Now that we’re talking recession (again), it seems like a good idea to remind ourselves of the last time some observers declared unequivocally that we were in recession, to wit, Steven Kopits, January 2, 2023:
So in H1, we were facing an implosion of productivity through mid-year, declining GDP to mid-year, declining VMT, declining gasoline consumption and yet 1.1 m new jobs per Establishment Survey from March to June. Those numbers do not square. Something is out of whack. The other numbers we might use to cross check the Establishment Survey don’t line up with it. That suggests the HH survey was probably closer to the truth.
Now, this is not my area of expertise, much less an area of interest. But I can look at the basic numbers and say that the other metrics we might check suggest the Est Survey was wrong.
You, Menzie, held the Est Survey was more likely right. You wrote: So: (1) I put more weight on the establishment series, and (2) the gap between the two series is more likely due to increasing, and biased, measurement error in the household series, rather than, for instance, primarily increases in multiple-job holders. https://econbrowser.com/archives/2022/12/the-household-establishment-job-creation-conundrum
Dead wrong, as it turned. And predictably so.
You were wrong because you did not consider the statistics more holistically. That’s the learning point for your students. Cross check your indicators if you have dials which are telling you different things. If jobs are increasingly rapidly, then GDP should also be up. If jobs are increasing rapidly, then mobility and gasoline consumption should also be up, because so many people need to drive to work in this country. Finally, if productivity is imploding when jobs are up, you really need to take a pause and put together some sort of narrative as to why that might be happening. It suggests something anomalous in the data which requires closer inspection.
Had you done that, Menzie, you might have concluded as did the Philly Fed (from my earlier comment):
From the Philadelphia Fed:
Early Benchmarks for All 50 States and the District of Columbia
Estimates by the Federal Reserve Bank of Philadelphia indicate that the employment changes from March through June 2022 were significantly different in 33 states and the District of Columbia compared with current state estimates from the Bureau of Labor Statistics’ (BLS) Current Employment Statistics (CES). Early benchmark estimates indicated higher changes in four states, lower changes in 29 states and the District of Columbia, and lesser changes in the remaining 17 states.Our estimates incorporate more comprehensive, accurate job estimates released by the BLS as part of its Quarterly Census of Employment and Wages (QCEW) program to augment the sample data from the BLS’s CES that are issued monthly on a timely basis. All percentage change calculations are expressed as annualized rates.
In the aggregate, 10,500 net new jobs were added during the period rather than the 1,121,500 jobs estimated by the sum of the states; the U.S. CES estimated net growth of 1,047,000 jobs for the period.
So, for March through June 2022, the CES estimated 1.1 m new jobs. The Fed’s revision took that down to 10,500.
Looks like the Philly Fed is supportive of my suppositions.
And by the way, don’t we also suspect that the additional 1.6 m jobs adds after June per the Est Survey may also be a phantom. If the HH survey proves right again, then those H2 jobs gains (through November) will evaporate, just as the March to June numbers did.
I tried to stress how the data were likely to be revised. In particular, I noted that most macroeconomists focused on business cycle fluctuations put most weight on the establishment survey. With a year and a half additional data, what can we see about what the data say. First, with respect to employment.
Figure 1: Nonfarm payroll employment from CES (green), civilian employment from CPS (tan), civilian employment, adjusted to account for CBO estimates of immigration (blue), all in 000’s, s.a. Putative peak-to-trough recession of 2022H1 shaded lilac. Source: BLS, CBO, and author’s calculations.
Note that there have been two benchmark revisions of the CES numbers, as well as one early benchmark from the Philadelphia Fed, since Mr. Kopits wrote his comment, and yet the current version of nonfarm payroll employment rose throughout the 2021-22 period, so we can put some faith in the NFP series over this period.
What about aggregate output?
Figure 2: GDP (black, left scale), GDO (tan, left scale), GDP+ (green, left scale), all in bn.Ch.2017$ SAAR, and coincident index (red, right scale). Putative peak-to-trough recession of 2022H1 shaded lilac. Source: BEA via FRED, Philadelphia Fed.
What about the James Hamilton markov switching model for recession definition, given the decline in GDP in 2022Q1-Q2?
Figure 3: Probability of being in a recession, from James Hamilton model, in %. Threshold denoted by red dashed line. Putative peak-to-trough recession of 2022H1 shaded lilac. Source: FRED.
The indicator remains far below the threshold.
What about the Sahm rule (real time)?
