And negative at the 2s10s:
Figure 1: 10yr-3mo Treasury spread (blue), 10yr-2yr (tan), and 10yr-5yr (green), all in %. NBER defined peak-to-trough recession dates shaded gray. Source: Treasury via FRED, author’s calculations.
The drop in the 10yr-3mo spread is quite precipitous. For me, this is the best (single) predictor for recession at the 12 month horizon.
The fact that the 2s10s and 5s10s are negative highlights the fact that the inversion is at the middle of the spectrum.
Figure 2: Treasury yield curves, as of indicated dates, in %. Source: Treasury via FRED.
As of a month ago, the yield curve was generally upwardly sloping, although the 10s5s was negative. As of close today, we have an inversion between 3 years and 20 years (not shown).
The big drop in 10y-3m spread really seems to correlate with Gazprom announcing they will cut flows to Germany and Europe via Nord Stream pipeline.
The decline in the 10y/3m spread has been quite rapid. Not sure hat has any implication for recession odds, but it surely means big losses for some accounts.
Only twice since 1982 has this spread been this narrow without continuing to inversion and signaling recession – 1995 and 1998. After 1998, here was a steepening, then inversion in mid-2000 which preceded recession.
https://fred.stlouisfed.org/series/T10Y3M
Menzie, what does the recession-odds machine say?
You’re asking percentage right?? Interesting question. Tons of papers on it, seems a shorthand way is “AUC” -“area under the curve”. Long-version (more mind-numbing) ones “shape of the curve”?? Professor Chinn has probably referenced many of these papers in the recent past that my feeble brain has already forgotten. Good starting point here with other papers in the footnotes:
https://www.frbsf.org/economic-research/publications/economic-letter/2018/august/information-in-yield-curve-about-future-recessions/
Is Kevin Drum trolling Bruce Hall?
https://jabberwocking.com/the-price-of-gasoline-was-down-yet-again-last-week/
Another week, another 17¢ decline in the price of gasoline. We are now down 60¢ from the June peak, a yearly savings of about $300 per driving-age adult:…Kudos for President Biden, right? After all, he was allegedly responsible for the big increase, so he must be responsible for the big decrease too.
Yea Bruce Hall did blame Biden. CoRev did too. But neither one of these partisan MAGA hat wearing liars would ever give any credit to Biden.
the decimation of the strategic petrol reserve is cause per the party apparatchiks for the minor decline in pump price
not sure how Putin prevented the reserve from working its miracle or why now…..
or maybe the price hit a barrier to people affording with other inflation acting up
so much misinformation
so little thinking
https://abcnews.go.com/International/uk-braces-record-high-temperatures-summer-heat-wave/story?id=86996029
UK temperature tops 40 C for 1st time, as Heathrow passes 104 F
The U.K. also experienced its hottest night on record on Monday.
On Sunday the Tour de France had an exciting stage which ended with the riders drowning each other in water as the temperature was also 40C (104F). Yes global warming is a real thing even if persistent liars like CoRev will say this is just “weather”. I’m sure CoRev would not have survived the first 5 miles of that ride on Sunday.
pgl,
Now now. CoRev apparently is not denying that global warming is happening. He just does not think it is due to anrhropocentric greenhous gas emissions. After all, he linked us to non-climatologist climate blogger, Andy May, who argues that all we are seeing is just a bunch of autocorrelation: both CO2 emissions and global average temperature are rising, but not because there is any connection between the two, or there might not be, but simply because they each have already been rising, so, likely to continue doing so no matter what.
Maybe Dr. Hamilton could do a cointegration analysiis!
“Yes global warming is a real thing even if persistent liars like CoRev will say this is just “weather.” Yes it is just weather. Is this heat wave record setting? So far London is 1 degree below the 1911 record. In Germany the July temperature is below average: “We know June came in 2°C warmer than normal – warm, but nothing unusual. Certainly, with all the media hype we’ve been hearing, July must have been a real scorcher so far. But, as it’s sadly been the case for quite some time now, there’s a huge difference between reality and what the fake media report. Fact: July has been running cooler than normal in Germany so far (up to July 18).” https://notrickszone.com/2022/07/19/germany-2022-summer-heat-wave-so-far-july-has-been-cooler-than-long-term-mean/
Please stop confusing the two. It just shows your ignorance. Careful or we’ll have to discuss temperature anomalies, again. 😉
https://public.wmo.int/en/media/press-release/2021-one-of-seven-warmest-years-record-wmo-consolidated-data-shows
His ignorance?
