leadership can actually acknowledge that mistakes were made in 2009: “ Ghosts of 2009 Drive Democrats’ Push for Robust Crisis Response. In their quest for Republican backing, Democrats say they missed opportunities in 2009 for a stronger response to the Great Recession. They’re determined not to repeat the mistake.

    After years of having to endure years of partisan hacks spewing the nonsense that Democrats’ underwhelming performance in 2009 was “all Republicans’ fault” and that they were powerless to do more, it appears that the Democratic leadership actually learned something!!!

    This is great news! I hope they follow through.

    1. pgl

      Oh man – you are so far behind times that you are seriously challenge our Village Idiot Bruce Hall for stupidest man alive. Economists including Paul Krugman where saying Christina Romer’s bold fiscal proposals should not have been watered down way back in 2009. But I guess you were too busy bashing Krugman back then and praising the UK fiscal austerity of Cameron. You were then a partisan hack but you have graduated since to merely a Carnival Barker.

      1. 2slugbaits

        We don’t know the details of the proposal put forward by those ten GOP senators, but if it’s mainly about providing immediate relief to states, schools, vaccinations and paychecks, then I’d probably take the deal. That would give Biden enough votes to override a filibuster. Some of the other stuff that’s in the Biden plan is not as time sensitive and could probably be passed through budget reconciliation a little later, which would have the added PR virtue of looking like Biden is constantly at work to help the recovery. The extra time would also give the Biden team a chance to make the next round more targeted. My wife and I really don’t need another stimulus check. And getting ten GOP senators to tag along this time might weaken McConnell’s future ability to abuse the filibuster. Obama’s problem was that he only had one bite at the apple and had to trim down his stimulus plan to get 60 votes. Biden can work things so that he gets two bites at the apple; once with 60 votes and a second time through budget reconciliation.

        I’m increasingly coming to the view that we need to think in terms of two GDP output gaps. The service sector is seeing a yawning output gap, but the goods sector is probably near potential output. I can envision a case in which the goods sector gets overheated while the service sector shrinks. That’s another reason why I’d rather see a more targeted stimulus program. We should be paying people in the service sector who cannot work. We shouldn’t be paying people like me who will either put the stimulus check in the bank or go out and buy more stuff from the goods sector.

        1. pgl

          You are willing to take half a loaf even if I’m advising against. But to our angry Village Idiot JohnH I’m the ‘partisan hack’. Go figure!

          1. 2slugbaits

            Actually, it’s more like I’m willing to take half a loaf today and another full loaf tomorrow.

        2. pgl

          I’m listening to Steve Rattner on Morning Joe comparing the Republican proposal to the Biden proposal. The latter included $350 million in Federal revenue sharing whereas the Republican proposal appears not to. In my view this is non-negotiable because without this Federal revenue sharing, the state governments will have to slash education, police, and other critical proposals. That would be a huge negative fiscal shock at a time when we need at least some fiscal stimulus. And are the Republicans now telling us we have too many police and educators? Seriously?

        3. baffling

          “We shouldn’t be paying people like me who will either put the stimulus check in the bank or go out and buy more stuff from the goods sector.”
          in complete agreement. i want stimulus for the nation, but i do not need it in my pocketbook. last time i received funds, it allowed me to continue spending on some services I would have otherwise cut. but it was not necessary for me to receive the funds. this time around, it will not be used the same and will end up in bank/brokerage account. i may lose out on more targeted stimulus, but it is the right path going forward. and if we do not support local governments and schools, this will become a multiyear headwind affecting 2024.

      2. JohnH

        One of the enduring mysteries of the Obama administration is why he built an army of grassroots supporters in 2008 and let it wither in 2009 just as Republicans were organizing the Tea Party. I was part of Obama’s grassroots army and realized we had been abandoned shortly after we hosted a healthcare meeting around our dining room table in February 2009 at the behest of the Obama administration. We submitted our suggestions. They promised to get back to us soon, but never did. Obama’s grassroots army had been disbanded.

        Shortly after, I watched as Obama passively let Republicans define Obamacare, Obama’s signature initiative , as a pejorative. James Carville got so frustrated that he publicly published talking points for Obama to use. Carville was ignored.

        There ensued a vacuum on the left with little to counter the emerging Tea Party. Even with Democrats’ overwhelming majorities in Congress precious little got done.

        Meanwhile partisan hacks like pgl exacerbated the problem by insisting that Democrats were powerless, blaming it all on Republicans, and enabling Obama’s rightward drift by deflecting criticism of Obama’s pusillanimity and Democrats’ refusal to seize the rare opportunity to make a big difference.