Figure 4: Real time Sahm rule indicator, in % (blue). Threshold denoted by red dashed line. Putative peak-to-trough recession of 2022H1 shaded lilac. Source: FRED.
This indicator was also very far below the threshold.
Finally, Mr. Kopits cited two series as supportive of his recession thesis. Unfortunately, neither are very predictive of recessions as defined by NBER’s Business Cycle Dating Committee.
Figure 5: Vehicle miles traveled, mn., s.a. (light blue, left scale), gasoline supplied, thousands bbl/day (brown, right scale). Gasoline supplied seasonally adjusted by author using X-13 (in logs). Putative peak-to-trough recession of 2022H1 shaded lilac. Source: NHTSA via FRED, EIA, and author’s calculations.
Remember, Mr. Kopits wrote as recently as September 2023:
I am pretty comfortable with both my H1 2022 call and with the role of gasoline/diesel consumption and VMT as indicators of economic stress or comfort, as the case may be. I’d note that US oil and gas consumption remains depressed by about 5% compared to normal but hasn’t changed much in the last year or so.
Wow!
This Steven Kopits dude. Where have we heard from him again?
Oh yea – the clown who said GDP/M2 aka Velocity is a stable or mean reverting ratio.
Oh yea – the clown who made up “suppression” but has no clue what it really means.
Oh yea – the clown who has no idea what the Real Business Cycle is.
Oh yea – the clown who has no idea what either endogenous or exogenous means.
Look – this troll writes a lot of nonsense that he thinks we should take seriously. Even though Steven Kopits is nothing more than a clown.
The list is nearly endless. Confidence intervals, hurricane death counts for brown people, overthrow of Xi Jinping any moment…..
On and on and on……..
The VMT one really was a howler. But then it’s like “the new normal” under the orange abomination. Kopits has told so many howlers now it’s like “Meh”.
BTW, does anyone know why Kopits wasn’t invited to write at least one piece for “Project 2025”?? That had to hurt our Blue states resident’s ego pretty badly:
https://prospect.org/politics/2024-08-07-crow-jim-project-2025-reverse-racism/
Did Kopits call up Paul Dans after being snubbed by Project 2025 and say “Et tu, Brute??” ?
https://www.propublica.org/article/project-2025-trump-campaign-heritage-foundation-paul-dans
https://www.politico.com/news/magazine/2024/08/02/project-2025-trump-inside-story-00172299
President Trump back in the day praising Governor Walz:
https://www.msn.com/en-us/news/politics/excellent-guy-audio-reveals-trump-praising-tim-walz-s-handling-of-george-floyd-protests/ar-AA1opRXK?ocid=msedgdhp&pc=U531&cvid=efca7d6fde80478bb6a703ccd9df2782&ei=12
“I know Gov. Walz is on the phone, and we spoke, and I fully agree with the way he handled it the last couple of days,” Trump said on a June 1, 2020 call with multiple governors, in reference to Walz’s decision to deploy the Gopher State’s national guard to quell protests. “I was very happy with the last couple of days, Tim,” Trump added. “You called up big numbers [of guardsmen] and the big numbers knocked them out so fast it was like bowling pins.”
And yet Team Trump in 2024 bash Walz over this. Two faced liars they be.
Just a few excerpts since traitor and MAGA liar Bruce Hall does not read very well:
Democrats push back as Trumpworld dusts off ‘swift boat’ attack on Walz
https://www.msn.com/en-us/news/politics/democrats-push-back-as-trumpworld-dusts-off-swift-boat-attack-on-walz/ar-AA1oq4En?ocid=msedgdhp&pc=U531&cvid=b6bc0540a8e1421fbc5e346b43d771d5&ei=12
Vance also accused Walz of falsely claiming to have seen combat, citing comments the Minnesotan had made about not wanting “weapons of war” to be available on American streets. The Ohio senator’s accusation that his opponent ditched his guard unit rather than deploy to combat is patently false.
According to military records, Walz officially retired from the Minnesota National Guard in May 2005, two months before his unit received word that it would be deployed, four months before deployment preparations began and ten months before the unit deployed.
In a statement, a Harris-Walz campaign spokesperson strongly pushed back against Vance’s claim that Walz had “dropped out” rather than deploy with the men he led, instead accurately describing the governor’s separation from service as a normal retirement after nearly a quarter-century in uniform.
