Public Letter on Recovery Policy (from Scholar’s Strategy Network), released today:

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From Trinity College Dublin:

CALL FOR PAPERS

IM-TCD half-day workshop on:
International Capital Flows and Financial Globalisation

Date: December 17th, 2020
Venue: Zoom

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Reader Bruce Hall, like all too many other people, thinks Sweden is doing just great. Here’re some data pertaining to the performance of its neighbors.

• GDPNow 6/26 -39.5%
• NY Fed nowcast 6/26 -16.3%
• St. Louis Fed 6/26 -38.14%
• IHS 6/26 -35.3%

GDP Now estimates over time:

Some reasons why nowcasts differ, by Jim Hamilton.

Employment has been cut tremendously. With massive impending revenue shortfalls, state and local spending will continue to remain depressed, placing a drag on the economic recovery – just as austerity measures slowed the recovery from the Great recession.

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As of today, here are key monthly indicators followed by the NBER Business Cycle Dating Committee:

Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (5/29 release), Bloomberg, and author’s calculations.

The NBER Business cycle Dating Committee has dated the most recent peak at February 2020 for monthly data, and 2019Q4 for quarterly.  Jeffrey Frankel describes the reasoning for this date.

Q2 nowcast from Atlanta Fed is -48.5% (6/9), from NY Fed is -25.9% (6/12), St. Louis Fed is -38.9%(6/12), all SAAR. IHS Markit is -37.4% as of today.

According to researchers at Columbia University, implementation of shelter-in-place/social distance measures one week earlier would’ve saved 36,000 lives. Given the GDP that was generated in that one week, this implies Trump’s implicit valuation of one life is $1.16 million (compared to typical Value of Statistical Life of about $11 million).

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By the rest-of-the-world, i.e., countries that China did not retaliate against. Thanks, Trump!

See also Carter and Steinbach (2020).

Our reduced-form regression results indicate large and statistically significant trade effects of retaliatory tariff increases for the United States and non-retaliatory countries. The identification is robust to pre-existing trends and anticipatory effects and reveals substantial heterogeneity between products and trading partners. We find that the United States lost more than USD 15.6 billion in trade with retaliatory countries. Soybeans, pork products, and coarse grains recorded the most substantial trade destruction effects. These losses are only partially compensated by additional exports to non-retaliatory countries. At the same time, non-retaliatory countries were able to considerably expand their trade with retaliatory countries. The analysis shows that these countries gained USD 13.5 billion in additional trade with retaliatory countries. The trade diversion effects are dominated
by increasing exports of soybeans and pork products. The primary beneficiaries of retaliatory tariff increases are countries from South America such as Argentina, Brazil, and Chile. Retaliatory countries also increased their imports from Eastern Europe and the EU. These results indicate that the 2018 trade war had substantial redistribution effects for global agricultural and food trade.

A couple years ago, Ryan LeCloux and I were cataloging the ways in which to track the individual state economies, at higher than annual frequency (paper here). I think that topic will be of interest again. State employment figures for April will come out on the 22nd, Philadelphia Fed coincident indices on the 27th.

For now, consider the evolution of the coincident indices going from February to March.

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