That’s a title of an article by Christopher Condon, in Bloomberg a few days ago. What’s the evidence? Figure 1 shows the typically referenced CPI deflated trade weighted dollar.
Figure 1: CPI deflated trade weighted dollar (blue), and unit labor cost deflated trade weighted dollar (tan). NBER defined peak-to-trough recession dates shaded gray. Source: OECD via FRED.
The unit labor cost (ULC) deflated real exchange rate comes closer to the idea of competitiveness than the CPI deflated (see Chinn (OER, 2006)). That’s because the CPI measures prices of goods and services traded and nontraded, while ULC usually applies to the manufacturing sector (which is likely to be tradables) and the cost of production.
While the dollar hit a trough in 2015Q1 according to both measures, by 2024Q2, the ULC deflated series has only risen 12.4% vs. the 19% recorded by the CPI deflated series. Now, the ULC deflated series only encompasses data countries for which the requisite data is available, so omits for instance China. Nonetheless, Ahn, Mano and Zhou (JMCB, 2020) show that in general ULC deflated exchange rates are the only exchange rates that consistently exhibit the posited behavior regarding trade balances (i.e., appreciation deteriorates the balance).
It’s also true that real exchange rates usually use prices or costs of final goods, rather than the value added. Bems and Johnson (AEJ Macro, 2017) calculate such exchange rates. In addition, one might want to take into account global value chains. Patel, Wang and Wei (JMCB, 2019) calculate the value added and global supply chain adjusted real exchange rates, up to 2014.
Source: Patel, Wang, Wei (2019).
The global value chain adjusted exchange rate shows much less variation than the CPI deflated, or even ULC deflated. That being said, the sample ends before the sharp nominal dollar appreciation in 2015.
Finally, it should be noted that whatever policies Trump has proposed — including tax cuts, new tariffs — they are likely to cause greater, rather than less, dollar appreciation.
“A very strong dollar can discourage exports and contribute to imports,” Yellen said in an interview with Bloomberg News. “But there’s a lot more that’s involved. And I think you have to ask, why is the dollar strong?”
Valid. But seriously – how would one expect Trump to think about these issues when the best he can do is to pass a cognitive test involving whether a whale was a giraffe or an electric shark?
The Treasury chief said that legislation enacted by President Joe Biden — dubbed Bidenomics — to bolster infrastructure, semiconductors and clean energy and, through the Inflation Reduction Act, electric vehicles, has offered countervailing support for manufacturing. “We have a very strong economy. Consumer spending and investment spending are robust. The programs that we’ve put in place — the IRA, infrastructure and then the rest of it — all of that is creating a lot of manufacturing jobs,” she said. US economic strength has, in turn, pulled in foreign capital and elevated the dollar’s value, Yellen said last week. Moves by the Federal Reserve to tamp down inflation have left interest rates higher than in other countries, also contributing upward pressure. “We believe that’s how the system should work,” she said in a Thursday press conference.
Ah yes – economic policies that increase investment demand might just raise interest rates. Wait – the evidence shows manufacturing output has risen under Biden. It fell under Trump. But again -what do you expect from a clown who barely passed a cognitive test designed for 2 year olds?
Gross Output by Industry: Manufacturing
https://fred.stlouisfed.org/series/GOMA
I think I noted this nominal series before. It fell under Trump so real manufacturing output fell even more. It rose considerably during Biden’s first two years in office. Evidence matters as Trump tells more lies than even Bruce Hall does.
Many moons ago, I compared two manufacturing series which had diverged strongly after the Covid recession, asking if anyone knew why they were behaving differently. Manzie answered “inflation”. I had compared dollars to units. Egg, meet face.
So now, I deflate series denominated in dollars, as I know you usually do, as well. Here’s your series, deflated by factory unit labor costs:
https://fred.stlouisfed.org/graph/?g=1r7sN
Up from before the recession, but down from the 2022 peak. You’ll notice a decline prior to the Covid recession. There was an economic and financial scare prior to Covid, one which does get much mention these days. The Fed cut rates in the summer of 2019.
