That’s a term that is invoked in a CNN article today. I think of stagflation as weak growth combined with high inflation. A little context:
As noted here, advance estimate for q/q GDP growth is 1.6%, below 3.4 consensus. But as discussed here, GDP+ is at 2.6%, and final sales to private domestic purchasers is running 3.0%. In addition we have the following key monthly indicators followed by the NBER’s Business Cycle Dating Committee.
Figure 1: Nonfarm Payroll (NFP) employment from CES (bold blue), civilian employment (orange), industrial production (red), personal income excluding current transfers in Ch.2017$ (bold green), manufacturing and trade sales in Ch.2017$ (black), consumption in Ch.2017$ (light blue), and monthly GDP in Ch.2017$ (pink), GDP, 3rd release (blue bars), all log normalized to 2021M11=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q1 advance release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (4/1/2024 release), and author’s calculations.
Note that NFP, civilian employment, personal income, consumption, and industrial production all rose in March. One could use alternative proxies for GDP, monthly GDP, and NFP. I use respectively GDP+, Philadelphia Fed coincident index, and Philadelphia Fed early benchmark NFP.
Figure 1: Nonfarm Payroll (NFP) employment adjusted by ratio of early benchmark sum-of-states to post-benchmark sum-of-states (bold teal), civilian employment (orange), industrial production (red), personal income excluding current transfers in Ch.2017$ (bold green), manufacturing and trade sales in Ch.2017$ (black), consumption in Ch.2017$ (light blue), and coincident index (light pink), GDP+ release (violet bars), all log normalized to 2021M11=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q1 advance release, Philadelphia Fed [1], [2], [3]. and author’s calculations.
For thinking about inflation trends, I show below instantaneous inflation (Eeckhout, 2023) for headline and for core PCE and CPI:
Figure 3: Instantaneous inflation for PCE deflator (blue), and CPI (tan), per Eeckhout (2023). Source: BEA, BLS, via FRED and author’s calculations.
Figure 4: Instantaneous inflation for core PCE deflator (blue), and core CPI (tan), per Eeckhout (2023). Source: BEA, BLS, via FRED and author’s calculations.
With economic activity y/y growth ranging from about 2.2-2.9 ppts when trend is around 2 ppts, and trend inflation around 4 ppts, I’m not sure “stagflation” is the right term.
“Prior to joining CNN, Hur was at CNBC and wrote service stories for the Investing Club with Jim Cramer.”
The author of this silly story wrote for Cramer the Clown. That explains a lot. But maybe she thinks she is now working for Faux Business News.
The dominion lawsuit revealed that Faux news “jounalists” are trained to say whatever the listeners want to hear and get roused by hearing.
That is why “The Daily Show” had such an easy time making fun of their BS postulates, by pointing out that they had changed their tune 180 degrees when a democrat that was exactly the same done by the previous GOP president. They are trained to give up on any principles or facts to simply say what the audience want to hear.
The “stagflation” fear story will get the attention of audiences – so that is what they will peddle – regardless of facts. There is no penalty for being factually wrong (the number of eggheads listening is small), but there is a huge penalty for being boring or saying something the listeners don’t want to hear.
She wrote this which is fine:
some analysts say that one GDP report isn’t yet cause for concern, since more cool data would be needed to establish a trend. Plus, the labor market continues to show remarkable resilience, as does Americans’ spending power, providing pillars of support for the economy.
But after writing this sensible statement – she left in the comment about stagflation? And we thought Princeton Steve was a moron!
CNN and others who traffic in easy journamalistic labels apparently don’t care that a single quarterly report doesn’t necessarily reflect persistent condition. “Stagflation” is not only a poor match to Q1 data, but is also a silly way to think about any single quarter’s data.
The Business Dynamics Survey for Q3 of last year is out, showing a net *loss* of 192,000 jobs in the private (seasonally adjusted) during that quarter.
Here’s the link: https://www.bls.gov/news.release/cewbd.nr0.htm
For the entire 12 months through September of last year, there was a 1.6 million gain in private sector jobs, or roughly 1.4%, vs. the 2.5 million, or 1.9%, in the current iteration of the Establishment Survey.
In February he QCEW showed a 1.5% YoY gain for the same period, including public sector jobs.
The BDS is almost as comprehensive as the QCEW, with the added virtue of being seasonally adjusted.
A bit of data trivia relates to the Business Dynamics data –
ADP’s employment tally, which is independent, seasonally adjusted and covers private employment, offers a control for both the payroll report and the Business Dynamics data. Over the 6 quarters prior to Q3 2023, ADP was a better fit to the Bsiness Dynamics net private hiring tally than the BLS private payroll count. Over that period, the payroll survey diverged from the Business Dynamics net job change by 310k per quarter. ADP diverged by only 235k.
