EPU through yesterday, and VIX as of 2pm today:
Figure 1: EPU (blue, left scale) and 7 day centered moving average (red, left scale), and VIX (green, right scale). 1/6 observation for VIX is as of 2pm ET. Source: policyuncertainty.com and CBOE via FRED.
Why the jump in EPU? Maybe Trump’s backtracking on universal tariffs? Then backtracking on that backtracking will presumably keep EPU up for the 1/6/2025 observation…
And here’s the Baker, Bloom and Davis categorical EPU through December:
Figure 2: Trade Policy Uncertainty (blue). NBER defined peak-to-trough recession dates shaded gray. Source: policyuncertainty.com, and NBER.
Welcome to 2025.
Off topic – a new one from the great Claudia Goldin:
Babies and the Macroeconomy
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5076014
Gradual modernization allows for adjustment of social norms regarding a woman’s role, with low fertility rates as a result. Sudden modernization leads to a mismatch with social norms regarding a woman’s role, and even lower fertility rates.
Given a choice, women choose to have fewer babies when having babies costs a greater loss of freedom than the simple requirements of parenthood. It explains a lot.