Guest Contribution: “Isn’t this what a soft landing would look like?”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. 

A skydiver jumps out of an airplane, apparently without a working parachute. On the way down, a passing hang-glider calls out to ask how he is doing.  The plummeting man shouts back “Okay, so far!”

For many, the US economy resembles the skydiver.  But they are probably wrong.

  1. Expectations of a hard landing

Many think a hard landing became inevitable when the Fed in March 2022 began a series of interest rate hikes, which totals 5.0 percentage points so far and is expected to continue. Many economists, as well as the public, have been confidently predicting a recession for over a year now, or even saying that it has already begun.  In June 2022, 57% of respondents told pollsters that they believed the US was already in recession, versus only 21% who did not.  An inverted yield curve in bond markets suggests that the financial sector, too, has been expecting a downturn.  The word “recession” appeared far more often in public media during the last year than is usual even in the midst of a true recession.

But they have all been wrong so far.  A recession did not hit the US economy in 2022 and the expansion could well continue in 2023 or even 2024.  That goes for the global economy as well.

It is true that, historically, monetary tightening of this magnitude usually leads to recession. But a hard landing is not inevitable.  After all, if the Fed were to pull off a soft landing, isn’t this what it would look like?  Maybe the parachute will open as intended.

  1. What qualifies as a soft landing?

How should one define a soft landing? The critics point out that the Fed is unlikely to achieve by 2024 its hope of bringing the inflation rate down to 2 % without the intermediating pain of a sharp rise in unemployment and fall in GDP.  But that is too tough a criterion for judging a soft versus hard landing.

A soft landing could be described as a gentle slowdown in the rate of growth of output and employment, enough to bring them below the levels of potential output and the natural rate, respectively, accompanied by a slowdown in the inflation rate.  To count as “soft,” the slowdown would have to stop short of a recession, unless perhaps a shallow one.  But the inflation rate need not rapidly fall precisely to 2% in order to count as a “landing.”

  1. The current economy

So far, US employment and output have indeed slowed, but only relative to the breakneck pace of the 2021 recovery from the 2020 recession.  Their growth rates have continued to be positive.  The rate of GDP growth over the last four quarters has averaged 1.8 %.  Surprisingly, the recent numbers indicate that an unusually strong job market persists.  Job expansion averaged 278,000 per month over the first 6 months of 2023. This, too, is generally described as “slowing” – which it is, relative to the strong job growth in 2021.  But it is still rapid by any meaningful standard.  By comparison, total American population growth is about 100,000 per month and expansion in employment since 2001 averaged only 87,000 per month [=(156.2-132.7 million)/270].  So, the current job market is anything but recessionary. Indeed the unemployment rate remained at 3.6% in June, close to the low levels of the late 1960s.

The Fed’s reason for tightening monetary policy was, of course, to bring down inflation, which had become worryingly high in 2021-22.  Some progress has been made on that front.  The CPI for June 2023, released on July 12, showed 12-month inflation equal to 3.0 %. This is a big decline relative to June 2022, when CPI 12-month inflation peaked at 9.1 per cent.  Declining rental costs suggest that CPI inflation will continue to moderate in the coming months. To be sure, some of the decline in headline inflation since 2022 has been due to the volatile food and energy components (just as had been some of the CPI rise on the way up, from 2021 to 2022).  But even taking out food and energy, core CPI inflation in June was 4.8 % over the most recent 12 months, down from 6.3 % in the 12 months to October 2022.

Inflation still exceeds the Fed’s long-run target of 2% in PCE terms (that is, Personal Consumption Expenditures inflation, which is the Fed’s preferred measure).  It was 3.8% in May on a 12-month basis, having peaked at 7.0 % in June 2022.  Presumably, a severe recession might have brought inflation down to 2% this year.  But if inflation were to stay at 3-4 % over the coming year, with 2% as a subsequent goal, the tradeoff would be worthwhile to avoid a serious recession.

  1. A soft landing is possible

Of course, “a recession is coming.”  Every economic expansion must come to an end sometime.  But, contrary to what one often heard, there was no reason to be confident that it was coming in 2022.  Nor has there been any particular reason to predict that it will come this year, or even in 2024.  The odds of a recession in any random year are about 15%.  The odds over the next 12 months are higher than that, due to monetary tightening – but only something like 40 %, in my view.

Even though the parachutist jumped out of the plane more than a year ago, an unusually strong updraft has kept him at a high altitude for the time being. It is too early to judge that the parachute hasn’t opened as planned.  Maybe it will, and the economy will achieve the elusive soft landing.


This post written by Jeffrey Frankel.

90 thoughts on “Guest Contribution: “Isn’t this what a soft landing would look like?”