In Q3, 2023, the payroll survey counted 713k more jobs than the Business Dynamics survey, while ADP counted 1.065 million more jobs. ADP typically misses by less vs the Census count, but this time missed by more and was closer to BLS.
On the face of it, we should prefer Census data because of coverage. However, given the strength of GDP growth, ADP hiring data, weekly jobless claims and other data, we need to consider that the Business Dynamics report may be out of whack.
Do you know whether the Business Dynamics data are collected separately from QCEW data? If so, that would provide another independent check on these various data series.
It’s too late today, but I’m thinking of comparing the Business Dynamics data on new firm hiring and job losses from business closure against the BLS birth/death plug.
To my knowledge, the QCEW and The BEDS make use of the same source data. The two big differences are (1) the BEDS is seasonally adjusted, and (2) the BEDS follows private employers’ data longitudinally, and imputes birth and death numbers.
Of interest, for the first time post-pandemic, the BEDS reported that there were more business deaths than births.
A second important dynamic is that government job changes generally lag private jobs changes. This has been true post-pandemic, as initially government jobs lagged, but since the end of 2022 they have contributed a larger % to job growth than the private sector:
https://fred.stlouisfed.org/graph/?g=1l781
Also worth remembering that there was a similar scare about 2 (?) years ago, that got totally revised away.
Speaking of inflation, Trump’s co-conspirators are scheming ways to take away the Fed’s independence”
https://thehill.com/business/4624880-trump-second-term-fed-powell-potential-plan/
I know some of the press on Trump’s potential economic agenda are generated by scheming Trump-admin wannabes, but that’s how these things become policy. So here’s another:
https://www.rt.com/news/596630-trump-advisers-dollar-sanctions/
Countries avoiding use of the dollar in international transactions may be subject to sanctions if this idea becomes U.S. policy. I’m not aware of any U.S. law or international standard which allows such sanctions, so we’re looking at another nutso notion that could become policy. Trump has shown opposition to de-dollarization.
Who’d be in the crosshairs? Definitelythe BRICs. Probably Russia, Venezuela, perhaps some middle-east countries and members of the European Monetary Union. Why the EMU? I doubt the EMU qualifies on paper, but since the whole idea amounts to “making it up as we go”, I’m not sure formalities matter. The EMU is the world largest common currency area, and Trump is opposed to European unity, so this could be a problem.
That is the scary part. These people are so stupid they actually do not understand why those “logic for clueless idiots” style “simple solutions” would create many more and much worse problems than what they were supposed to solve. That kind of understanding comes from knowledge and experience – something that was avoided in the Trump administration where the only qualification was how much you could kiss Trumps ass. By default Trump initially had some people who were not clueless nut jobs, but a lot of those were weeded out towards the end. A new Trump administration will begin with very few people who can understand even the basics of their responsibility area – and they plan to do a huge purge at the mid management level.
Greedflation.
You’re welcome Menzie.
for those of us that lived when stagflation was around we had both inflation and unemployment in double digits.
You yanks have inflation at 3 something depending on the measure and unemployment is near record lows.
They would would roughly have to double to get stagflation IMHO
Can we really trust a figjam to count all the way up to 6??
Thought this was a well done story, over on Financial Times paper:
https://www.ft.com/content/ca036415-7ded-4384-ac2d-33825f1a82c3
“According to Uyghur Human Rights Project, a US-based rights group, official statistics show more than 578,000 criminal convictions in Xinjiang during the six years from 2017 to 2022. The figure does not include the unknown numbers of people in the region’s internment camps and other forms of arbitrary detention. If accurate, that would indicate an imprisonment rate for Uyghur adults in Xinjiang of about 5,800 per 100,000, more than one in every 17 people. That would mean non-Han people in Xinjiang are imprisoned at more than 50 times the rate of Han people, and that non-Han people imprisoned in Xinjiang account for about one-third of China’s entire prison population.”
” …….Six months after finding out about her mother’s fate, Akeda who lives in Seattle working as a data analyst, is still in shock. She is also intensely angry at the Chinese Communist party and deeply fearful for her mother’s health.”
Moses,
I downloaded the PMI Composit from investing.com and “gave it a go”.
I tried several different models with different time frames and could not get a statistically significant result for the PMI Composit Index.
In the past I have also tried to use the WEI index with no success.
Thanks again for the suggestion.
