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, written in advance of the March 4 tariffs, was published by Project Syndicate and the Korea Herald.
Ballpark adjustment to GDPNow:
Highest 7 day moving average since Covid…(not sure if that date coincides with “bleach”):
Despite the lack of coincident indicators suggesting a recession’s onset (we’ll see more on Friday), there are plenty of articles now suggesting an imminent recession: “Wall Street Banks Say Markets Are Flashing Rising Recession Risk”, “The Recession Trade Is Back on Wall Street”, “Whisper it and it’s back: Recession risk creeps onto markets’ radar”, “2025 Recession Risk Is Increasing According To Multiple Indicators”. Kalshi’s recession probability for 2025 is now at 42%, after languishing at around 22% for a month. Assuming no recession as of February, what does a conventional term spread (10yr-3mo) model for 12 months ahead indicate?
+77K vs. +141K (Bloomberg consensus). Using the 2021M07-2025M01 relationship between ADP and BLS measures (in log first differences), I nowcast +125 vs Bloomberg +108K (although the 95% prediction interval encompasses a drop to 135310K from January’s 135479K).
From Econ442, yesterday’s lecture:
So much for grocery prices dropping on day one. Some forecasts from ERS, TradingEconomics:
Update to this post.
Years (or months) from now, if the economy goes into recession, remember this is the team that brought you that outcome.
Trump can’t even do that right.