That’s former CEA Chair Miran’s argument in the FT. Is this assertion empirically validated? A graph from Hamilton, Harris, Hatzius and West (2016) suggests, maybe not:
Source: Hamilton et al. (2016) exhibit 3.3, as edited by Chinn.
If you see a clear positive association between growth and the real interest rate, then you have better eyes than I do.
The real rate-growth rate link is clear in a very simple, stylized New Keynesian model, as Hamilton et al. show:
As I recall, research regarding the relative importance of inflation, the cost of funds and demand for credit in determining interest rates finds demand for credit is the smallest element. Demand for credit shows up in term premium, the catch-all for everything other than expected inflation and the expected cost of funds. Here are the 10-year yield and 10-year term premium:
https://fred.stlouisfed.org/graph/?g=1Yl4Y
Nope, term premium does not explain the rise in interest rates, so economic growth cannot explain the rise. And let’s keep in mind that even if “growth” were responsible, the causal link is mostly through demand for credit. Is corporate debt the fastest growing component?:
https://fred.stlouisfed.org/graph/?g=1Yl6e
Nope. Despite the rise in demand for AI funding, federal debt is growing faster. And if “growth”, which is to say, credit demand, were responsible for rising borrowing costs, we might expect corporate yields to lead Treasury yields higher. Here are BBB and junk spreads:
https://fred.stlouisfed.org/graph/?g=1Yl6V
Spreads have been narrowing, not widening. Corporate yields aren’t pulling Treasury yields higher; Treasury yields are pushing corporate yields high.
The felon-in-chief’s lackeys tell lies that reflect their resumes, but they are still telling lies. If a simple fellow like me knows that demand for credit isn’t a credible explanation rising interest rates – based upon easily gathered evidence – then hucksters with PhDs either know it, too, or don’t give a hoot. Liars, either way.
The fact that they choose to lie about this issue means it’s got them worried. Good.
The grifter-in-chief has promised $5,000 to every adult citizen of the U.S. if Republicans “win the House of Representatives and the United States Senate” in November. That comes to roughly $1.35 trillion.
There are some obvious qualifications that should be made to his statement:
1) He’s lying.
2) Congress has not appropriated money for bribes, so the grifter can’t keep his promise without Congressional legislation authorizing bribes.
3) The grifter-in-chief hasn’t defined “win” – could be majorities, could be every seat in each chamber – so unless the least popular party at a mid-term in quite some time wins every seat, he can refuse to pay and claim he hasn’t broken his promise.
4) He’s lying.
Interestingly, the grifter made this promise at his party-for-himself convention, where most attendees are trying to figure out some way to keep their seats despite the grifter’s disastrous antics. I’m sure they loved it.
He is promising everybody a $5K loan – since he is putting it on the nations credit card.
Well yeah there’s gonna be some rapid growth– we’re all getting $5,000 from Trump after the Republicans sweep the midterm races. Don’t you guys pay attention to current news?
You could be smart like me and take out an advance loan on that $5k to invest in crypto. Don’t work for your money, have your money work for YOU.
What is today’s existing home sales telling us? Inventory is at 1.62 million, up 5.9%, and 4.9 months of supply. The housing market is becoming less supply-constrained. However, prices are still rising 1.6% YoY despite the sales collapse. The reason is obvious: existing homeowners are sitting on cheap mortgages and don’t want to trade them for much more expensive financing. So Scott B – the housing market can remain illiquid rather than clearing through dramatically lower prices. On Tuesday, Bessent declared himself in control of the situation: “I am the house now … And you can bet against me if you want.”
Last night Grandma Betty asked when was she getting her Trump $5,000 – and I said Grandma Betty – You didn’t get the $5000 DOGE refund, you didn’t get $2000 Tariff refund, and you didn’t get the Healthcare Refund – Trump has lied about everything – he didn’t end the war in Ukraine and has started another war in Iran – he didn’t cut our energy bills in half – just increased them – groceries and gas are much more expensive now than under Biden – that’s when she cut me off.
I am sure all the commentors on here have been following what is happening to the U.S. labor force under Trump – I always find Mike Konczal analysis very insightful. His column today – “One of the great ironies of the second Trump administration has been that, despite their attempt to reassert a male breadwinner family model and make a gender vibe shift, men have gained no jobs under it. In December 2024, there were 79,332,000 men employed in the Current Employment Statistics survey. In August 2026, there were 79,326,000, a decline of 6,000. That’s as 759,000 overall jobs were created. ” https://newsletter.mikekonczal.com/p/why-are-women-over-100-of-jobs-gained
Ah, but what’s really important is native born workers:
https://fred.stlouisfed.org/graph/?g=1YmxW
They’ve gained…hang on…oh, well what’s really important is native born MEN:
https://fred.stlouisfed.org/graph/?g=1Ymz0
See they’ve…wait…rats…
Konczal, one of the early bloggers and “grandmasters” of the finance/Econ blog world, Hat’s off to you Sir, for “getting it”.
This “randomly” reminds me of all of trump’s promises to coal miners/ West Virginia, Pennsylvania….. Openly wondering (and genuinely, with Empathy) what happened to all those trump-loving coal miners now??
So now, the grifter-in-chief has said said he’s going to send $500 rebate checks to some Obamacare customers about a month before the election. I’m guessing this one is true, and probably legit. The timing is obviously entirely political, but so’s everything this guy does.