PAYEMS is pretty consistent I guess. Sometimes I think it’s just a trend line. Or you might find the PMI has more meaning when the economy is sending mixed signals. I obviously have no idea what the magic bullet is on that, but you can bet banks and others are searching for it.
I hear the tornados have past your area. How did you hold up?
I believe Sulphur, Oklahoma was the closest one to me. We had a couple what they call “hook echos” (that never became tornadoes) just south and barely west of us that gave us a scare. You can do an image search on Google to see what a “hook echo” looks like. It;s basically a “radar signature”. Some of them transform into tornadoes, some of them do NOT develop into tornadoes. I’ve been so lucky on these type things all my life. You know, I’d say “God/Jesus was looking out for me” but I have seen too many people who were much more deserving of God’s grace than I am who got hurt or suffered through tornadoes, so I can’t make logic out of it. All I know is that I’m grateful.
I’d make jokes about the tornado environment delaying my enjoyment of adult beverages by 2–3 days, but when people die it doesn’t seem too funny of a joke.
*barely east I should have said
I notice that Bloomberg shows the nonfarm payroll forecast at a 210K change for April, as of 4/26/2024.
My FWIW forecast is at 226K.
My very cerebral internet brother, are you including any kind of “tweak” with flash PMI numbers in your forecast?? If not you might consider factoring that in somehow.
Hello Moses,
Thanks for the thought.
The forecast of a change in nonfarm payroll 226K resulted from the forecast of 17 job categories. So, it would be a bit difficult to add PMI to all 17 models, but when I get some time, I will try to see If PMI is statistically significant to any job category. Perhaps PMI will be significant to a manufacturing category.
As mentioned in the past, I also try to forecast the change in nonfarm payroll using FRED series, PAYEMS. So, just one model. For March the one model approach was more accurate than the 17-model approach, but this result is rare for me.
Based upon your recommendation, I added dlog(pmi) to a model related to PAYEMS. Unfortunately, dlog(pmi) was not statistically significant.
The model I used is an ARCH-1, GARCH-1, with an IGARCH restriction.
Dlog(payems,2) c ar(1) ar(2) ar(3).
The single PAYEMS model forecasts a change in nonfarm payroll of 289K.
As can be well imagined, I would like to be able to have the two approaches yield forecasts that are closer together.
@ AS
Is the dlog(pmi) using already reported PMI or US flash PMI?? It makes a difference as the flash PMI is more up to date. That’s 50.9 for April vs 52.1 in March. Or you could split the difference, but I would presume flash data for April would get you a better result.
The PMI flash I saw shows 49.9 for April 2024.
https://www.investing.com/economic-calendar/manufacturing-pmi-829
That is not flash PMI I don’t think, which is why I keep demarcating it in bold. But this is my mistake, I should have shared the link as well to make it clear.
https://www.spglobal.com/marketintelligence/en/mi/research-analysis/flash-pmi-data-point-to-lower-economic-growth-and-inflation-trajectories-in-second-quarter-April24.html
@ AS
Also you could take the average between the end result of the two models (1 model vs 17 models results), add the end results together and divide by two, That’s a easy way to get them to “fit” if using the two models gives you some kind of, eh “postulation satisfaction” for lack of a better phrase.
AS it’s not that “crazy” and really isn’t a hell of a lot different than using GDI and GDP to derive GDO. Not terribly different.
There is a manufacturing and services PMI.
The latest PMI manufacturing is 49.9
The latest PMI services is 50.9
Services link is below:
https://www.investing.com/economic-calendar/services-pmi-1062
https://www.pmi.spglobal.com/Public/Home/PressRelease/2a6d069e95b3402f85a5e44e3ff49917
Right….. but the one I gave you was composite. And based on survey data, not blind “forecasts”. Would be a better number, don’t you think??
I found the more nuanced takes on GDP more helpful than trying to dig up some catch phrase from the 1960s and 70s – Here is Sam Ro via B. Ritholtz Big Picture blog:
As Sam Ro explains:
-Personal consumption grew at a 2.5% rate.
-Business investment grew at a 2.9% rate.
-Residential investment grew at a 13.9% rate.
The weakness was, in Sam’s words, a sign of “U.S. economic strength.” Because our imports rose 7.2%, versus our exports growing only 0.9%, the net is negative. That consumer strength is — in BEA model-terms — a drag on GDP.
https://ritholtz.com/2024/04/march-2024-state-coincident-indexes-ease/
and this via Robert J. Shapiro https://washingtonmonthly.com/2024/04/26/why-biden-and-most-americans-should-welcome-the-latest-gdp-report/
“business investments in inventories fell. Given the strength in consumer spending, however, the next quarter’s data will likely show that inventories have turned around and are growing.” – Shapiro. Exactly – final sales grew at a healthy pace. If they continue to do so, production will grow later to replinish the shelves.