  1. Baffling

    “ But if inflation were to stay at 3-4 % over the next year, with 2% as a subsequent goal, it would be worth it to avoid a serious recession. And such a scenario should count as a soft landing.”
    I have been making this argument since inflation was starting to rise. There is no need to push it down to 2% painfully. We can handle a period of time between 3-4% to offset many years of sub 2% rates. That will be acceptable to the common person. I think a 2% target is too low anyhow. It is arbitrary, and wrong in today’s economy.

  2. New Deal democrat

    To begin with, I think for most people a “soft landing” means no recession. So, after criticizing those who have forecast a recession, Frankel’s definition comes pretty close to moving the goalposts:

    “A soft landing could be described as a gentle slowdown … [that] stop[s] short of a recession, unless perhaps a shallow one.”

    Unless those Frankel criticizes called for a ‘deep’ recession, the Venn diagram of his opinion vs. those he criticizes overlaps substantially.

    I am not going to use Frankel’s qualifier. I think a “shallow” or “bright” recession is the most likely outcome, and very soon. Manufacturing (except for vehicles) has rolled over. Residential construction has turned down very slightly. It has been buoyed by multi-family construction, for which permits have fallen to a 2.5 year low.

    Goods consumption turns down before services consumption decelerates. And it is real services consumption has been powering the economy, up over 2.5% YoY still. But services inflation is still up 5.3% YoY. Since almost by definition, there can be no supply bottlenecks driving that inflation (except for labor – and labor supply will increase only if wages do, or if good paying jobs decline in other sectors), the only way to bring that inflation rate below 3% is to shrink demand. And demand for services consumption has *only* shrunk during recessions.

    To be fair, I don’t think we actually tip into recession until housing under construction declines substantially. But some statistics that have been relentlessly positive, like Redbook consumer spending and real estate loans, have now turned negative. As I’ve pointed out several times recently, outside of payrolls and real services spending, this past January is a fair candidate for a cycle peak.

    An unemployment rate above 4.0% would satisfy the Sahm Rule, and yet would be lower than about 45 of the last 50 years. Like 2001, it probably wouldn’t feel like a recession to a large majority of people. That’s what I think is the most likely outcome: a ‘bright’ recession.

    1. Jeffrey A. Frankel

      To New Deal Democrat:
      I’m putting 60% odds on no US recession at all within the next 12 months. Hence a soft landing.

    2. Ivan

      I hate it when you economists take a continuous parameter and categorize it. You lose information when you do that – what exactly do you gain?

      Sure you can try to rehabilitate yourself by sub-categorizing your two binary choices of “recession or no recession” by adding prefixes like “shallow”, “bright”, “strong”, “weak” etc., but your original statistical sin cannot be whitewashed. I still HATE IT.

      1. Macroduck

        Yes. To some extent, these ill-defined categories are the cost of popularization – a text full of numbers makes eyes glaze over. But arguing over the definition of “soft landing” doesn’t make us smarter or better informed.

      2. New Deal democrat

        Ivan: a ‘soft’ or ‘bright’ recession is still a recession. Which the NBER has in the past generally defines as a non-trivial downturn in production (peaked last September): real sales (peaked in January), real income less government transfers, and jobs (still growing strongly).

        1. Ivan

          So here they are trying to mitigate their previous mistake of turning a rainbow reality into a black/white, yes/no carricature – and you insist that they must go back to two and only two categories. You are not being nice and not helping them either.

    1. pgl

      Real GDP has risen more than real GDI has fallen. So what was Jonny’s boy again? Oh yea – he is warming up for another one of his pointless insults towards Dr. Frankel.

        1. JohnH

          ltr…you need to look at real GDP and real GDI…that’s where you get the divergence between positive GDP over the past year and negative GDI.

          1. pgl

            She did. Or do you care to mansplain this to her. No troll – ltr is WAY smarter than you could ever be.

      1. JohnH

        Which do you believe…GDP or GDI? One positive, one negative. Is Schrödinger’s cat dead or alive?

        1. pgl

          Jonny boy wakes up and begins his day asking Putin – what is it you want me to believe today? Face it dude – you are a worthless little troll. Nothing more. Nothing less.

          1. ltr

            Jonny boy wakes up and begins his day asking Putin – what is it you want me to believe today?
            Jonny boy wakes up and begins his day asking Putin – what is it you want me to believe today?
            Jonny boy wakes up and begins his day asking Putin – what is it you want me to believe today?

            [ Scurrilous, as usual. Always but always try to intimidate and ruin. ]

        2. pgl

          “Which do you believe…GDP or GDI?”

          More evidence Jonny boy’s writing sucks. Both series are positive. Yea the CHANGE in real GDI is negative for this short period of time.

          See ltr’s graphs. Real GDI growth was higher than the real GDP growth for a while. And during that period little Jonny boy emphasized the latter. Why? Because Jonny boy is your standard National Review two faced liar.

