The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 1.9% annual rate in the fourth quarter, well below the historical average of 3.1% per year, but close to the 2.1% average since the recovery from the Great Recession began in 2009:Q3.
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Author Archives: James_Hamilton
Measuring the economic effects of uncertainty
Economists have had a lot of interest recently in whether uncertainty itself may have measurable effects on the economy. Last week I participated in a session devoted to economic research on this question at the meetings of the Allied Social Science Association in Chicago. Here I relate some of the comments I made there.
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Back to normal?
A year ago, the Federal Reserve decided to raise its target for the fed funds rate by 25 basis points above the floor of 0-0.25% at which we’d been stuck for 7 years. FOMC members indicated at the time that they were expecting to end 2016 at 1.4%, or four rate hikes during the last year. We started this December at 0.41%, and the first hike of 2016 didn’t come until last week. Now FOMC members say they are expecting to end 2017 at 1.4%, or three more hikes from here during the next year. The January 2018 fed funds futures contract is currently priced at 1.23%, suggesting that the market is buying into two, not three hikes during 2017.
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Factors in low real interest rates
The real return on long-term government bonds has dropped steadily over the last 30 years, falling from values around 4% to something closer to zero or even negative for many countries today. What accounts for this remarkable development, and what are the prospects for this situation to continue?
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Rising interest rates and the term premium
Last week I puzzled over the response of financial markets to the U.S. election. Since the election, the S&P500 is now up 3%, the dollar is up 4.6% against the euro, and most remarkable of all, the 10-year Treasury rate has gone up 50 basis points. Here I offer some further thoughts on the last development.
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Mr. Trump and the markets
I was astounded not only by the outcome of the U.S. presidential election but also by the response of financial markets.
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Links for 2016-11-13
Three papers of interest on the effects of U.S. trade policy on manufacturing employment, racial discrimination, and the Chinese real estate boom.
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New data sources for economic research
One of the exciting implications for economists of the digitization of everything is the ability to study economic relations and behavior at a level of detail far beyond anything that could have been attempted a decade ago. I’ve earlier called attention here to new measures of inflation obtained from millions of prices posted on the web, new insights into pricing behavior coming from scanner data on individual store transactions, and understanding of consumer behavior based on debit and credit transactions of 25 million Americans. Here I discuss another new study based on smart-phone apps.
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Q3 GDP
The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 2.9% annual rate in the second quarter. That’s below the historical average U.S. growth rate of 3.1% per year. Even so, this was the best report in the last two years.
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U.S. elections
The most valuable resource for tracking the U.S. elections is Nate Silver’s 538.
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