According to the CME, peak Fed funds will be achieved tomorrow. So… “25 and done”…
Author Archives: Menzie Chinn
The “Unexpected Compression”
of real wages. Or as the FT article summarizes it, “America’s lowest-earning workers are enjoying higher wage growth than top earners, after taking into account the effects of the recent bout of high inflation.” From Autor, Dube and McGraw (2023).
Mass Shooting Fatalities This Year Are Not So Bad If You Exclude “Illegal Immigrants” (read subhumans)
As defined by Governor Abbott:
Business Cycle Indicators on May Day
Monthly GDP from S&P Global Market Insights is up 0.3% in March (3.9% annualized), final sales up 6.3% (annualized). This follows on the heels of Thursday’s announcement that nominal personal income and nominal personal spending exceeded consensus by 0.1 ppts m/m. Here is a picture of the key series followed by NBER’s Business Cycle Dating Committee, augmented by monthly GDP (where the top two are real personal income excluding current transfers and nonfarm payroll employment).
GDP, GDP+, Final Sales
Jim noted recurrent delays in the long heralded recession in his Thursday post. Here are some additional reflections on where economic activity has been, and where it is heading, relying on additional data. GDPNow (which hit the mark for Q1 growth) indicates continued growth through Q2. S&P Global Market Insights (nee Macroeconomic Advisers) indicates a plateau has been reached. Final sales (i.e., GDP ex. inventories) suggests continued growth.
Guest Contribution: “Restructuring Debt of African Commodity-Exporters”
Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate. I would like to thank Sohaib Nasim for valuable assistance on this month’s commentary, as well my others this year.
Best Guess on the Recession Start Date
I was asked about my guess for the recession’s start. I said consensus was for 2nd or 3rd quarter this year, about 6 months from now. Then I wondered a bit. According to Miller (2019) (discussion here), the highest AUROC at 6 month horizon is the 5 year-Fed Funds rate spread. What does this spread indicate?
On Illiteracy
Reader JohnH writes about the discourse on Econbrowser:
Amazing the Krugman’s minimalist treatment of inequality far exceeds what I see mentioned here!
Dollar Value and the NIIP
Larger and larger gross cross-border holdings lead to bigger swings in the NIIP to GDP ratio.
Assessing the Cross-Taiwan-Straits Military Balance
400 Harpoon missiles to Taiwan is a good development. But clearly more is going to be necessary. A leaked document recounted in WaPo assesses the current military situation.