          1. JohnH

            pgl claims real GDI was negative for only a short time…yet the FRED chart I show was for a year.

            For some reason pgl has this knee jerk denial of reality…

          2. pgl

            July 21, 2023 at 12:30 pm
            pgl claims real GDI was negative for only a short time…yet the FRED chart I show was for a year.

            No lying troll. GDI exceeded GDP until the very last quarter. Your rate of change graph is a deceptive piece of trash for reasons I have noted. But lying is what Jonny boy do.

        3. baffling

          once it is measured properly, it will only be one of them. it will not be both. your complaint is with a lack of accurate real time data.

          1. JohnH

            Yes…”once it is measured properly” Until then, what do we know? Aren’t we in limbo …or with a case of Shrödinger’s cat…or maybe in the gray zone?

            “once it is measured properly measured” will they both be positive or negative?

        4. baffling

          even a small amount of noise becomes a problem when change is very small. it is not realistic to think your data should be noise free. real world, experimental data always has noise.

          1. JohnH

            Agreed, “even a small amount of noise becomes a problem when change is very small.”

            Economists should be cognizant of this when they try to convince us of “recession” or “no recession.” Instead it seems that the default state is “no recession” until conclusively proven otherwise.

          2. Baffling

            “ Instead it seems that the default state is “no recession” until conclusively proven otherwise.”
            Historically the default condition is NOT a recession. You are arguing against reality johnny.

    2. pgl

      “The rate of GDP growth over the last four quarters has averaged 1.8 %.” – Frankel.

      Jonny boy’s own link confirms that this is true. But this cannot be according to Jonny boy so he digs up real GDI. Of course the last time Dr. Chinn mentioned real GDI – Jonny boy went bonkers accusing Dr. Chinn of trying to excuse weak GDP growth.

      Jonny boy has the same malleable opinions as the economic hacks who write for the National Review.

      1. JohnH

        pgl just can’t seem to understand my position. I wasn’t trying to accuse Dr. Chinn of trying to excuse weak growth…but I was questioning the amount of time and effort spent trying to prove that anemic GDP growth was barely positive, not barely negative.

        1. pgl

          ‘can’t seem to understand my position’????

          Do you understand what your babble even means? You are two faced liar and the worst writing of all time.

        2. Macroduck

          You mean like when you spend comment after comment arguing that your favorite income indicator is the only indicator that matters?

          This is an economics blog. Discussing the performance of the economy, and appropriate economic policy, is the declared purpose of this blog. If you aren’t interested – or don’t understand – you could stop bothering people here.

          1. JohnH

            Ducky is spewing BS again. The FREDblog chart that I linked to shows time series for 4 different series. Two are negative since the start of the pandemic and two are slightly positive. Any presumed increase in real wages since before the start of the pandemic should therefore be judged as inconclusive…in the gray zone.

            In addition, the real time inequality data for factor income, which represents mostly wages for the bottom 90%, has been negative the huge portion of the economy.

            But Ducky, who presumes to know things, can’t be bothered with looking at real wageand income data.

          2. pgl

            July 21, 2023 at 12:46 pm
            Ducky is spewing BS again. The FREDblog chart that I linked to shows time series for 4 different series.

            No – there are two series. Real GDI and real GDP. The other two plots represent averages of these two. Of course Jonny thinks there are four separate series because Jonny boy is a very stupid troll.

        3. ltr

          I wasn’t trying to accuse Dr. Chinn of trying to excuse weak growth…but I was questioning the amount of time and effort spent trying to prove that anemic GDP growth was barely positive, not barely negative.

          [ This strikes me as a reasonable objection, just as I find no reason to worry about deflation because the consumer price index is slightly negative for a month. ]

    3. JohnH

      “There’s room for debate on whether GDP or GDI should be the primary economic indicator for determining the health of the economy. GDP is released in a more timely manner, which may explain why it garners more attention. However, it’s clear that both measures of economic output offer valuable information on the health of the economy….

      When GDP and GDI data are revised, the revisions tend to be smaller for GDI, which may make it a more-accurate indicator than GDP…”

      So why are pgl and other economists here reporting only on GDP, particularly when GDP and GDI are sending conflicting signals about the health of the economy? Isn’t circumspection warranted under these circumstances?

      What is obvious is that for the past year GDP is showing a healthier economy than GDI. Is a healthy economy the message that economists want to convey? If so, why?

      Why not just acknowledge the anaemic state of the economy, say it’s in limbo, in an indeterminate state, like Schrödinger’s cat? Or does partisanship trump impartiality?

      1. baffling

        “Why not just acknowledge the anaemic state of the economy,”
        probably because many people in this economy would not even try to use the term “anaemic” to describe the current state. many people do not have a sour view of the economy. the low unemployment rate should keep you from making such a declaration.