@ James
Terrific share. Although I am not sure I agree with Ro, it’s still good to look at things from different vantage points. Thanks.
Nice article, relatively short read:
https://www.newyorker.com/news/our-columnists/joseph-stiglitz-and-the-meaning-of-freedom
FREE MIT Press book. h/t FT’s Alphaville:
https://direct.mit.edu/books/oa-monograph/5761/TorFrom-the-Dark-Web-to-the-Future-of-Privacy
$0.00 cost. Scroll down slightly after the link jump and click where it says “Book PDF”
Enjoy!!!!!
So pro-Israel groups sends in provocateurs to yell “kill the jews” during legitimate protest (protests that are often supported by both Arab and Jewish students). Then the University administrators feel forced to clean out camps with the help of police (for fear of losing donations, or state funding). This inflame the students so they get even more adamant about protesting. It is pathetic that campus leadership has been so easy to capture and manipulate in regards to the protests. Even more pathetic that newspapers like NYT has not shown any civilian casualties since the first months of the invasion of Gaza. There appear to be things that cannot be protested against and cannot be reported by a paper that want to claim to be a “news” organization.
https://www.nytimes.com/2024/04/27/us/college-protests-police-response.html
University administrators kind of got themselves in a trap with all that “hostile environment” BS that seeded the right wing “snow flake” BS show. Now they are forced to act in response to any postulated hostility against Jews – even if it seems obviously staged. Is it really that hard to say that anybody can express whatever opinion they want – but any direct threat against any student will be investigated and subject to disciplinary action.
The only justification for paying top administrators their top dollar salaries is that they may have to take a bullet for academic freedom. You got your freking million dollar salary – now do the job.
Thanks for saying what needed to be said. It turns out some of the peace protesters happen to be Jewish. These kids are wise enough to realize Bibi and his war machine is bad not only for Gaza but also for Israel.
Even in Israel about 80% want the see Bibi gone.
I understand the history that makes some Jewish people go into a panic attack whenever they hear criticism of Israeli actions against a threat to Israel. But if 80% of those who would actually be subject to the physical danger are saying Bibi is the wrong guy – maybe Biden and the US needs to be little more verbal on saying that publicly.
The approach of “if we torture, humiliate and kill enough of “them”, then “they” will stop hating us and wanting us dead” is a brain dead right wing approach that is dangerously close to catastrophic failure. The weapons of terror are getting dangerously close to where a person dedicating his/her life to hate (of an “other” group) could just as easily murder hundreds of innocent civilians as a US bomb dropped by Israel in Gaza can. Creating a whole generation of Palestinians with a deep seated hatred of Israel and Jews is probably something we all will live to regret and suffer the consequences from.
If Netanyahu could accuse Israelis of being “self-hating Jews” because they wanted to keep the rules of democracy in Israel, he’d do it tomorrow morning. And Netanyahu’s claims that U.S. university students are “anti-Semite” because they don’t like watching women and children being mass murdered on their TV sets is just as preposterous.
Netanyahu’s love of donald trump shows how much he “loves jews” not to mention Netanyahu’s love of keeping inter-generational hatred of Jews alive and well. Which random murder of woman and children in Gaza does just that.
Its my understanding that Netanyahu has said he will not call for elections until the war is over. Talk about an incentive to keep the war going forever.
Columbia must be run by dumb and stupider. Trying to stop the protest by closing the camp. Don’t they get that it doesn’t get any more limited and controllable than a camp you can set a fence around? Don’t they have someone there who have passed a Psychology 101 course who can tell them how things are reved up or cooled down in mass protests? Their strategy seems to have been copied from the playbook of Bibi – if we crush down hard enough they will all go home and accept our superiority.
Off topic – monarchy of democracy?:
When Supreme Court Justice Alito partly based his overturning Roe vs Wade on the legal views of Matthew Hale, a 17th century English witch hunter, he was apparently warming us up for the even older English legal arguments regarding the legal “bodies” of the king, er, I mean the president:
“the king has in him two Bodies, viz., a Body natural, and a Body politic. His Body natural (if it be considered in itself) is a Body mortal, subject to all Infirmities that come by Nature or Accident, to the Imbecility of Infancy or old Age … But his Body politic is a Body that cannot be seen or handled, consisting of Policy and Government, and constituted for the Direction of the People, and the management of the public weal, and this Body is utterly void of Infancy, and old Age, and other natural Defects and Imbecilities, which the Body natural is subject to, and for this Cause, what the King does in his Body politic, cannot be invalidated or frustrated by any Disability in his natural Body.”