        Fortunately Biden is setting the right and priorities. Too bad he has neither the votes nor the grassroots organization needed to make much happen. But he has been using his bully pulpit and he does have Bernie’s supporters vigilantly watching. And he must know that should he stumble it will empower Bernie 2.0 and Trump 2.0. Democratic centrists have finally run out of second chances.

        1. pgl

          “I was part of Obama’s grassroots army and realized we had been abandoned shortly after we hosted a healthcare meeting around our dining room table in February 2009 at the behest of the Obama administration.”

          Somehow I doubt this but let’s say you got to express your brilliant ideas for healthcare. I’m sure people who get this issue fell on the floor laughing. But what I know – like Krugman I’m just a “partisan hack” to coin an overused phrase from our angry Village Idiot.

          1. JohnH

            The people who got the summary of our neighborhood’s mutually agreed upon recommendations never bothered to read them…because the initiative had been abandoned, along with Obama’s entire grassroots organization.

            And so, Obama left a vacuum on the left, while the Tea Party organized an effective grassroots organization on the right, which ultimately led to Trump. Unfortunately, Democrats still have not learned the lesson of the importance of the grassroots and still stand corporate stooges for election rather than popular grassroots candidates. Fortunately, the Democratic leadership’s obtuseness has left a lot of room for Bernie supporters, who will surely capitalize if Democrats flail about as they did in 2009.

          2. pgl

            “The people who got the summary of our neighborhood’s mutually agreed upon recommendations never bothered to read them”

            Let me guess – the title was Medicare 4 All and the text kept saying how any other ideas were from “partisan hacks”. Yes our angry troll is so predictable and BORING!

    2. Steven Kopits

      The two events are not comparable. One was a depression, the other an outage.

      A depression is characterized by a prolonged period of a drop in housing prices. You can see it on the graph below, which shows that real US housing prices did not return to their 2006 peak until 2020 (bearing in mind that 2006 was a huge speculative bubble).

      Of greater relevance, though, is home equity withdrawals. Basically, this is a decent indicator of the household sector. If withdrawals are negative, then the average household is paying down debt, rather than borrowing to buy new stuff. You can clearly see that US home equity withdrawals were negative from until 2015-2016. If that number is negative, your society is in a world of trouble. See the graph below.

      Now, look at 2020 and 2021 in both graphs, and you will see both hefty equity draws and a sharp increase in the value of housing. These are both signs of financial excess and a speculative bubble — exactly the opposite of the post-2008 market.

      So, right now, we are in a grossly overheated market obscured by the enforced (but not organic) outage caused by the coronavirus. The situation is not at all the same as 2008-2016. Fiscal stimulus may be desirable in humanitarian terms, but the economy does not need it as such. It just needs the pandemic to end.

      1. pgl

        First you claim that business cycles follow oil prices and now you are claiming it is all about residential investment. Can you please make up your damn mind? BTW the 1982 recession was deep and it occurred as oil prices were falling and it was solely a residential investment driven recession. But of course the Princeton Policy hacks you lead have never taken macroeconomics from the economics department at Princeton Univ.

        1. Steven Kopits

          It’s not a business cycle, Get it? It’s a pandemic, which is entirely independent of the business cycle.

          1. pgl

            “It’s not a business cycle, Get it? It’s a pandemic, which is entirely independent of the business cycle.”

            You were the one who raised housing price and residential investment and the last recession. I guess you do not even get your own bloviating.

          2. pgl

            “House prices are soaring, as is residential investment.”

            Dude – I know that. In fact I have said that. It does not change the fact that your theories of the business cycle are all over the map. It seems your ability to carry on a coherent conversation is even worse. Excuse me while I go do something more productive – like watching the grass grow.

  5. Moses Herzog

    We hear about “dog whistles” and code language, Would be curious to read this blog’s more politically savvy regular commenters 2slugbaits, noneconomist, Willie, even John H, tell me where “disaffected white voters” falls under in the code language category?? Or am I wrong (impossible!!!!) and it’s not any kind of code language??

    Are we afraid to “call out” the Bruce Halls, sammys, and “Princeton”Kopits, CoRevs, Ed Hansons, Rick Strykers for what they truly are?? Are they “disaffected” or can we insert another word there with a more accurate meaning?? Feel free to take my personal invitation to step on the MidEast desert IED.

    1. pgl

      Go easy on Bruce Hall as he can’t get a date with Marjorie Greene since that Taylor dude married her.

      1. Moses Herzog

        @ pgl
        I’m also looking forward to Neal Katyal’s thoughts on all of this, I think he is supposed to update his YT Vlog “Courtside” on Sunday evenings, so I am looking forward to his thoughts, and you might take interest as well.