The attacks against the governor appear to be the brainchild of Chris LaCivita, one of the two GOP operatives who run former president Donald Trump’s 2024 campaign. Twenty years ago, he was one of the consultants who orchestrated a smear campaign against John Kerry, then a Massachusetts senator and the Democratic challenger who sought to deny Bush a second term in the White House. The campaign was the work of a GOP group called “Swift Boat Veterans for Truth,” ostensibly made up of Vietnam veterans who served with Kerry, a US Navy veteran who earned a Purple Heart and a Bronze Star while commanding small riverine craft in the Vietnamese jungles.
How timely. Kopiits is running for a board position, telling the press he’s smart about numbers and organization and stuff. My memory of his efforts at analysis here is that he makes things up to suit his desired outcome, makes glatib errors, and has a high opinion of himself never justified by his performance.
Maybe my views have softened with the passage of time, but that’s what I remember.
Glaring errors. Tried to type that three times.
My “glaring error” included a glaring error.
I trust what Claudia Sahm is saying about the Sahm rule – rather than what a commenter on this blog says: “My Recession Rule Was Meant to Be Broken” https://www.bloomberg.com/opinion/articles/2024-08-07/the-sahm-rule-is-warning-of-recession-but-claudia-sahm-isn-t-sold
Also – After two raucous Harris/Walz rallies in Eau Claire (12,000) and Detroit (15,000) focused on policy and future opportunities for all Americans – I was expecting more from the Washington Post this morning than the top two headlines – “Trump complains about campaign as advisers try to focus on attacking Harris” – it is the typical “strange screams are coming from the basement of the Florida Topkapi palace” political reporting and another headline “GOP operatives question Walz’s service in the National Guard” – typical Swift Boating B.S. from the GOP.
For the benefit of readers everywhere – Harris/Walz always talk about climate change policies and the need to address the climate crisis – it should be obvious to everyone, we need to start addressing the climate crisis – for example here is a report from yesterday – “A melting Alaska glacier keeps inundating Juneau. Floods are getting worse.” https://www.washingtonpost.com/climate-environment/2024/08/07/glacial-lake-outburst-juneau/
“The Sahm rule… joins a long list of economic tools skewed by the unusual disruptions of the past four and a half years.”
Yes. Anyone who grabs some random indicator and squawks “See!!! See!!! The economy is terrible/great/whatever” isn’t doing legitimate economics. Same old choice – ignorant or dishonest.
Something from 2022 that Swift Boat Bruce Hall failed to mention:
GOP opponent who never served criticizes Gov. Tim Walz’s exit from National Guard
Supporters say the governor was a great soldier who was entitled to leave when he chose.
https://www.startribune.com/walzs-24-years-in-national-guard-get-renewed-scrutiny-from-gop-opponent-who-didnt-serve/600216280
Gov. Tim Walz’s 24-year military career in the Minnesota National Guard is under attack by his GOP rival in the waning weeks of the governor’s race. At a recent state Capitol news conference, former state Sen. Scott Jensen stood with veterans to criticize Walz for leaving the guard in 2005, shortly before the battalion he led was deployed to Iraq. Walz has said he left the guard to run for Congress. Jensen, who narrowly avoided the Vietnam-era draft, said the governor’s departure from the guard fits a pattern and “is just one of a long line of instances … where Tim Walz failed to lead and ran from his duty.”
Walz counters that his life has been devoted to public service, including the military. “We all do what we can. I’m proud I did 24 years,” Walz said. “I have an honorable record.” Candidates in Minnesota and across the country for years have faced questions about their military service. Former Gov. Jesse Ventura weathered scrutiny about his time as a Navy SEAL, military service that became a major theme in the former professional wrestler’s longshot bid for governor. This year, Republican J.R. Majewski of Ohio told voters he served as an Air Force combat veteran who deployed to Afghanistan after the 9/11 terrorist attacks and was in grueling warzone conditions. Military documents obtained by the Associated Press indicate Majewski was not in Afghanistan but far from combat, loading planes for six months at an air base in Qatar. Along the campaign trail, Walz does not tell dramatic accounts of his time in the National Guard. He most often frames himself as a former high school teacher and football coach from Mankato.