Trump’s fault we were having trouble in 2019? I dunno, but when people tell us how great it was under Trump until Covid showed up, they’re…misremembering, I guess?
Kevin Drum has an interesting interpretation of that Trump meltdown:
No, Trump’s insults yesterday weren’t deliberate
https://jabberwocking.com/no-trumps-insults-yesterday-werent-deliberate/
Trump knows perfectly well how to pander to a crowd—just listen to his comments a few days ago to a Christian audience—so it’s only natural to wonder if he was being deliberately insulting in front of a Black audience.
Who knows, really? The mind of Trump is a dark and chaotic place. But I’d bet against it. I think this was just another example of Trump being unable to control himself when the pressure gets too high. He has nothing to prove to his base, after all, and in his disordered imagination he really and truly can’t figure out why Black people might not like him. To him, it makes perfect sense that a Black audience would eat up his insinuation that Kamala Harris isn’t really Black and therefore doesn’t deserve their support. This is the same genre of imbecilic attack that works great in a Republican primary, for example, so why not here? He doesn’t understand that stuff this stupid only works when you’re among fans who mindlessly lap up everything you say.
As for calling the interviewers nasty, that’s also something that works great for Trump when he’s among friends. He doesn’t realize that it sounds defensive and idiotic to anyone else.
So, no, I don’t think this was deliberate provocation on Trump’s part. He truly believes he deserves the Black vote because he thinks he deserves everyone’s vote. That’s what happens when you lose touch with reality.
Also since there are no nay-sayers in his inner circle he never gets corrected or help with understanding what went wrong. Nobody who would even suggest that he was not perfect and “the best ever”, will be with him long enough to help him learn from his mistakes. So he keeps making the same stupid mistakes again and again. Making audience specific preparations is a lot of hard work and he doesn’t believe in hard work.
JD Vance Is An Investor In A Far Right Video Platform Filled With Neo-Nazi Content
https://www.msn.com/en-us/news/politics/jd-vance-is-an-investor-in-a-far-right-video-platform-filled-with-neo-nazi-content/ar-BB1r3iI3?ocid=msedgdhp&pc=U531&cvid=324543a9e66440d3a8eae9279867bb93&ei=14
US-VOTE-POLITICS-VANCE
US-VOTE-POLITICS-VANCE
© AFP via Getty Images
Sen. J.D. Vance (R-OH) has been making headlines for his “rocky rollout” since being named former President Donald Trump’s running mate last month. The bad headlines and poll numbers have been driven by Vance’s extreme comments about “childless cat ladies,” abortion, and more. Well, along with extreme comments, Vance has some extreme investments.
Vance has had a six-figure stake in Rumble, an online video platform. The company has played host to Russian propaganda and to far-right personalities like Stew Peters and Tim Pool. It has also featured even more extreme content, including explicitly neo-Nazi images and themes like this song touting the “Reich” and calling for Jews to be placed in ovens from a “dissident rapper” with a dedicated page on the site. The site features a plethora of channels and videos dedicated to the concept of “white genocide,” which is a core belief for white supremacists. It also hosts channels for explicitly white supremacist organizations including VDare and Patriot Front, which has led masked demonstrations around the country.
Trump’s kind of “family man”!
Not to be utterly parochial, but Kiefer and Scruggs took gold and silver in women’s foil – an all U.S. final match.
Like soccer and basketball, this is Title 9 in action. Because collegiate women’s sports have enough support to foster strong competition and good coaching, U.S. women are extremely good at collegiate sports.
Meanehile, Katie Ledecky won the 1500 meter freestyle in record time, her 13th Olympic medal.
I hear Simone Biles is doing well. She wrote on Twitter:
I Love My Black Job!
And the GOAT won the women’s gymnastics all around gold.
For culture vultures – perhaps Mrs. Menzie? – Bill and Ted are doing Vladimir and Estragon.
https://www.theatermania.com/news/keanu-reeves-and-alex-winter-to-star-in-waiting-for-godot-on-broadway_1746602/