Monthly GDP up two months in a row. Final sales in May up, but not offsetting completely decline in April. Here’s a picture of key indicators followed by the NBER BCDC, plus monthly GDP from SPGMI (formerly IHS-Markit, and Macroeconomic Advisers before that).
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 (blue bars), all log normalized to 2023M04=0. Source: BLS via FRED, Federal Reserve, BEA 2024Q1 third release, S&P Global Market Insights (nee Macroeconomic Advisers, IHS Markit) (7/1/2024 release), and author’s calculations.
Every indicator for which we have data, save civilian employment, is up in May.
On the other hand, GDPNow for Q1 is now 1.7% (SAAR), down from 2.2%. SPGMI tracking is 1.9%.
When combined with deceleration in core inflation measures, and year-ahead inflation expectations, it seems to me the Fed has thus far engineered a pretty soft landing (although one has to caveat that the economic activity indicators will be revised going forward).
I remain reluctant to credit the Fed, or any central bank, for “engineering” a set of economic outcomes in this cycle. Central banks all used demand-side tools to address what was mostly a supply-side phenomenon. The Fed didn’t create the Covid inflation, and very likely isn’t the main cause of its cure.
About the time of the Fed’s first hike I wrote, probably in comments here, that the Fed had probably timed its hike to coincide with the peak of inflation, and that this would give the unfortunate impression that the Fed can immediately cure inflation with rates. Whadayaknow, there was close coincidence between the two, both for the Fed and the ECB:
https://fred.stlouisfed.org/graph/?g=1pJF4
The myth of Fed control grows.
In December 2022, the Fed’s Summary of Economic Projections anticipated a recession, by the Sahm rule and by real GDP closer to zero than ever happens with a recession. The Fed was aiming at recession and missed. To me, that argues that the Fed didn’t “engineer” a soft landing. If we do avoid recession while inflation falls back to target, it will be because of the underlying economy and luck. The Fed was along for the ride.
…withOUT a recession..
Macroduck: “In December 2022, the Fed’s Summary of Economic Projections anticipated a recession, by the Sahm rule and by real GDP closer to zero than ever happens with a recession.”
People mis-cite the Sahm Rule all the time. It is “when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months.” They forget the three-month moving average for both the current employment rate and for the minimum of the last 12 months.
The Salm Rule did not signal a recession at any in 2022, 2023 or 2024. It is currently at 0.37. Here is FRED:
https://fred.stlouisfed.org/series/SAHMREALTIME
Claudia Sahm herself explains it in detail here, with example calculations.
https://stayathomemacro.substack.com/p/the-sahm-rule-step-by-step
Yes, people mis-cite (if that’s a word) the Sahm rule, but I didn’t. Take the U3 estimates from the SEP, compare them to the three-month average of the U3 rate at the time. You get more than a 0.5 ppt rise. The math is quite simple. Feel free to try it yourself. In fact, you should probably actually do the math any time you feel the urge to correct mine.
So wait, you are saying that FRED’s math is wrong and your math is right?
https://fred.stlouisfed.org/series/SAHMREALTIME
You are saying that Claudia Sahm’s math is wrong and your math is right? Sahm shows the math. How about you?
https://stayathomemacro.substack.com/p/the-sahm-rule-step-by-step
OK, let’s review…
I wrote “…the Fed’s Summary of Economic Projections anticipated a recession, by the Sahm rule…”
“Anticipated” is the part you seem not to understand. The… SEP…anticpated… That means the figures in the SEP show a rise in the actual U3 rate which would have signaled a recession if the U3 rate had matched the SEP forecast. I did not write that the Sahm rule indicated a recession. I wrote that the SEP anticipated one, based in the fact that a 4.6% U3 rate in 2023 would have been a 1.0% rise from the 3.6% 3-month average at the time of the December, 2022 SEP release. Twice what is required by the Sahm rule. No need to check your FRED links because the actual data have nothing to do with the point I made. It was all about what Fed officials thought they were doing.
So I’ve shown my math, but I shouldn’t have had to. You challenged my statement, yet you feel no burden to support your own position? Childish. Besides, you never got around to the math because you didn’t bother to think through what “anticipated” or “SEP” were all about. You know, like in standardized test prep where they tell you to read before you answer?
You tried to pull a gotcha and you made a fool of yourself. Congrats.
Look, you can’t just make up your own Sahm Rule. Claudia Sahm clearly stated it as “when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months.”
