Category Archives: recession

Equipment Investment, Capital Goods Imports, and the Impending Slowdown

Almost exactly 12 years ago, I noted the decline in equipment and software investment and the contemporaneous plateauing of capital goods imports, and repeated my worries in mid-June. At the time, I didn’t dare suggest an impending recession. Jim Hamilton (in July) warns “All of which is a reminder that the latest GDP numbers do not prove that we’re out of the woods yet” as the recession probability indicator rises to 26.2%.

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The Pedagogical Implications of Mr. Trump

He’s made a lot more work for me over the past two years — re-arranging and updating lecture slides. One thing is moving up and emphasizing what a recession is (a 20 year old student doesn’t remember the last one, really), and what current indicators are flashing. (You can imagine what it’s done for my international trade class!)

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Lest You Be Lulled by the NFP Release: Employment Growth 1 yr before Recessions

Figure 1: M/m annualized growth rate in nonfarm payroll employment in the runup to 2007-09 recession (red), to 2001 recession (teal), and assumed 2020 recession starting in January (dark blue). NBER defined recession dates shaded gray, starting at peak. Source: BLS via FRED, ALFRED, and author’s calculation.

Update, 5:30pm Pacific:

Forward looking indicators continue to suggest a slowdown.

Figure 2: US economic policy uncertainty (EPU) index, 7 day centered moving average (gray, left scale), 10 year-3 month Treasury spread (blue, right scale), and 10 year-2 year Treasury spread (red, right scale), both in percentage points. Light orange shading denotes Trump administration, orange denotes Federal government closures. Source: policyuncertainty.com, and Federal Reserve Board via FRED, and Bloomberg (for 2/1).