      2. pgl

        “So why are pgl and other economists here reporting only on GDP”

        You suck at even lying which is your only forte. Our host had presented all sorts of excellent discussions and research on these measurement issues. But it seems little Jonny failed to pay a lick of attention. Dude – your chirping is a total waste of time. Find some other blog to pollute with your trash.

      3. pgl

        “growth in GDP and GDI have both slowed recently and have also diverged, with real GDP growth turning negative and real GDI growth remaining positive.”

        Like I said. Like ltr tried to say. Real GDI had been increasing by more than real GDP only a short time ago. And back then Jonny boy was trashing the reporting of real GDI.

        Hey Jonny – you did it again! You forget to read your own damn link. I would say kind of stupid but stupid is who you are.

        1. JohnH

          pgl just loves to move the goal posts, which is pretty strange, since anyone can look at my link, which clearly shows the performance of real GDP and real GDI over the past year…

          1. pgl

            Oh gee – Jonny boy is so upset that the NFL commissioner will not let him “move the goal posts” to the 30 yard line. You really should stop using your stupid line here as it is YOU that often moves the goal posts. Grow up little boy as your whining is retarded.

  3. ltr

    July 13, 2023

    Everything’s Coming Up Soft Landing
    By Paul Krugman

    The latest numbers on consumer prices arrived on Wednesday, and they were better than even optimists had expected. Even media reports, as far I can tell, generally omitted the “but concerns remain” qualifiers that have seemed mandatory when covering good news about the Biden economy.

    Which is not to say that everyone was happy. Republicans are more or less in denial, no doubt worried that they may be losing pretty much their only substantive campaign issue — leaving them with nothing to run on besides wokeness and Hunter Biden. And there have been some fairly peevish reactions from economists who had committed themselves to the grim view that we would face a nasty “sacrifice ratio” — that controlling inflation would require years of high unemployment.

    For this report was anything but grim. It strongly suggested that we may be heading for a soft landing — a return to acceptable inflation without a large rise in unemployment. We’re not there yet, and I’ll talk shortly about what may still go wrong. But a happy outcome that not long ago seemed like wishful thinking now looks more likely than not.

    To understand what the report told us, you first need to know that few serious analysts paid much attention to the two numbers that dominated most news reports: overall inflation and “core” inflation, excluding food and energy, over the past year.

    Overall inflation has been driven largely by clearly temporary swings in volatile prices: The 16.5 percent decline in energy prices over the past year isn’t going to be repeated.

    Core inflation, on the other hand, is at this point dominated by official shelter prices, which lag behind market rents by a year or more. So the core number is still reflecting the big 2021-22 run-up in rents, itself probably driven by the rise in remote work rather than what’s happening to the economy now.

    So most of us now look at measures that try to bypass these distortions. I’m a fan of “supercore,” core inflation excluding shelter and used cars. Others prefer different measures, but they’re all telling the same story: a rapid decline in underlying inflation even though the unemployment rate is the same as it was a year ago….

    1. pgl

      Thanks for this interesting discussion which is largely consistent with Dr. Frankel’s post.

    2. Macroduck

      If wage growth were the major driver of price increases during the post-recession price spike, then the “sacrifice ratio” Krugman dismisses would be a reasonable basis for policy. As we have seen demonstrated in posts and comments here, wage gains are probably not the major driver of inflation.

      The Fed has a rate hammer that works to drive credit-cycle nails. That’s it. Great tool when excess credit growth is the problem. The Fed doesn’t have a wage tool. Wages only cool off when labor demand cools off because demand for output cools off because either supply of or demand for credit, or both, cools off. Identifying some “necessary” labor-market sacrifice ratio when there is no wage-price spiral is bad economics, rooted in the circumstances of 1970s.

  4. Ivan

    An outstanding article on why corporate America is in a panic about the new FTC chair – she is spreading fact-substantiated knowledge rather than “we all know” BS.

    Very well written. I loved this paragraph (although it should have been Thanksgiving):

    “The Republican project is a matter of getting turkeys to vote for Christmas by doing a lot of culture war bullshit, cruelly abusing disfavored sexual and racial minorities. This wins support from low-information voters who’ll vote against their class interests and support more monopolies, more tax cuts for the rich, and more cuts to the services they rely on.”

    1. Moses Herzog

      Great share by commenter Ivan. Thanks. Got another feed for my RSS reader today.

    2. pgl

      Biden’s ceding of antitrust policy to the left wing of the party, combined with disaffected GOP senators viewing Khan as their enemy’s enemy, led to Khan’s historic appointment as FTC Chair. In that position, she was joined by a slate of Biden trustbusters, including Jonathan Kanter at the DoJ Antitrust Division, Tim Wu at the White House, and other important, skilled and principled fighters like Alvaro Bedoya (FTC), Rebecca Slaughter (FTC), Rohit Chopra (CFPB), and many others. Crucially, these n n that laid out 72 concrete ways in which the administration could act – with no further Congressional authorization – to blunt corporate power and insulate the American people from oligarchs’ abusive and extractive practices

      Biden believes in good old competition. Such a socialist!