You can’t just use a SEP projection in that rule — a projection, by the way, that is more than a year into the future. A projection, by the way, that includes a median, a central tendency and a range that are all different and have nothing to do with a three month moving average of U3.
Claudia Sahm has repeatedly corrected fools like you who have misused the Sahm Rule. And she has been quite clear that she and her rule are not in the prediction business.
If you want to make your point about projections and recession predictions, make your point but don’t stoop to dragging Claudia Sahm into it. She’s a lot smarter than you will ever be.
Temper, temper, little fella. Old Sigmund might suspect that your attack on my intelligence reflects doubts about your own.
Yes, I can use the Sahm rule to understand FOMC behavior. Your insistence that I can’t is just a rule you’ve made up. Your initial failure to understand what I wrote is your problem. You can’t make it mine.
Sahm has corrected lots of people for misunderstanding her rule, but I didn’t misunderstand it. I used her rule in what is perhaps a novel way. She has not, to my knowledge criticized anyone for using it the way I did. You made that up. Seems rather dishonest of you. Feel free to back up you claim – find an instance in which she has corrected someone for using her rule to assess he implications of a forecast. Or stop digging. – your choice.
I feel awkward when two people I like and respect argue on the blog. Truce guys, truce!!! For old Uncle Moses’ frail heart.
The December 2022 SEP release is a September 2022 estimate. It has a wide range of values for unemployment for the end of 2023, more than a year away. Is their estimate a one month estimate or a 3-month moving average or what? Is their estimate within the next 12 months or 16 months or what. At any rate, it doesn’t fit the definition of the Sahm Rule. It’s just plain dumb on a Bruce Hall level of dumb.
Still thrashing around. Still making stuff up. Still relying on insults because you don’t have anything else to fall back on. Digging a deeper hole for yourself.
And just to illustrate how dumb this approach is, go to the Summary of Economic Projections for the quarter before December 2022 and the quarter after December 2022 and you will see radically different projections which shows why using a 3-month rolling average is necessary.
And if you take a look at the Fed’s table of Average Historical Projection Error Ranges, for unemployment rate is it plus or minus 1.1 to 1.9. That makes your year ahead projection for the Sahm Rule, with a threshold of 0.5, a total joke. Anyone who used that year ahead projection for the Sahm rule back in December 2022 was a fool.
Wondering how everyone feels living under rule of the MAGA Supreme Court? Now that the Trump tarantulas on the Court have decided they know better than the scientific experts – I expect most pig farms and cattle feedlots to let it rip and just dump their manure in the nearby stream, waterway, creek and let anyone getting their water downstream deal with it. I suppose billable hours for attorneys will skyrocket as we all scramble to deal with this. https://www.msn.com/en-us/news/opinion/column-with-its-chevron-ruling-the-supreme-court-shows-that-it-thinks-its-smarter-than-scientific-experts/ar-BB1pgHlm
I know someone that has worked in energy/utilities regulation and policy setting and he said this will have enormous implication in every aspect of your lives.
I guess the Republicans have achieved their fever-dream of no regulatory oversight – just let us all fight tooth and nail for clean air and water against corporate power. .
I am always amazed when I hear Trump dark rants about having you for dinner Hannibal Lecter and his rant about the snake and rampant crime (the one about getting eaten by a shark is just so bizarre) – this is the dark vision that he wants.
I disagree with Lindsey Graham – Trump has not only destroyed the Republican Party – he will destroy our democracy.
There is a new monthly indicator in the press today, probably the result of a press release:
https://zetaglobal.com/zeta-economic-index/
Don’t know whether it will be of much use, but it’s got “AI”, so it must be good. It is claimed to be based on the web searches and purchases of households. It’s also “real time”, so extra good, I guess, even though we’re in July and the latest data point is to June, and the releases are only monthly.
OK, I’m not wild about the buzz word marketing, but it’s another data point. I didn’t find a way I download the data, but we are invited to get in touch for more information.
U.S. military bases are reported to be on a heightened state of alert due to a “combination of (unnamed) factors”:
https://www.defense.gov/News/News-Stories/Article/Article/3823705/us-bases-in-europe-go-to-higher-state-of-alert/
Fingers crossed.
The Supreme Court Took A Sledgehammer To American Democracy
Opinion by David Kurtz
https://www.msn.com/en-us/news/opinion/the-supreme-court-took-a-sledgehammer-to-american-democracy/ar-BB1phnYi?ocid=msedgdhp&pc=U531&cvid=a8a6d8323a5b4f1294284240ccab1500&ei=19
A TalkingPointsMemo essay documenting how Trump attempted to overturn the will of the people in so many ways and how our legal system has utterly failed to stop his drive to being a lawless King.