You keep doing this schoolboy thing; you declare some dumb thing you’ve said to be true, then accuse someone else of being wrong based on the dumb thing you said. That’s not how facts works. Not truth, neither.
By the way, missing a record temperature by one degree has nothing to do with the distinction between weather and climate. Not does the fact that one locale is warm or cool relative to recent trend. Even you aren’t that dumb.
Have your masters told you to say more ridiculous things more often because the public is noticing how hot it is?
More MD gibberish. An example make the difference between emotional opinion versus valid support for: “You keep doing this schoolboy thing; you declare some dumb thing you’ve said to be true, then accuse someone else of being wrong based on the dumb thing you said. ”
You see that’s how a discussion can ensue instead of just another rant of gibberish.
CoRev,
You are increasingly becoming an utterly worthless lying piece of scheiss.
Temp hit 40.2 C in London yesterday. The highest temperature recorded in 1911 was on August at 36.7 C, not even close. This is easily found as I just did by the simplest of googling. Why are you just outright lying?
So, maybe Germany is not having as much heat as France, Netherlands, Spain, or UK, or Texas for that matter, where the grid is indeed in danger of going down again, not because of its use of solar power, sorry.
I have to ask: is your obsession with attempting to impose your ridiculous views about “weather” versus “climate,” a distinction well understood by most here, due to you having a son who is a meteorologist? Is he responsible for all this nonsense you have been spouting here recently, which is, frankly becoming increasing lunatic as it becomes increasingly just blatantly false.
Again, boy, UK just experienced its all time highest temperature ever recorded. That 1911 high was not even close.
Barkley, the 40.2C temperature record was hit at Heathrow: “Temperatures in Charlwood, Surrey, hit 39.1C late Tuesday morning before Heathrow, near London, surged to 40.2C early afternoon.”Temperatures in Charlwood, Surrey, hit 39.1C late Tuesday morning before Heathrow, near London, surged to 40.2C early afternoon.” https://www.cnbc.com/2022/07/19/heatwave-uk-logs-hottest-day-on-record-with-temperature-hitting-102point4-f.html
A provisional record set at an AIRPORT? Color me amazed. Not by the record, but by the ignorance. The previous 38.7C record was at the Cambridge Botanical Garden. So did the same location with record setting temps beat its past record? NOPE! Yesterday, July 19, 2022, the Cambridge Botanical Garden temperature was a warm 36c, 2.7c less than the previous record.
Why bring this up? Because in economics terms it is like comparing wages for CEOs to warehouse employees. Just a minor difference in conditions, don’cha think? Much like a botanical garden to an very large airport.
Is it a heat wave? Yes! Is it a record? Yes for the newer location Heathrow, but not for the previous older Cambridge. Is it climate? NO!!! it is however weather.
This continuous attempt to exaggerate weather even(s)t with climate is an: utterly worthless lying piece of scheiss. Furthermore, saying this: “I have to ask: is your obsession with attempting to impose your ridiculous views about “weather” versus “climate,” a distinction well understood by most here,…you having a son who is a meteorologist? Is he responsible for all this nonsense you have been spouting here recently, which is, frankly becoming increasing lunatic as it becomes increasingly just blatantly false.” Recently? How about here for nearly 2 decades? BTW, the “weather” versus “climate,” a distinction well understood by most here” is obviously not well understood here.
Most events will normally be associated with weather unless their time frames correlate with climate. do you understand that fundamental difference or does my wage example confuse you? Convince me.
CoRev,
Holy effing cow. The shamelessness of your outright lying and goal post moving has reached some new ultimate level.
The question at hand was (and is) what and when and where was the highest temperature ever observed for all time anywhere in the island of Britain, which happens to include all of England, Scotland, and Wales. The answer is that it was yesterday, actually at several locations, although with Heathrow Airport the best known, clocking in at 40.2 deg C, a bit over104 F.