  5. Macroduck

    Frankel is doing two things here. He is making a forecast and matching that forecast to a common but ill-defined term. Matching the forecast to the term “soft landing” is an exercise in arguing about definitions. The more effort spent arguing about definitions, the less we pay attention to the performance of the economy. Just think back to the troll choir’s effort to claim we were in recession last year, ahead of the mid-term election; it relied largely on a specious redefinition of recession.

    Frankel’s real economic claim is the forecast. Inflation will slow to a tolerable pace (it pretty much has already) and we will avoid serious recession. There is plenty of room for discussion of the forecast. That discussion is useful. A policy maker, business planner, household budgeter is helped by having reasonable expectations of the economy. I don’t see what purpose is served by fussing over definitions, outside of politics – which brings us back to the desperate antics of the troll choir last year.

    So, recession has been avoided so far, unless NBER tells us otherwise. There is a pattern in economic performance which is suggestive of pre-recessionary periods in the past. Frankel makes the point that a soft landing would share that pattern, but avoid a serious recession. Putting aside questions of definition, that’s a reasonable claim. Leading and lagging sectors are likely to behave in roughly the same manner in a mere slowdown and prior to recession.

    Frankel’s final sentence, about the odds of the U.S. avoiding serious recession, begins “Maybe it will…” Aside from the problem of falsifiability – how serious is “serious”? – I don’t see a problem with that, and I’m not much interested in a squabble over definitions.

    1. pgl

      Remember when JohnH made his off beat incoherent comment about China being able to export cars because of something to do with its exchange rate. That IMF link you provided was excellent. And I noted some Chinese economist who disputed the Trumpian-JohnH BS about alleged currency manipulation. I just got around to finding this:
      Real Broad Effective Exchange Rate for China

      Notice how much the yuan appreciated over the last decade or so. The Chinese economist got this right. And course Jonny boy once again got an issue incredibly wrong.

    2. JohnH

      I couldn’t agree more–“The more effort spent arguing about definitions, the less we pay attention to the performance of the economy.”

      But the Democratic partisan hacks insist on “no recession” while the Republican partisan hacks insist on “recession.” Someone who is not a partisan hack would just acknowledge anemic growth, conflicting signals, in limbo, or Schrödinger’s cat and be done with it.

      Partisan bias becomes clear when supposedly impartial people spend a lot of time arguing “recession” or “no recession.”

      1. Macroduck

        If your understanding of the discussion is ” both sides are hacks”, you’ve fallen for one of the oldest tricks around. Or more likely, your are using one of the oldest tricks around.

        “Moral equivalence” was a favorite Russian propaganda trick during the Cold War. Climate-change denialists use it, too, when they claim climate studies are driven by corrupt money from the left. Putin is back at it, claiming that his invasion of Ukraine is NATO’s fault or Nazi’s fault, or anybody fault but his. Both times. And Johnny, by the way, resorts to moral equivalence arguments a lot; wonder where he learned it.

        You’ll note New Deal Democrat’s persistent interest in the business cycle. NDD is a business-cycle economist who thinks recession is likely. Anyone think he’s a Republican hack? Are Robert Hall, Robert Gordon, James Poterba, Valerie Ramey, Christina Romer, David Romer, James Stock and Mark Watson partisan hacks? They’re all take a strong interest in whether the economy is in recession. It’s their job, after all, as members of NBER’s business cycle dating committee. As was Professor Frankel for nearly a quarter century.

        So, what’s more likely, that everyone who’s interested in the business cycle is a partisan hack, or that Johnny is?

      2. baffling

        “anemic” is a charged word for this description. thus it would not serve a useful purpose. only a partisan purpose. Johnny, you need to acknowledge that economically, the country is doing rather fine right now.

  6. ltr

    Really nice essay by Frankel, but I have been and am unwilling to accept this assertion:

    ‘Of course, “a recession is coming.” Every economic expansion must come to an end sometime….’ Given the work in sentiment in economic swings of Robert Shiller and the pragmatic economic management and resulting growth in China since 1977 and the lengthening of time between recessions in America, I think the “sometime” coming of recessions can be a long time indeed.

    August 4, 2014

    Real per capita Gross Domestic Product for China and Australia, 1977-2022

    (Percent change)

    August 4, 2014

    Real per capita Gross Domestic Product for China and Australia, 2000-2021

    (Indexed to 2000)

  7. Moses Herzog

    It strikes me that most people are in agreement on the matter if even those who have been predicting a recession in 2023 are now back-pedaling and saying it will be a “bright recession”. During this phase of events I have been mostly cowardly, not taking a stance, only predicting that IF we have a USA recession it would be post-2023.