Concentration hurts small business (yeah, axiomatic), which creates right-wing extremists? Maybe:
https://www.promarket.org/2024/06/28/rising-market-power-has-led-to-the-rise-in-far-right-political-parties/
The claim is similar to the one made by Peter Turchin in “End Times”:
https://books.google.com/books/about/End_Times.html?id=LyaJEAAAQBAJ&printsec=frontcover&source=kp_read_button&hl=en&newbks=1&newbks_redir=0&gboemv=1#v=onepage&q&f=false
Elites suck all the benefits out of the economy, leading to populist resistance and collapse.
Of course, even before Turchin’s hypothesis, we knew that richies try to turn poors against each other to prevent them from organizing against richies.
So the former small business people turn to people like Trump rather than Biden even though Trump’s economic policies favor the mega businesses over the little guy while President Biden has tried to reverse this market concentration. Funny how this works.
More Trump policy chatter, this time regarding NATO:
https://www.politico.com/news/magazine/2024/07/02/nato-second-trump-term-00164517
The gist is, he won’t pull the U.S. out of NATO, but will reduce the U.S. contribution and insist that Europe take more responsibility. Then there’s a bunch of made-up stuff about how NATO will be irrevocably changed, even if the U.S. doesn’tpull out. Mediocre journalism.
I recall during the first year of Trump’s presidency, lots of people pretended to know what Trump’s policies were, but didn’t. This article makes clear that the policy ideas it reports don’t come from Trump and can’t come from his national security team because he doesn’t have one. So take it for what it’s worth.
Total direct contributions to NATO is about $4 billion. Reducing US contribution towards that would have no direct consequences. It would be a symbolic act. The main important contribution from US to NATO is its membership – and guarantee that US would go to war against anybody who goes to war with a NATO member. The main contribution from US is, therefore, the huge military force it has as a whole in the world. Taking US troops out of Europe would do little to take away that and a lot to harm our other military activities in Africa and the middle east. The countries of NATO are building up more military force, but have no reason to help US build or maintain an imperial army.
Demographic most affected by pulling US units out of the EU is military retirees depending on US military medical facilities.
The idea of Russia running thru the Fulda Gap today is almost ludicrous.
A reason the EU won’t maintenance any level of mobilization is Warsaw Pact is now EU cannon fodder.
EU needs independence in security: larger population and bigger GDP.
However to Atlanticists, and US defense industry NATO is sacred.
Anonymous: Not Fulda, but Suwalki.
I am of the Fulda generation.
OK – you have been asleep for the past 40 years. Dude – the Soviet Union does not exist anymore.
anonymous: me too but got to stay with the times. Thought we won the battle of wuerzburg when gamed out.
I gotta a book, out of one of those “Mini free libraries” You see in some parks, You take the book and return it back (on the “honor system”) or you contribute some of your own to the little box (not waterlogged ones like some idiots do). Anyway, that book I grabbed is thick and discusses many aspects of Russian culture. Now I have read a very few Russian books translated into English, “The Master and the Margarita” (twice) etc. But I tell you, with all these paid Russian trolls wandering around this blog, probably being paid Russia’s version of minimum wage just to sit around and annoy us, I gotta read that book so I can better understand these FRUITCAKES
It would improve the discussion here if you would write something lucid. Most of your sentences don’t have an obvious meaning.
The improvement to he discussion would, though, be small. If economics is slippery – and it is – then international relations is slipperier. When Tetlock spoke of monkeys throwing darts, it was punditry regarding international relations that he had in mind. The idea that some “anonymous” guy on a barstool knows what the future of international relations will bring is ridiculous. Some “anonymous” guy thinking he know what the future of international relations will bring is an egotistical fantasy.
You linked politico.
Again, you haven’t actually made a point. You’ve become clutter in the comments.
What the Orange Dufus doesn’t get is that the main function of NATO is not the defense against Russia – it is the retainment of the huge combined economic power of Europe behind the US led policies in the world. Defense against Russia is currently a joke.