You made a claim that this was not the highest ever observed, that back in 1911 a temperature was observed that was a full degree higher. That was just an outright flaming lie, and you now admit that it was, although you have not actually said, “Oh, sorry, I made a mistake.” Instead you have attempted a completely absurd effort to introduce a new goal post: what must count are temperatures only at the location where this previous high was observed (which was in Rands, not the Cambridge Botanical Garden, btw). Somehow a higher temperature appearing somewhere else at another location at another time, does not count, with, for some strange reason, Heathrow Airport especially not counting.
Do you actually not understand what a total flaming fool you have made of yourself here, CoRev? Really, I think this has got to be the most blatantly attempt to cover up lying and bumbling on your part I have seen here so far. Wow!
Barkley, what part of this statement is so hard for you to understand? “Is it a heat wave? Yes! Is it a record? Yes for the newer location Heathrow, but not for the previous older Cambridge. Is it climate? NO!!! it is however weather.”
Perhaps saying its a record at Heathrow doesn’t compute with you.
What I actually said was: ” So did the same location with record setting temps beat its past record? NOPE! Yesterday, July 19, 2022, the Cambridge Botanical Garden temperature was a warm 36c, 2.7c less than the previous record.” It’s important to compare records to like sites as i ts important to compare wages to likes. “Why bring this up? Because in economics terms it is like comparing wages for CEOs to warehouse employees. Just a minor difference in conditions, don’cha think? Much like a botanical garden to an very large airport.”
Compounding the confusion is the actual term is PROVISIONAL Record… Just as in economics GDP is issued provisionally.
As I’ve said several times now, you’ve been making many mistakes lately. I guess I should also add your recent crazy name calling .
One day, since claiming to understand the difference between weather and climate, have a talk with Barking Bierka – then Disgusting NYC Jerk. He need help.
CoRev,
You are caught red-handed outright lying, and you just will not admit it, will you?
Look, the question is not “what is the record at Heathrow” or “what is the record at Cambridge Botanical Gardens”? The question is what is the all time record ever recorded in the entire island of Britain. That happened yesterday and at a very large number of locations, only one of which was Heathrow, which got attention because it is a well known location. Maybe it did not set a record in Cambridge, but so what?
You claimed that the record was set in 1911, a whole degree higher than these later observations. You said it above. This has nothing to do with your increasing ridiculous gibberish about weather and climate.
You really are completely shameless. I can see you shooting Menzie and when caught standing over his wounded body with the smoking gun in your hand saying, “Who me? This was just a temporary heat wave.”
CoRev the barking dog still chasing its own tail.
40.2 is less than 36.7 by your fuzzy arithmetic? Got it!
Now our lying troll is arguing about temperatues at the Cambridge Botanical Garden versus the airport. CoRev moves the goal posts even more than the most incompetent consultant ever – Princeton Steve.
turning correlation into causation is religion
But – yet – the Fed is saying “The beatings will continue until morale improves.”
I’m curious what Larry “I Am Never Wrong” Summers would have to say about this??
https://www.federalreserve.gov/econres/notes/feds-notes/fiscal-policy-and-excess-inflation-during-covid-19-a-cross-country-view-20220715.htm
I guess mass unemployment beats GVC induced price increases any day of the week. “If only” we could have more school children going hungry and more people willing to take a non-living wage, we could have avoided these price increases. Well, Larry told us loss of work, loss of wages and kids at home alone with no school provided lunches was the answer, but now we have higher gasoline prices that “never would have been caused by war in East Europe”, if we hadn’t had the fiscal support for American families, we never would have had the war in Ukraine. Why won’t people just listen to Larry Summers?? Or just give him a White House job where he can cold call women heading important government agencies to bully them. Then Larry wouldn’t be so bitter about his policy irrelevance.
https://www.thenation.com/article/archive/woman-greenspan-rubin-summers-silenced/
Interesting analysis. Cliff Notes conclusion:
‘Our back-of-the-envelope illustrative calculations suggest that U.S. fiscal stimulus during the pandemic contributed to an increase in inflation of about 2.5 percentage points (ppt) in the U.S and 0.5 ppt in the United Kingdom.’ and 1.8% for the Euro area.