    May I quote a famous Englishman??

    “Tis but thy name that is my enemy:
    Thou art thyself, though not a Montague,
    What’s Montague? It is not hand nor foot,
    Nor arm nor face. O be some other name,
    belonging to a man!
    What’s in a name? That which we call a rose,
    By any other word would smell as sweet.”

    1. pgl

      Australia is a resource rich nation that benefited from the commodity boom. As China grew, it needed all sorts of commodities such as copper, iron ore, natural gas etc. much of which was produced in Australia.

      1. ltr

        Australia is a resource rich nation that benefited from the commodity boom….

        [ Thank you for the response, which strikes me as entirely reasonable. However, questions remain since Australia ran a large trade deficit from 1992 on and prices of commodity exports were quite variable. So domestic fiscal policy had to have played quite a significant role in bolstering the Australian economy, but I do not know enough yet to offer ideas about the role.

        Also, could Australia have grown faster from 1992 on?

        August 4, 2014

        Real per capita Gross Domestic Product for China and Australia, 1992-2022

        (Percent change)

        August 4, 2014

        Real per capita Gross Domestic Product for China and Australia, 1992-2022

        (Indexed to 1992)

      2. ltr

        Australia is a resource rich nation that benefited from the commodity boom….

        [ Thank you, again. You are correct, but there is more for us to know. Smoothing growth, avoiding recession, interests me since the toll of recession can be more long-lasting than often understood. For instance the long-lasing toll of recessions in the currency crisis period after 1997 is striking. ]

  8. pgl

    BEIJING (Reuters) -An unusually public claim by a Chinese professor the country’s youth jobless rate might have hit close to 50% in March has stoked a debate about official data and a soft labour market, despite curbs on negative portrayals of the economy. The National Bureau of Statistics said that month’s jobless rate for people between the ages of 16 and 24 was 19.7%, less than half of what Peking University professor Zhang Dandan estimated.

    If 16 million non-students “lying flat” at home or relying on their parents were included, the rate at that time could have been as high as 46.5%, Zhang wrote in an online article in respected financial magazine Caixin. The article by Zhang, associate professor of Economics at the university’s National School of Development, was published on Monday but has since been removed.

    Nearly 50% instead of 20%? Wow – oh wait the PRC got this deleted. Go figure.

    1. Ivan

      As always with these dictatorships they cannot delete reality, only the reporting of reality. Whether its 20% or 50% it is a huge problem with severe long-term consequences. The fact that Winnie the Pooh is telling the young people to just suck it up tells you why he is way over his head on this one.

    2. ltr

      Nearly 50% instead of 20%? Wow…

      [ Go figure… The meanness is always but always evident when it comes to wanting to harm China. Wow… ]

  9. JohnH

    Which do you believe…GDP or GDI? One positive, one negative. Is Schrödinger’s cat dead or alive?

    1. pgl

      Hey Jonny boy – way to not read your own FRED blog link which basically confirms what I have been saying (I made this easy for you in my recent comment). Why do you so often fail to read your own link? Kind of makes it easy for the grown ups to mock you as your own links contradict the trash you love to write.

  10. Macroduck

    Off topic, the wholesome goodness of slavery –

    Here’s a bit from page 6 of “Florida’s State Academic Standards – Social Studies, 2023”:

    “Benchmark Clarifications:
    Clarification 1: Instruction includes how slaves developed skills which, in some instances, could be
    applied for their personal benefit.”

    Slavery. It’s like an internship, but with free room and board!

    1. pgl

      And those plantation owners fed them too!

      My high school principal was a racist jerk who ended every school day with some dumb speech that always ended “the South shall rise again”. Needless to say the black students wants to beat this clown up. Me? I told them I would help them.

    2. pgl

      “Today is a good day to remember: Christianity is the faith, and America is the place slavery came to die.” – Josh Hawley on the Twitter. And we thought Marjorie Taylor Greene was the sick one.

    3. Ivan

      I can’t wait to see the websites with “supplemental curriculum” for Florida students.

  11. ltr

    July 21, 2023

    China adds 6.78 mln new jobs in urban regions in H1

    BEIJING — China added 6.78 million new jobs to the labor market in urban regions in the first half of 2023 (H1), achieving 57 percent of the annual jobs target, according to data released Friday by the Ministry of Human Resources and Social Security.

    In June, the surveyed urban unemployment rate stood at 5.2 percent, the data showed. China aims to add 12 million jobs in cities this year and keep the surveyed urban jobless rate at around 5.5 percent.

    According to a statement by the ministry on its website after a press conference, the government had stepped up efforts in prioritizing employment in H1 with concrete measures. For instance, the government subsidized enterprises with funds to the tune of 52.8 billion yuan (about 7.4 billion U.S. dollars) in H1 to encourage companies to provide job openings, the statement said.