Now that Rudy Giuliani has been disbarred and cannot practice law, he was wondering around seeking with a BLACK job or even a Hispanic job. Mike Lindell felt sorry for Rudy so he hired him to market those worthless pillows (BTW Rudy failed at marketing coffee):
https://www.msn.com/en-us/news/politics/mike-lindell-gives-rudy-giuliani-a-job/ar-BB1pitzg?ocid=msedgdhp&pc=U531&cvid=01b2c9ab8f1d47eca44cd4369da51262&ei=77
Mike Lindell Gives Rudy Giuliani a Job
MyPillow CEO Mike Lindell announced this week that he is giving former New York City Mayor Rudy Giuliani a job.
On Tuesday, Lindell appeared on Steve Bannon’s WarRoom show where guest hosts are filling in after Bannon surrendered himself to prison this week.
“Speaking of Rudy Giuliani…we hired him over at FrankSpeech.com. He’s on my network now. He follows Steve Bannon, it’s Steve Bannon, and then after him is Lou Dobbs and then myself,” Lindell said.
While speaking with Newsweek on Tuesday, Lindell explained that he hired Giuliani this week after he was suspended from WABC Radio where he hosted a daily show. Giuliani was suspended from the radio network in May after making unfounded claims about the 2020 election, the Associated Press reported.
Was Biden thinking about Bruce Hall?
https://www.msn.com/en-us/news/opinion/biden-everyone-who-willfully-denies-the-impacts-of-climate-change-is-really-really-dumb-or-has-some-other-motive/ar-BB1pioEc?ocid=msedgdhp&pc=U531&cvid=ba8d2897b1ac4c73aa119771e4477da9&ei=15
President Joe Biden on Tuesday called climate change deniers “really dumb” during remarks about extreme weather. “It’s not only outrageous, it’s really stupid,” Biden said at the Washington, D.C., emergency operations center. “Everyone who willfully denies the impacts of climate change is condemning the American people to a dangerous future, and either is really, really dumb or has some other motive.”
Spot on Mr. President!
It’s no wonder that Netanyahu and donald trump are such good pals. They are both as clueless on how to handle international affairs:
https://theworld.org/segments/2024/07/02/growing-rift-in-israel-between-army-and-politicians
Seeing very little about this in Wisconsin/National news – but I think it will be huge long term in Dane County and WOW -Waukesha, Ozaukee, and Washington/Collar Counties of Milwaukee – Wisconsin Biohealth Tech Hub to receive nearly $50M in federal grant funding – https://www.wpr.org/news/wisconsin-biohealth-tech-hub-to-receive-nearly-50m-in-federal-grants In addition to $ 49 million in federal funding, the state’s tech hub will receive $7.5 million in state funding and $24 million in industry commitments – This is investment in already existing companies/research/training that has been building for a decade or more – Over its first decade, Wisconsin Economic Development Corp. Secretary Missy Hughes said the state’s tech hub will create an estimated 30,000 jobs in personalized medicine and $9 billion of economic development.
Let’s compare to the WIGOP/Trump/Walker – failed Foxconned deal that got tax credits of $2.85 billion – eventually reduced to $80 million (by Evers) that produced an empty field with a giant glass globe and a hundred or so consulting jobs/warehouse jobs. https://www.jsonline.com/story/money/business/2023/11/10/what-happened-to-foxconn-in-wisconsin-a-timeline/71535498007/
By the way – Evers and Biden admin worked to secure a $3.3 billion Microsoft investment in Wisconsin on the empty fields of the Foxconned deal – https://news.microsoft.com/2024/05/08/microsoft-announces-3-3-billion-investment-in-wisconsin-to-spur-artificial-intelligence-innovation-and-economic-growth/
Another example of the B.S. sham deals that the GOP produces and the actual economic development that Biden/Evers administrations deliver.
Let’s look at results – not the constant firehouse of B.S. that comes from the Trump/GOP
There were 3 different barometers that came in as disappointing today (vs expectations). This was one of them:
https://tradingeconomics.com/united-states/non-manufacturing-pmi
Fed’s Goolsbee makes case for rate cut in coming months, citing ‘warning signs’ of a slowdown
https://www.msn.com/en-us/money/markets/fed-s-goolsbee-makes-case-for-rate-cut-in-coming-months-citing-warning-signs-of-a-slowdown/ar-BB1phEPK?ocid=BingNewsSerp
Chicago Federal Reserve Bank President Austan Goolsbee on Tuesday made the case for a cut in interest rates in coming months, saying that maintaining the current level of the policy rate as inflation keeps falling means that policy will put more downward pressure on demand.
