I’m concerned about tariff policy impacting the economy. Usually fiscal, executive and trade policy decisions wouldn’t lead to an immediate recession, but these tariffs are a huge blunder. There have been other unforced errors – like cutting basic research spending – but that is more of a long-term issue.
As an aside: Imagine a tech company announcing they were going to cut spending by eliminating R&D. Their stock would plummet. That is what the U.S. has done with some of the DOGE cuts.
Nowcasts, 4/5
NY Fed nowcast down.
Business Cycle Indicators: Employment in March
Mid-March to be specific.
Has the Recession Already Started?
Even if the answer is yes, we won’t know for a long time.
What a Difference a Day Makes: The Post-Obliteration Day Yield Curve
Inversion deepens (see sky blue line vs. green line):
2 April 2025: An Event Study
Odds of a recession in 2025:
Doug Irwin: “…bigger than Smoot-Hawley”
From Bloomberg:
Further Inversion of the Treasury Yield Curve
As of close today:
Negative GDP Growth in Q1?
GDPNow as of today:
Forward Looking Implications of Consumption Behavior in the Trump 2.0 Era
Aggregate consumption drops as income ex-current transfers rises. The pattern of disaggregated consumption pattern suggests tariff-induced front-loading drove some of the support for consumption in December.