So yea the fiscal stimulus had a little to do with the higher inflation rates but not nearly all of the increase. And as you allude too, the benefits from the fiscal stimulus outweigh the modest increase in inflation.
Now if expected inflation rose from 1.5% to 4% – a question Summers should have to address goes like this “didn’t you advocate an inflation target = 5% back in the day”.
2.5% out of 9.1% means that fiscal stimulus had little to do with inflation? What did pgl miss from elementary school math? Try 27% of inflation. That’s insignificant?
But according to pgl and many revered mainstream economists, Corporate America’s contribution to inflation was insignificant too! Of course, corporate-friendly economists have to ignore evidence ro the contrary: “ Corporate profits have contributed disproportionately to inflation. ”
https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-inflation-how-should-policymakers-respond
“ It Is Difficult to Get a Man to Understand Something When His Salary Depends Upon His Not Understanding It.” Or maybe just his career prospects or consulting gigs…
@ JohnH
The arguments we were presenting (if I maybe so presumptuous to lasso in pgl agreeing together with me on this specific issue, at least to a degree) was that blaming fiscal stimulus during a pandemic for high inflation, when much of the evidence points to global supply shortages and oligopolistic flexing of muscles, is both disingenuous and vacant of evidence. The fiscal stimulus that is being blamed for the inflation by Larry Summers and his Republican choir has little to do with “Corporate America’s contribution to inflation”, as fiscal stimulus funds are from the federal government. So your contention that by pointing out fiscal stimulus had less to do with 2022 inflation than Larry Summers promulgates pgl is “defending” corporate America is completely untethered from reality, much less a rudimentary understanding of public vs private funds.
I do agree with what you are saying. And I appreciate the fact that you bother to actually read the few tidbits I may have to offer.
A great way to defend corporations is to attribute inflation to anything but corporate pricing power. It is obvious that several factors have combined and contribute to inflation. Sadly, economists—Bivens excluded—exclude any factor that might reflect badly on corporate power. Better to adhere to the corporate meme that it’s workers and wages that are the problem.
The public discussion is limited to anything but corporate pricing power, even though most Americans are convinced that corporate profiteering is a significant factor.
Ignoring a key factor in inflation is a great way for economists to lose even more credibility.
Quibbling over how much is much? That’s all you’ve got? Grow up.
Maybe little Johnny boy has a bigger point than he thinks. After all, I was talking about the INCREASE in inflation from say 1.6% to 9.1% which would mean 2.5% is a THIRD of the increase. So if I had said 2.5% had little to do with the increase – little Johnny boy could take his victory lap.
Alas little Johnny boy did not notice I said it had “a little to do” with the increase, which is a very different statement. Poor little Johnny boy never learned to read.
BTW – little Johnny boy has not read what certain “mainstream” economists have advocated things like using anti-trust and removing tariffs to bring prices down. But again – little Johnny never learned to read.
MD, another really dumb comment. Knowing “how much” is how we adjust policy. Of course, in Biden’s and democrat’s case it will be left to the voters, because the policies have been so atrociously bad.
Still waiting for that list of positive policies.
JohnH,
If this recent outburst of inflation was largely due to corporate power, why were we not having this high inflation earlier? Or did we in fact have some massive increase in corporate power all of a sudden during the pandemic? Aside from maybe one or two industries, I am unaware of anybody making that argument. Indeed, I certainly have not seen you making the argument, which is what you need so as not to look like the complete fool you look like with this stuff.
Ask him about lumber prices. He seems to think that price increase has not reversed. He is not THAT clueless.
Barkley…yours is the typical mainstream economists’ response: why did corporations not use their pricing power earlier? Then, satisfied with their convenient way to throw the problem back over the fence, they just avoid examining how Corporate America is contributing to inflation. An excellent way to shirk understanding the problem and offending any of the powerful profiteers.
If you bothered to read Biven’s piece, he addresses your excuse and then does what most mainstream economists refuse to do: study the data and calculate excess profits’ contribution to inflation.