    2. JohnH

      Moses, you might be interested in Robert Reich’s 2014 book tour:

      “ It was ostensibly a book tour but I wanted to talk with conservative Republicans and Tea Partiers.

      I intended to put into practice what I tell my students – that the best way to learn is to talk with people who disagree with you. I wanted to learn from red America, and hoped they’d also learn a bit from me (and perhaps also buy my book).

      But something odd happened. It turned out that many of the conservative Republicans and Tea Partiers I met agreed with much of what I had to say, and I agreed with them.

      For example, most condemned what they called “crony capitalism,” by which they mean big corporations getting sweetheart deals from the government because of lobbying and campaign contributions.”

      As Bubba once said, “it’s the economy, stupid!” Yet until just recently craven and corrupt corporate Democrats had no coherent, compelling economic message. If they did, they surely could have attracted more Red State votes, even votes among disaffected white voters.

      1. Moses Herzog

        @ John H
        Reich knows what many solid college professors (or in my past history “pretend teacher”) have learned over the years, if you are willing to engage WITH your students and not talk AT them, the teacher will often be the beneficiary. You make some friends along the way, and often gain some fellow stakeholders. Reich knows better than to demonize those with different views, knowing honey often is more useful than vinegar. People circle the wagons quickly if you’re not receptive to listening and hearing them out to the end~~hear out their arguments fully. Personally I feel this is one of Tulsi Gabbard’s gifts, but people are so tribal-ish they write her off. Gabbard has some “flaky” characteristics as well, but this isn’t really their true beef with her.

        I saw masses of people at Gabbard’s rallies, many of them ex-military or military families, crying openly at Gabbard’s rallies. Not just one person, scores of people crying. Elizabeth Warren and Michael Bloomberg didn’t get anyone openly weeping at rallies. It means she’s “hitting a musical chord” with people, just by listening to their concerns. People like Barkley Junior and “PGL” can make all the jokes they want about Gabbard, it speaks highly of her.

        She lost any chance of a vote from me after her absentee vote on impeachment, still….. Gabbard is not “the devil”.

        1. JohnH

          I had a Tulsi yard sign out for months. I hoped she would make America’s perpetual, pointless and futile wars into a a real issue and get people to think about the wisdom of it all.

          But Democrats simply dismissed her as a friend of Putin…and avoided any debate about guns vs. butter. And academic economists could have raised the issue of the wisdom of Bush’s tax cuts which resulted in deficit spending to finance the Iraq fiasco…a subject on which I find academics’ silence remarkable and troubling.

        2. Barkley Rosser

          Guess this is another peace offering from me to Moses Herzog that is not being accepted. Instead, he does his usual: throws out an off-topic gratuitous insult. I hope Macroduck is very impressed.

          BTW, pgl, my bet is that Georgia’s new Congressperson married a Mr. Green and was Marjorie Taylor before she did so, but I cannot say this is a matter I have dug into. Just going on now these go based on the order of names.

          1. Moses Herzog

            @ Barkley Rosser
            MY father taught me to respect those with a high level of institutional education. Institutional education was a “be all end all” with my Dad. I’m certain he viewed me as quite the failure with “only” a bachelor’s and once offered a FREE ride for a Master’s at a small Nebraska school related to a career as an insurance actuary by the Finance Dean (who was retiring that year) at the school I was attending. I couldn’t go two days without a lecture from my Dad about higher education starting, roughly age…certainly by age 12, probably before that. Your PhD qualifies on those grounds. Instead of wondering why I rarely agree with you, you might ask why I have zero respect for someone everything my raising says I should respect said person.

            Peace offerings are something that should come naturally/organically, not conditional or based on a time stamp.

          2. Barkley Rosser


            Just how drunk are you? I did not put any “conditions” or “time stamp” on my peace offer. However, a peace offer even though no “time stamp” is stated suggests that the person to whom it is offered make a response. Your first comments mentioning me after I made the offer did not mention the offer, but instead involved yet more inappropriate negative commentary. That looks like a rejection of the offer.

            As it is, you finally address the offer but do not say whether you accept it or not. Instead we get a weird speech about your father’s respect for higher ed and how you sort of absorbed that, but then say you “rarely agree” with me and then appear to reject my peace offer because somehow it was not “organic,” whatever the heck that means, and supposedly had conditions, which it did not, plus the mysterious “time stamp,” which it also did not have. In short, you have completely misrepresented my offer. Once again, you are lying blatantly.

