Since January 2017:
Category Archives: Uncategorized
Gross vs. Net Investment, Pre- and Post-TCJA
In other words, the sugar high fades. Brad Setser has noted how weak nonresidential fixed investment has been, despite the TCJA. It looks worse when looking at net — rather than gross — investment.
Recession Probabilities, September-October 2020
Plain vanilla 10yr-3mo probit yields 37% probability of recession in October next year. Adjusting the spread by the 10 year term premium estimate (Kim-Wright) implies only a 6.5% probability in September (vs. 46.4% plain vanilla). Augmenting the term spread with the 10 year term premium implies a 42.2% probability for September…
Exactly How Much Does the Mainstream Literature Ignore Demographics?
Reader Steven Kopits writes about the economics profession:
MMT in (Relatively) Plain English
The Yield Curve Has Dis-Inverted. Are We Safe Now?
Figure 1: 10 year-3 month constant maturity Treasury spreads (blue), 10 year-2 year (red), 5 year-3 month (green), in %. Source: Federal Reserve, Treasury.
Do Macroeconomists Ignore Demographics (and Secular Stagnation)?
Reader Steven Kopits makes an astounding claim about macroeconomists (including me, and Jim Hamilton, et al.):
Capital Goods Imports and Equipment Investment
The last time we saw equipment investment declining was 08Q1; and capital goods imports in 08Q3
Figure 1: Imports of capital goods other than automobiles (blue, left scale), and equipment investment (brown, right scale), both in billions of Ch.2012$, SAAR. Source: BEA, 2012Q2 2nd release.
Given depreciation, net equipment investment is probably declining.
Manufacturing Employment, Hours Decline in September
Figure 1: Manufacturing employment – production and nonsupervisory workers (blue), aggregate hours (teal), manufacturing production (red), in logs 2019M01=0. Source: BLS, Federal Reserve Board, via FRED, and author’s calculations.
James Hamilton at UW Madison: Predicting the Next Recession
The video of Jim Hamilton’s inaugural Juli Plant Grainger Institute lecture at the University of Wisconsin-Madison Economics is now up!
Click here for YouTube video.
Must see for anybody who is serious about critically reading the tea leaves regarding an incipient recession (Spoiler: As of 9/11, he was sceptical a recession had begun). Interesting conjecture about using holding period returns on Treasury securities of different maturities to isolate a expectations hypothesis of term structure component (my reading).
(Aside: for conventional wisdom, see my Econ 435 notes for Econ on EHTS/yield curve/recession prediction)