JohnH,
I do not remember you linking to Bivens’s study, but I have checked it out. True, he claims one can have corporate power fueliing an outburst of inflation even when it has not increased. But he has a problem with his argument. He says in Great Recession there was corporate power and profits rose, just as profits are rising now. But then wages were suppressed but now they are not.
Why the difference? He says it is not expectations driving demand, but he does not say what it is. Most of us say it is these supply chain problems combined with the rising demand. Corporate profits are playing a role, but they are simply taking advantage of a situation driven by other forces. Bivens basically admits this is not the chief driving force, which has been your repeated weak claim.
JohnH,
BTW, I get it that you enjoy name calling. Somebody who does not agree with you is a “typical mainstream economist,” not what most mainstream economists think of me, btw. But, heck, what do they know?
So, since you are indulging in random name calling, I shall throw it back at you. You are an immoral propagandist for fascist war crimes. How about that, buster?
“2.5% out of 9.1% means that fiscal stimulus had little to do with inflation?”
A little moron. Please work with your preK teacher and learn to READ. DAMN!
“But according to pgl and many revered mainstream economists, Corporate America’s contribution to inflation was insignificant too!”
I never said that either. Come on dude – get a new hobby as your lying about what I said is getting really boring.
Yup! Or go out on a limb and make an early prediction which may be wrong. At least we have Steven Kopits’ prediction, a speaker and paid analyst, not too afraid to predict.
JohnH is chasing his own tail here. I see you got jealous and decided to join him. Are maybe you two are in a race to be the dumbest troll ever. Good luck with that!
As far as Princeton Steve – the only people who invite this fool to speak are Fox and Friends. Now anyone who pays him for consulting is wasting their money. How did his QTM based prediction that inflation would be 39% turn out?
Wait, wait – the Saudis ARE exporting a lot more oil?
https://www.msn.com/en-us/money/markets/china-s-oil-imports-from-saudi-arabia-are-surging-helping-the-world-s-top-crude-exporter-notch-its-best-month-since-2020/ar-AAZKcFD?ocid=msedgdhp&pc=U531&cvid=23fcdaa7736e468185d771da34c16fa1
Bloomberg data shows Saudi Arabia oil exports this month are on track for their highest levels since April 2020.
Preliminary numbers through July 18 reveal total observed shipments are headed for 7.7 million barrels a day, up by 1.1 million barrels a day from last month.
Flows into China are on track for 1.8 million barrels a day in July, the most in three months.
Exporting more oil to China but not to Europe and the US.
https://www.nytimes.com/2022/07/19/opinion/inflation-prices-fed.html
July 19, 2022
Inflation: A revolution of falling expectations
By Paul Krugman
Macroeconomic policy in the United States has been subject to two great errors over the past half-century. The odds are that you’ve only heard about the first, the way the Federal Reserve allowed inflation to become entrenched in the 1970s. But the second — the way policymakers allowed the economy to operate far below capacity, needlessly sacrificing millions of potential jobs, for a decade following the financial crisis — was arguably even more severe.
The task facing today’s policymakers, which, given Joe Manchin — er, gridlock in Congress — effectively means the Fed, is to try to steer a course between Scylla and Charybdis, avoiding both past mistakes. (Which mistake is Scylla, which Charybdis? I have no idea.) The good news, which by and large hasn’t made headlines but is extremely important, is that recent data are showing encouraging signs the Fed may pull this off.
This news also, however, suggests that the Fed should steer a bit farther to the left than it may previously have been inclined to, and turn a deaf ear — stuff its ears with wax? — to demands it turn hard right rudder.
OK, enough with the classical metaphors.
Many people know the story of the 1970s. The Fed repeatedly underestimated the risk of inflation and remained unwilling to follow anti-inflationary policies that might have caused a recession. The result wasn’t merely that inflation got very high; high inflation went on so long that it became entrenched in public expectations. At the peak in 1980, consumers surveyed by the University of Michigan didn’t just expect high inflation in the near future, they expected inflation at close to 10 percent to persist for the next five years. And expectations of continuing high inflation were reflected in things like long-term wage contracts.