From Edmund Plowden’s “Reports”, mid-16th century.
In short, a king’s power cannot be separated from his person. This is the doctrine put forward by Trump’s lawyers, which at least four U.S. Supreme Court justices seem to find plausible. “The king’s two bodies” was an argument put forward mostly by Catholic legal theorists, which helps explain its appeal to some current Supreme Court Justices.
By the way, I assume we all see the commonalities between a rich rapist president and a rich rapist movie producer? Well, the press is reporting another commonality – by name, the Molineaux rule:
https://www.newyorker.com/news/news-desk/what-harvey-weinsteins-overturned-conviction-means-for-donald-trumps-trial
Macroduck As bad as Matthew Hale was, Alito made him out to be even worse by deliberately misquoting Hale not once, not twice, but nine times. Hale’s comment about abortion was conditioned on the fetus being passed “quickening.” Alito omitted the “if” in Hale’s opinion. That would earn you an “F” and expulsion in any reputable university.
a king’s power cannot be separated from his person.
Oliver Cromwell’s army had something to say about that. They did indeed separate his power from his person.
Nice catch on Hale. Not to mention Old Ironsides.
Ya know how apologists for class division accuse the victims of class division of “class warfare”? The idea behind this accusation is that the poor simply must resent the rich. You can see the logic.
Quick question, though: If it’s the poor who resent the rich, why do the rich denigrate the poor so much more often than the other way around?
One answer is that the rich suffer from the emotional effort of needing to assure themselves they aren’t bad people, despite evidence to the contrary. The poor, meanwhile, don’t spend nearly as much effort resenting the rich as simply wishing the rich would get off their backs:
https://www.patheos.com/blogs/slacktivist/2024/04/18/rural-white-magas-and-what-woke-c-s-lewis-got-wrong/?utm_source=substack&utm_medium=email
This is a subset of the broad category “every accusation a confession”.
‘Ya know how apologists for class division accuse the victims of class division of “class warfare”?’
I go back over 20 years listening to the arrogant clown named Robert Novak pretending only he knew economics as he would learn at the feet of Lawrence Kudlow.
And I thought Robert Novak was there those many years to help Nixon with his Mommy issues.
If we’re to believe recent WSJ editorials there is one way women can get an abortion, even one that might be defined “late term”. Join the Army and head to the nearest VA hospital.
https://www.nbcnews.com/health/health-news/va-performs-first-abortion-weeks-saying-certain-cases-rcna49007
https://www.womenshealth.va.gov/WOMENSHEALTH/docs/Abortion-Services-Frequently-Asked-Questions.pdf
Why haven’t Republicans “taken up the cause” on this “loophole” in the state abortion laws?? Are Republicans afraid that if they don’t allow female soldiers to get an abortion people like W. Bush won’t be able to go on extended holiday saving Fort Worth Metro from the Vietcong??
Hallelujah! Lefties are on the job!
https://thehill.com/policy/energy-environment/4625126-democrats-biden-pivotal-plastics-waste-negotiations/
I’ve been watching the Ottawa plastics negotiations to the extent thin press coverage allows, and the U.S. position has been disappointing. The U.S. has taken a back seat in the discussions, and that is the kiss of death for anything that’s hard to negotiate. If other countries know we don’t strongly support hard tasks, they know any agreement won’t matter much, so why bother? This has been the case in Ottawa.
The fact that Senate lefties are pressuring the White House isn’t being reported by mere coincident. This is part of the lefties’ pressure campaign. No doubt industry will now bellyache and fire up Republicans to complain about over-regulation and world government and trilateralists, but dishonest debate is better than no debate.
OK, Uncle Moses likes/tries to give this blog some laughs sometimes. OK, OK, OK, most of the time you guys are laughing at me and not with me. But come on, I still made you laugh. Here’s some jokes told by our American President about a cowardly shallow orange creature:
“The 2024 election is in full swing and yes, age is an issue,” noted Biden, 81. “I’m a grown man running against a six-year-old.”
And then he brought up Trump’s recent scheme to sell “God Bless the USA Bibles” for $59.99. “Trump’s so desperate he started reading those Bibles he’s selling. Then he got to the first commandment: ‘You shall have no other gods before me.’ That’s when he put it down and said: “This book’s not for me.’”
Biden said: “Donald has had a few tough days lately. You might call it Stormy weather.”
https://www.theguardian.com/us-news/2024/apr/28/stormy-weather-biden-skewers-trump-at-white-house-correspondents-dinner