August auto sales were less dismal than July. But don’t uncork the champagne quite yet.
Category Archives: recession
Rising unemployment
Is there anything good to say about today’s report from the Bureau of Labor Statistics that the U.S. unemployment rate jumped up to 6.1% while seasonally adjusted nonfarm payrolls declined by another 84,000 jobs? Well, here’s one thing. It gives us some real clarity as to just where the economy stands.
Why Does It Feel Like a Recession?
The preliminary GDP release today provided a number of surprises. The first surprise was not that GDP was higher than the advance release (given the June trade figures reported earlier this month), but rather that at 3.3% it exceeded the 2.8% (SAAR) of the consensus [0]. The second surprise is that the reduction in imports comprises an even larger proportion of the overall growth.
Calling a European recession
“Is the first zone wide recession in the short history of the eurozone about to be registered?” asks Edward Hugh. I was curious to apply the algorithm for calculating my U.S. recession indicator index to a euro area GDP measure to get an answer.
The Dollar and the Trade Deficit: How Does Productivity Fit In?
Why is the trade deficit, even taking out oil, so large when the dollar is so weak? Maybe some insights can be gleaned from productivity measures.
Recession indicators
Many people may not care whether our current situation meets the formal definition of a recession, but as I’ve explained previously, you should. Here’s a summary of how I see the economy at the moment. I begin by discussing a new paper by UCLA Professor Ed Leamer, which has also been highlighted by Greg Mankiw, Frank Stephenson, Calculated Risk, and Brian Blackstone.
A Different Look at the Labor Market
Over the past few months, I’ve heard that, while job creation is insufficient to keep unemployment rates constant, job losses have not been consistent with recession. More recently, we’ve heard a slight modification on this “talking point”. Commenting on the August 1 labor market release, WSJ RealTime Economics notes:
So far this year, the economy has shed nearly half a million jobs — hardly a sign of strength.
But it could have been much worse. In testimony before a congressional panel Friday, Bureau of Labor Statistics Commissioner Keith Hall noted that the last two recessions had resulted in 1.5 million lost jobs. “Economic growth is not strong enough to support job growth,” he told legislators, but he added that relative to the last set of official recessions, job losses this time around “have not been as severe.”
Economic consequences of falling oil prices
I’ve maintained that rising oil prices put a significant burden on the U.S. economy in recent months. How much will falling oil prices help to alleviate those concerns?
Synergies of the unpleasant kind: recessions, credit crunches and housing busts
From the abstract of a new paper by Stijn Claessens, M. Ayhan Kose and Marco E. Terrones, entitled “What Happens During Recessions, Crunches and Busts?” (paper now online here):
We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the 1960-2007 period. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. We document a rich set of stylized facts about the behavior of key macroeconomic and financial variables during these various events. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of a recession. In particular, we show that recessions associated with credit crunches and house price busts are deeper and last longer than other recessions are. In light of our findings, we examine the implications of recent macroeconomic and financial developments in the United States for the future path of its economy.
Revisions matter. So do levels
The 1.9% SAAR growth rate in 2008Q2 [BEA] is widely viewed as a positive [0]; and the fact that GDP growth remained, in this advance release, above zero is a positive. However, when taken with the annual revision, one sees some interesting aspects. Not only was growth in 2007Q4 negative, albeit slightly; the revisions put 2008Q2 real GDP below what the final estimate for 2008Q1 GDP was: $11692 versus $11701. Future revisions will definitely occur to the 2008Q2 figure, and indeed the figures back to 2006Q1 will be again revised come next July.