It took a severe recession and years of high unemployment to get inflation back down to an acceptable level, and that’s not an experience we want to repeat.
However, there’s another experience we don’t want to repeat: the long employment slump after the 2008 financial crisis. Here’s one commonly used labor market indicator, the percentage of prime-age adults with jobs:
https://static01.nyt.com/images/2022/07/19/opinion/krugman190722_1/krugman190722_1-jumbo.png?quality=75&auto=webp
The quiet disaster of the 2010s.
Prime-age employment slumped in the aftermath of the crisis, which was understandable, but what’s really striking is how long it stayed depressed — almost to the end of the 2010s.
There was no good reason that far more Americans couldn’t have been employed during that period. After all, inflation stayed low even when employment finally got back to pre-crisis levels. So that long era of depressed employment was pure loss, representing vast waste: millions of workers who could have been employed but weren’t, hundreds of billions of dollars’ worth of goods and services America could have produced but didn’t….
if imports were not subtracted from retail sales gdp would be awesome!
and the fed would not have 9 trillion on it books
“if imports were not subtracted from retail sales gdp would be awesome!”
Reported retail sales do include imported goods. Learn to write troll.
https://fred.stlouisfed.org/graph/?g=G5Ya
January 4, 2020
Real Average Hourly Earnings of All Private Workers, 2020-2022
(Indexed to 2020)
https://fred.stlouisfed.org/graph/?g=twAi
January 15, 2018
Real Average Hourly Earnings of All Private Workers, 2017-2022
(Indexed to 2017)
https://fred.stlouisfed.org/graph/?g=mlWp
January 15, 2018
Real Median Weekly Earnings, * 2000-2022
* All full time wage and salary workers
(Percent change)
https://fred.stlouisfed.org/graph/?g=mlWs
January 15, 2018
Real Median Weekly Earnings, 2000-2022
* All full time wage and salary workers
(Indexed to 2000)
https://fred.stlouisfed.org/graph/?g=lMaW
January 15, 2018
Real Median Weekly Earnings for men and women, * 2000-2022
* Full time wage and salary workers
(Percent change)
https://fred.stlouisfed.org/graph/?g=lMaX
January 15, 2018
Real Median Weekly Earnings for men and women, * 2000-2022
* Full time wage and salary workers
(Indexed to 2000)
https://fred.stlouisfed.org/graph/?g=muKd
January 15, 2018
Real Median Weekly Earnings for White, Black and Hispanic, * 2001-2022
* Full time wage and salary workers
https://fred.stlouisfed.org/graph/?g=muKc
January 15, 2018
Real Median Weekly Earnings for White, Black and Hispanic, * 2001-2022
* Full time wage and salary workers
(Indexed to 2001)
Gazprom is a lot like Trump with this you cannot sue me nonsense:
https://www.msn.com/en-us/news/world/russia-s-gazprom-sends-force-majeure-letter-to-european-clients/ar-AAZL9t3?ocid=msedgdhp&pc=U531&cvid=5507ca805b00465d8737522428b08594
Russia’s state-run gas giant Gazprom has warned some European clients that it can no longer guarantee supply to the continent, the latest salvo in an economic dispute between Moscow and Europe over the war in Ukraine.
Russia’s Gazprom sends force majeure letter to European clients
© Andrey Rudakov/Bloomberg News
Russia’s Gazprom sends force majeure letter to European clients
The notice, first reported by Reuters and confirmed by two German energy companies Tuesday, was dated Thursday and retroactively declared force majeure on gas supplies back to June 14. Gazprom told European customers that it was no longer responsible for any gas shortfalls because of “extraordinary circumstances,” Reuters reported, citing a copy of the letter. The legal move comes amid a mounting energy crisis in Europe, where many countries rely on Russian gas, even as they seek to squeeze Moscow economically.
Force majeure is a standard contract provision that releases parties from responsibility for fulfilling their commitments in the case of extreme events — such as war, storms or fires — out of the company’s control. By invoking it, Gazprom is asserting it should not be held responsible for reneging on promised gas shipments to Europe in the context of the war.
But a major shareholder of Gazprom is this fellow known as Putin. To suggest this war of his is out of his control is a brazen lie.