            I note that it is perfectly possible to disagree a lot without it getting into all these personal attacks. I have long running debates and disagreements with many people on the internet and elsewhere over long periods of time in some cases, with these never descending into personalist attacks from either side.

            However, I think the record is pretty clear to most who drag through our interactions that the personal attacks overwhelmingly are initiated by you. I often, but not always, respond by replying in kind. Fact is, I am tired of this and would prefer to keep disagreements intellectual and not personal. But it seems you are simply not interested in that for reasons that fundamentally remain mysterious.

            Given this weird post, is this actually somehow about some issue you have with your father, that you are rebelling against his views? Is this why you are obsessed with so frequently addressing me as “Barkley Junior”? Really, do you understand how seriously sick this obsessively sadistic campaign against me you engage in is, Moses?

            I will reiterate once more, my peace offer, which has no conditions or “time stamp.” It seems that you are rejecting it, but if you change your mind and say, “Sure, I accept peace offering from you,” it will be on, at least from my side until you end it by reverting to making out-of=the-blue personal attacks, which so often seem to also show up in thread-jacking off-topic sideshows that neither of our hosts appreciates..

  6. joseph

    It’s funny the number of politicians and pundits who simultaneously say that the covid relief bill will overheat the economy and that too many people would just save the money.

    They are just lying about their excuses to not help people. Oh, sorry. That’s impolite. I should say they are arguing in bad faith.

    1. pgl

      As Menzie notes – the output gap may be as large as 4.5% of GDP, which puts it at $1 trillion per year. Overheating of the economy is no more likely than Central Park will be hot today.

  7. joseph

    Rob Portman in 2014 with Republican congress: “Reconciliation would be great” for pushing through the Republican agenda.

    Rob Portman in 2021 with Democratic congress: “Reconciliation would poison the well of bipartisanship.”

    Reconciliation is a special process that allows certain revenue and spending bills to bypass filibusters and be passed with a majority of 51 votes in the senate.

    Biden would be a fool to believe that Republicans who say they want a bipartisan bill aren’t just flat out lying. Oops, I mean arguing in bad faith. Republicans just want to delay and sabotage the Democratic bill.

    Voters gave Democrats a majority so they could do what needs to be done. They did not give Democrats a majority so that they could demonstrate faux bipartisanship. Voters don’t care about “bipartisanship.” They care about results and that is the only thing Democrats should be concerned with.

    1. pgl

      That people think Portman is a moderate just shows how deep in the well Trump has taken the already pathetic Republican Party. If Trump divides this party – I say great as it has been a disaster ever since Newt’s Contract on America (1994) if not before.

    1. Moses Herzog

      If Pelosi wasn’t so weak as a “leader” Republicans wouldn’t even bother flying this stuff up the flagpole. It’s because they know she will bite down on the cheap plastic fish lure, there’s no need to use the good fish bait.

      Pelosi is still walking around going “bad trumpy!!! bad bad trumpy!!! bad bad bad trumpy boy!!!! no doggy biscuit treats for you!!!!” because she got something wet and smelly at the base of her hosiery. Why wasn’t Pelosi intelligent enough to make a very public alarm bell on the National Guard needing to be present at the Capitol on the days leading up to January 6th?? Pelosi can manage crying after an office mirror got broke and making sure she has a back-up supply of ice cream for the grandkids–but anticipating obvious situations where her colleagues’ lives are in danger?? It’s another of many signs Pelosi’s geriatric bridge club needs to step down and let people like AOC, who want to get things DONE take their rightful seat at the head of leadership.

      1. Barkley Rosser


        Since it seems likely that a major reason for some of your less defensible ranting here is because you resent your father lecturing you excessively about higher education, is it the case that your bizarre obsession with denouncing Pelosi that is not supported by a single person here, except maybe some of the Trump psople (or maybe JohnH will sign on), not to mention your previous attacks on several other older powerful women, are due to you having had some sorts of bad experiences with your RN mother?

        Really, Moses, can you please keep your personal psychological problems to be expressed to your shrink rather than polluting this blog with your on and on posts driven by your phantoms? I mean you did two posts in a row denouncing Pelosi, with I think most people here frankly thinking that you are out of your mind with this garbage. Really.

        BTW, again, peace offering from me still stands, but again you do not take it. Your problem, frankly.

  8. Tom Michl

    I did some homework and reread Delong-Summers. Labelling their measure “maximal output” is quite true to their theoretical view that stabilization policy is gap-filling rather than smoothing. So that’s a “like”.

    I also was surprised that they (in 1988) explicitly deny hysteresis for the U.S.