    It said the government also fully promoted the employment of young people, such as college graduates, through various action plans and training initiatives. The government has continued to encourage enterprises to provide 1 million internship opportunities for unemployed youths this year. As of the end of June, 683,000 such internship positions were open, and 519,000 people had taken part in internship programs.

    The country has also prioritized large-scale vocational skills training targeting young people, especially college graduates, the statement said. In H1, more than 7.7 million vocational training coupons, which trainees use to access free training courses, were issued by the government.

    The ministry said that it would continue to promote employment for college students in its next step of work.

  12. Ivan

    Putins unforced errors are rolling out like bullets from a machine gun.

    He blocked the grain deal to try and force more concessions out of it. But then he try to destroy the facilities that would make that deal worth anything for Ukraine/the West. Why would Ukraine agree to any Black Sea grain deal if they will not be able to ship their own grain out of there? Ukraine and the West can get the grain out by other routes (although at higher cost). How will Russia get their grain out if the Black Sea becomes a war zone where neither Ukrainian nor Russian ships can get insured? Ukraine simply need one drone or mine attack on a Russian merchant ship in the Black Sea – to stop all commercial shipping in and out of Russian ports. The only reason they have not done it yet is their own desire to use Black Sea commercial routes for grain. Using missiles to hit residential areas was a stupid waste of a limited resource; using them to destroy grain facilities in Black Sea harbors is like Russia attacking itself with their own missiles.

    The current crack down on right wing bloggers in Russia is basically hitting straight at the only group there who has been giving strong and unconditional support for the attack on Ukraine. As if they didn’t already have a hard time finding people who support the war enough to risk their lives at the battlefront. Why make an enemy out of your best friend – and in the middle of a battle.

    1. Anonymous

      are you seeing rumblings of usa/nato wanting to “assure freedom of navigation” in the Black Sea?

      where could that go?

      1. Baffling

        Turkey certainly has been talking up black sea freedom, in defense of ukraine and in defiance of russia’s illegal threats in the black sea.

        1. Ivan

          Turkey want the Black Sea grain deal more than even Ukraine. They have been getting cheep grain from Ukraine and cheep natural gas from Russia. Those are things Ergodan desperately needs to support his faltering economy. NATO doesn’t need risking nuclear war to help Ukraine. All they have to do is arrange and pay for transportation that doesn’t go through the Black Sea. They have spend more than a year developing such alternatives. They may, like Ukraine, see an advantage in Putin overplaying his hand and opening himself up to a Ukrainian mine/drone attack on civilian shipping that would shut down all of Russias civilian trade through the Black Sea (or make it much more expensive). Russia just stop the attacks on Grain shipping facilities – someone in Russia may have seen the trap.

  13. pgl

    JohnH’s day job may be chief Putin cheerleader but he has a side job promoting Taiwan Semiconductor Manufacturer Corp. I wonder how he will make this out to be good news:

    ‘The world’s largest chipmaker, Taiwan Semiconductor Manufacturing, just saw its revenue drop for the first time in four years. The company said Thursday that second-quarter revenue declined nearly 10% compared to the same time a year ago, and annual net profits dropped 23%.’

    Of course any company in this sector faces significant commercial risk. But Jonny boy seems to get all excited whenever the profits for a US company decline has he has denied TSMC ever faced any commercial risk. And of course Jonny boy has no clue how to check the financials for TSMC even though makes this so easy.

    1. JohnH

      pgl really does get confused!!! I am a cheerleader for TSMC? And I said that TSMC never faced commercial risk? Where does he dream up this stuff?

      What I did say was a) that TSMC is at the leading edge of applying technology and producing the most advanced semiconductors (a widely held view) and b) that the US would be shooting itself in the foot to cripple TSMC as a way to deny China access to advanced semiconductors if need be (pgl thought crippling TSMC would be a brilliant idea, cutting the US off from the leading semiconductor fabricator!)

      The US did find a way to seemingly resolve the problem–have TSMC build leading edge semiconductors in Phoenix, which will work…if they can manage to find enough skilled talent, enough water, and survive weeks of 110 degree heat…

      1. pgl

        When Jonny boy gets caught spewing BS – Jonny boy tries deny, deny, deny. Hey troll – if you can stand behind what you write then do us all a favor – do not write the BS.

  14. Macroduck

    Recently, commenter William Dittl observed that “the CRE market is coming into default and major stress.” That sure seems right.

    It is somewhat good news that the share of outstanding commercial mortgages coming due soon is not large relative the total. Something between $900 billion and $1.5 trillion of the $20 trillion in outstanding U.S. commercial real estate mortgages come due in the next two years. I’ve seen estimates that 10% of those may be unable to roll over under present market conditions – call it $150 billion in CRE loans.