Joseph Eustice, a 32-year veteran of the guard who led the same battalion as Walz, said the governor fulfilled his duty. “He was a great soldier,” Eustice said. “When he chose to leave, he had every right to leave. Eustice said claims to the contrary are ill-informed and possibly sour grapes by a soldier who was passed over for the promotion to command sergeant major that went to Walz. That man, Thomas Behrends, was among those standing with Jensen to criticize the governor. Jensen and Behrends, a longtime critic of the governor, argue that Walz bailed on his troops when the going was about to get tough. On the day of Jensen’s news conference, Walz responded at a Medal of Honor Memorial dedication on the Capitol grounds, saying he was proud of his tenure in the guard. “I don’t know if Tom just disagrees with my politics or whatever, but my record speaks for itself and my accomplishments in uniform speak for itself, and there’s many people in this crowd, too, that I served with,” Walz said. “It’s just unfortunate.” Asked about his service, Jensen said his draft number in early 1973 was 27. Jensen said he was planning to report for his physical after graduating from high school that May. But after a ceasefire was negotiated, the draft was discontinued. Jensen wasn’t required to serve, and he enrolled at the University of Minnesota in the fall of 1973.
Walz enlisted in 1981, the day after he turned 17, military records show. The governor has said he drove with his dad, a Korean War-era veteran, to sign up in his native Nebraska. As his father had done, Walz said he expected to go to college on the G.I. Bill and eventually he did. Walz re-upped in the guard multiple times, including signing on for another six-year stint in 2001. Walz was a senior enlisted member, a master sergeant, in the years after the Sept. 11 attacks, according to military records. He lived in Mankato and served with the southern Minnesota-based First Battalion, 125th Field Artillery. The battalion was deployed to Italy in 2003 to protect against potential threats in Europe while active military forces were deployed to Iraq and Afghanistan, according to Walz. After the units returned to Minnesota in early 2004, Walz was promoted to command sergeant major. He retired the following summer to run for Congress in the First Congressional District in southeastern Minnesota, defeating GOP incumbent Rep. Gil Gutknecht. Eustice, an Ortonville teacher who describes himself as nonpartisan, said he unequivocally supports the governor’s version of events. “I love him as a soldier; I don’t care much for him as a politician,” Eustice said of Walz. Eustice said he recalled talking to Walz in 2005 when they were at Camp Ripley. He said Walz told him he was thinking about resigning the guard and running for Congress. “The man did nothing wrong with when he chose to leave the service; he didn’t break any rules,” he said.
DFL Ramsey County Commissioner Trista MatasCastillo, another Guard veteran who served at the same time as Walz but didn’t know him, called Jensen’s attacks on the governor’s service “disgusting.” MatasCastillo said military orders are unpredictable. The commissioner said she was an air defense officer and transferred to a new command shortly before her previous one was deployed. “It happens all the time,” she said “We don’t get to decide when and where we deploy.” MatasCastillo said serving in the military isn’t for everyone. “But if you haven’t done it and don’t fully understand the system, it is not a talking point you can use,” she said.
Walz’s critics also say the governor inflated his credentials because he retired as a master sergeant, not at the higher rank of command sergeant major. Walz served at the higher rank, but left before completing all the extra training necessary for the rank. In response to a Star Tribune request, his campaign provided a two-page military record confirming the dates and his ranks. The Minnesota National Guard also confirmed the outlines of his tenure, saying that Walz served from April 8, 1981, until May 16, 2005. “Walz attained the rank of command sergeant major and served in that role but retired as a master sergeant in 2005 for benefit purposes due to not completing additional coursework,” according to the statement from Army public affairs officer Lt. Col. Kristen Augé. Like Walz, Eustice said that he also left in the middle of a six-year re-enrollment because members are free to leave at any time after their initial six-year stint. “If you choose to re-up, you can walk in any day and be done,” Eustice said.
Waltz served his four years and signed up for another four years and then another four years and then another four years and then another four years and then another four years. He served out his final four years and then retired after serving for 24 years. DOD regulations prohibit military personnel from being a candidate for political office, which was his reason for retirement after completing his last enlistment term.
Vance signed up for four years, of which he spent 6 months overseas as a clerk, and then said “Get me outta of here, I’m done!”
Nailed it.
Which is why vance is the gift that keeps on giving. Not to mention the optics. You criticize a soldier who served 24 years. And you ignore the draft dodger private bonespurs you are cuddled up next to. Trump and vance are a match made in heaven.
This is hilarious. Elon Musk, the SpaceX Mars bro, is literally suing Mars.
https://www.vox.com/business-and-finance/365892/elon-musk-x-lawsuit-advertisers-antitrust
It seems that the petulant little man-boy is upset that in a capitalist market you can’t force customers to buy your product — even after you tell them to “go f–k themselves.”
Apparently the self-described “free speech” advocate wants to deny companies the freedom to say that his advertising site is garbage because it is full of Nazis and white supremacists.