    One way to think about hysteresis is that if it is present and policy makers respond to estimates of the inflation-neutral level of gdp they may wind up locking-in the damages. That is the danger presented by the CBO lowering the bar, as it did after the GFC. Reversing the damages requires overshooting the inflation target.

    1. pgl

      DeLong and Summers of late have changed some of their prior views and are all go hoe for fiscal stimulus.

    2. Moses Herzog

      Anyone who believes inflation hits America domestically before July 2022 (let’s demarcate it over 2.75% over any 3 month period), without some super funky “stuff” happening on the supply side, has gone FULL retard, and I include our two blog hosts in this (both of whom I greatly respect).

      1. Barkley Rosser


        Well, on Jan. 24, WaPo had long story about a lot of “funky stuff” going on with the supply side, especially in transportation and especially involving containers used on ships, US/Chinese transportation especially messed up, with this pretty complicated and overwhelmingly due to the pandemic. So this is likely to be a temporary situation that will get cleared up as the pandemic gets more under control. But shipping rates have apparently doubled, and in the near term we are likely to see a temporary increase in the rate of inflation, although whether it beats your cutoff, who knows?

        BTW, Jim Bullard called this awhile ago, which you ridiculed, and now we see serious media reports supporting it. But he also said this would be temporary and he did not call for any tightening of monetary policy because of it. Indeed, frankly Fed would like to see some increase in inflation to exceed 2% at least for awhile.

    3. Barkley Rosser


      Which is sort of odd given that in 1986 Summers wrote a pretty prominent paper on hysteresis in the European economy with Olivier Blanchard.

  9. pgl

    West Virg. Senator Joe Manchin was having his own pity party when VP Harris appealed directly to West Virg. citizens to support that much needed $1.9 trillion COVID19 bill. Ahhh. But the Democratic Senator should pay real attention to the West Virg. governor (a smart Republican) who is all end for the Biden proposal if not more.

    But Manchin should take heart that the White House will play nice with his fragile feelings:

  10. Moses Herzog

    @ Menzie
    I’m in one of my good moods right now. You’re cracking me up man (in a good way). Menzie I just read your tweet, are you telling us it’s more crucial we shun Larry Kudlow for saying it’s a V-recovery than to shun Barkley Rosser for saying it’s a V-recovery?? No, really, I’m asking for a friend. You put the low lying fruit out there Menzie, and you already guessed I probably failed the marshmallow test at age 5 right?? It was really bad, even if you think Barkley was “only” “hinting at that”
    (he wasn’t) or just “laying it out there” (he wasn’t) . He was trying to put it out there to lay claim he “predicted” it later on, on the small chance it did. That’s Barkley’s narcissist game for 9 year olds, and you know what I am saying is true Menzie.

    1. Menzie Chinn Post author

      Moses Herzog: Larry Kudlow is currently repeating the statement that it’s a V recovery; Barkley Rosser early on said it looked like the beginnings of a V but likely to tail off to something flatter, and indeed continued to revise his views as more data came in.

      In 2005, I predicted a big economic crisis, centered around a possible sudden stop of flows from abroad. I was wrong. It was a big economic crisis centered around a domestic sudden stop in the shadow banking system. I have revised my views in light of new data. On the other hand, there are people out there who still blame the financial crisis on moral hazard induced by government implicit guarantees. Those people I criticize because they do not revise their views in light of new data.

      1. Barkley Rosser

        And indeed especially if one looks at Figure 2, it looks like a V except that it stopped rising as rapidly as it fell before it got all the way back up, and I never said it was going to keep going up at the same rate it fell until it got all the way back to where it started from.

        Sheesh, I make a peace offering and Moses one of his most frequent misrepresentations of things I have written here, and in boldened letters with an intro about how he is is “one of my good moods now.” Yes, he has convinced to enjoying “sadistically” (his own word) going after me. I am just wondering how much cheap wine he consumed to get into such a good mood.

        BTW, Moses, this sort of reminds me of how you ridiculed me several times about my report that last May US consumption rose at a record rate, which indeed Menzie had to confirm for you, as you got pretty nasty in your repeated references to it.

        BTW, even though clearly are not taking me up on my peace offering, Moses, I shall continue to refrain from putting a certain pair of words in quotation marks in front of “Macroduck,” who really can come out now, if he is not too afraid of his own shadow at this point.

  11. pgl

    Kevin Drum at his new blog is still playing amateur economist:

    The Cliff Notes version is that Kevin uses the CBO measure of potential GDP to argue we are not that far from full employment and that the economy does not need much fiscal stimulus to close the gap. Look – Kevin has written some great posts but on this one, I have to disagree.

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