    Those are the ones which fail to roll debt over. There is also a group of loans which will default due to lack of revenue, before needing to refinance debt, so the problem is bigger than $150 billion. In fact, MSCI puts potential distressed CRE assets at $162.3 billion at the end of Q2:

    Recovery rates really matter in default; the lower the recovery of principal, the greater the damage to creditors and the financial system, which creates a dangerous feedback loop. If defaults are high, recovery rates will be low. If interest rates are high, recovery rates are low. If occupany rates are low, recovery rates will be low. You see where this is going. By the way, roughly 70% of CRE loans are held by small and medium-sized regional banks, which have already faced about of stress this year.

    From the Fed’s May, 2023 Financial Stability Report:

    “Commercial real estate

    “Many contacts saw real estate as a possible trigger for systemic risk, particularly in the commercial sector, where respondents highlighted concerns over higher interest rates, valuations, and shifts in end-user demand . Some market participants associated risks in real estate with the emergence of banking-sector stress, noting some bank exposures to underperforming CRE assets could prompt instability.”

    So it’s reassuring that banks are beefing up reserves in anticipation of CRE trouble:

    Note that Reuters tells us about large banks, which are not the most exposed to CRE. Note also that loss provision usually means limiting lending – a drag on growth.

    The problems in office buildings and retail stores didn’t just happen. Those problems are unfolding much as has been expected. China’s problem is much bigger and further along (creditors just seized another Evergrande property), but there are similar problems in the UK, Norway, France, Canada, Korea, Japan, Germany… To the extent there is positive feedback in CRE and CRE finance, the recent round of headlines suggests stress in the U.S. will continue to pile up.

    Just one more rate hike, right?

  15. Macroduck

    From NPR:

    “Former President Donald Trump’s trial into his handling of classified documents is set for May 20, 2024.”

    1. pgl

      Let’s hope 1/6 related indictments come soon. That is where the real action is. Either way – Trump is a traitor. But Kevin McCarthy has decided to serve the traitor in chief.

  16. ltr

    The fact that Winnie the Pooh is telling the young people to just suck it up…
    The fact that Winnie the Pooh is telling the young people to just suck it up…
    The fact that Winnie the Pooh is telling the young people to just suck it up…

    [ Malicious nonsense, but the evident need is to destroy 1.4 billion. ]

    1. Ivan

      Her I fixed that for ya.

      [ Malicious nonsense: the evident need is to destroy 1.4 billion. ]
      [ Malicious nonsense: the evident need is to destroy 1.4 billion. ]
      [ Malicious nonsense: the evident need is to destroy 1.4 billion. ]

  17. ltr

    ——- day job may be chief Putin cheerleader but he has a side job…
    ——- day job may be chief Putin cheerleader but he has a side job…
    ——- day job may be chief Putin cheerleader but he has a side job…

    [ Precisely the way the followers of Joseph McCarthy used to defame the likes of a Paul Robeson. The ceaseless maliciousness is beyond understanding. ]

    1. Moses Herzog

      I sometimes wondered, in a semi-melancholy way, “did I remember the events, I experienced, in my time in China, 2001~~2008 in an accurate way??” It’s very difficult ,, very very difficult, when love or emotions are involved……. But when I read YOUR comments pgl, I feel I understood everything about mainland China and everything about my GF’s Mom correctly……….. Still…………. I feel “confused” about my ‘Normal UNiversity’ (teachers’ college) Mathematics girlfriend’s thinking……….. . I wonder why I thought so “confused”?? : ) but that STILL hurts/

      1. Moses Herzog

        I meant to say ltr But, I love you guys, and you “got” it. You “got” it, I love you guys, Drinking now…. damn it now, I love you guys

        1. Moses Herzog

          Well, LAST of this Heinekin beer can Menzie, I still appreciate you putting this comment up. I’m Kirk Douglas and you are Stanley Kubrick, Or was it the reverse?? I’m Kubrick you’r Douglas CAN’t (can/ can;t can of beer haha, louis Rukeyser WSW pun) decide

  18. Baffling

    Why does johnny insist on calling the economy recession, or at least derogatory descriptions, when he does not know the state of the economy. What right, or evidence, does he have to make derogatory descriptions of the economy when he claims nobody knows the true status? Johnny you are simply a hypocrite. The last accurate measurement of the economy did not show a recession. That description should remain until another accurate measurement shows otherwise. The schrodinger description does not say it is both conditions. It simply says there is an undetermined, unmeasured state with a given probability of measuring one of those states. In quantum mechanics reality only exists after a measurement. A superposition of states is not a reality, only a mathematical description of a possibility. So johnny, you are simply arguing that at this point in time the economy is not real. If you keep trying to invoke schrodinger, that is what you are advocating.

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