“We are restrictive. The fed-funds rate in real terms, interest rate minus inflation, is as high as it has been in many decades. And as inflation comes down, that gets tighter,” Goolsbee said during an interview with CNBC on the sidelines of a European Central Bank conference in Portugal.
That means the Fed would be tightening monetary policy “by default” and not “by choice,” Goolsbee said.
The Chicago Fed president pointed to new “warning signs” of an economic slowdown. The real economy is weakening from a strong condition, he said.
Good catch. Here’s the breakdown by industry:
Growth: Other Services; Management of Companies & Support Services; Health Care & Social Assistance; Construction; Utilities; Finance & Insurance; Educational Services; and Professional, Scientific & Technical Services.
Contraction: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Mining; Retail Trade; Public Administration; Wholesale Trade; Transportation & Warehousing; and Information.
Retail, wholesale, transportation and warehousing are all indicative of softening demand – goods related. Real estate – we knew that, but also a sign of slack demand.
ISM’s economist says ‘hey, it’s just one month’ and maybe that’s the right way to look at it. However, see pgl’s link to Goolsbee (which auto-correct wants to change to “toolshed”).
Biden considering whether to end his presidential re-election campaign, report says
https://www.msn.com/en-us/news/politics/biden-considering-whether-to-end-his-presidential-re-election-campaign-report-says/ar-BB1plL3f?ocid=msedgntp&pc=U531&cvid=1c08d087a1ab47008e3def9cf2155532&ei=9
I cried in 1968 when LBJ decided not to run. I will probably cry if Biden decides not to run this year. But suppose he does so for the good of the nation. After all Biden is not the self centered POS that Trump is. And most of us here would agree that the most important thing is to keep Trump out of the damn White House – for the good of the nation.
Now who will lead the ticket and who will be that person’s VP nominee is the question that would have to be addressed. My view? The ticket that makes for sure that the Orange Jesus aka wannabe King is relegated to fighting off one trial by jury after another.
Here’s a radical thought – which will probably get a lot of people angry at me. But so be it. Kamala Harris is one possible choice to lead the ticket and continue the Biden agenda. OK but who will replace her as the VP nominee. As crazy as this sounds – her picking Liz Cheney to run for VP in a unity ticket would be a team Trump could not beat. Just imagine a debate between Trump and Harris. She would clean his clock. And let Trump pick whatever clown he wants to be his VP mate. A debate between that clown and Liz Cheney would be brutal for the MAGA hats.
Just saying!
The longer Biden stays in the fight the longer his fragility clouds every issue.
Seen at Naked Capitalism
“OMG, he is taking us all down”
While the GOP are following Napoleon advice, not to interfere when the enemy is making a mistake.
“Seen at Naked Capitalism”
So not only cannot you not write coherently – you can’t be bothered to provide a link? Dude – you are a worthless waste of time so do run away and find some other blog to pollute.
https://x.com/BetteMidler?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1808139549140475993%7Ctwgr%5Ee1e29f5b5783c465bef274197f2933c66f657c51%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.billboard.com%2Fmusic%2Fmusic-news%2Fbette-midler-calls-out-supreme-court-wizard-of-oz-parody-song-1235724070%2F&fbclid=IwZXh0bgNhZW0CMTAAAR3Gbmh9WKgV50nuGcUOgClRJ-51hBtogA-A8_G-0rWARFNkucnlNLy2DR0_aem_moCtMhohGaR8kHDVk7alLw
I love Bette Midler. Her take down of this corrupt Supreme Court is classic! Enjoy!
Polls – Sheesh:
Biden down after debate:
https://www.nytimes.com/2024/07/03/us/politics/poll-debate-biden-trump.html?smid=nytcore-ios-share&referringSource=articleShare&sgrp=c-cb
Biden tied with Trump, an improvement over a month ago:
https://www.reuters.com/world/us/one-three-democrats-think-biden-should-quit-race-reutersipsos-poll-finds-2024-07-02/
The 538 poll average is probably more reliable than any individual poll, and shows Biden loosing ground pretty fast:
https://projects.fivethirtyeight.com/polls/president-general/2024/national/
By the way, in the Reuters poll, Harris is within a point of Trump and 71% of Democrat want her to stay on the ticket. Michelle Obama is the only person to beat Trump in the Reuters poll.
“Harris is within a point of Trump and 71% of Democrat want her to stay on the ticket.”
Definitely stay. If Biden stays it’s Biden-Harris 2024. If Biden does not, she should head the ticket. Now the question would be who is her VP running mate. I have already offered my radical suggestion.