Ever wonder whether vehicle miles traveled (VMT) does a good job of predicting recessions? You should’ve stopped after looking at this Econbrowser post from January 4th, but I thought an update to most recent data would be of interest as we obtain December data. First take a look at what VMT does over recessions, versus heavy truck sales (suggested by Calculated Risk at some points), and the eponymous Sahm Rule (real time version).
Spreads and Risk/Uncertainty Measures post-Powell MPR and post-SVB
VIX and EPU up, inflation breakeven down, and term spreads diverge.
Wisconsin Economic Outlook, Benchmark Revised Wisconsin Employment and GDP
The February Wisconsin Economic Outlook forecast was just released yesterday. So too were January 2023 estimates for Wisconsin employment (incorporating annual benchmark revisions). How does the outlook look, given the data revisions? Pretty good in the short term. Over the next year – reflecting the forecast for the Nation – not as nice, with employment projected to decline modestly.
Business Cycle Indicators and the Employment Release
NFP employment increase of 311K beat the Bloomberg consensus of 205K. This number confirms the continued strength in the economy overall, at least according to the key indicators followed by the NBER BCDC plus S&P Global (nee IHS Markit) monthly GDP.
The Administration’s GDP Forecast
The FY 24 Budget was released today. Because the forecast was locked down in late November, and the macro outlook has changed so much, the administration felt compelled to add an “Update on the Administration’s Economic Assumptions”. Here’s the forecast (based on Table S-9 in the Budget).
“Biden Trump Grows National Debt by 11% in Two Years”
This is a corrected title of a mendacious (and typically statistically incompetent) article by Craig Eyermann in an Independent Institute blogpost (previously highlighted as Ironman of PoliticalCalculations). He writes:
Econ 702 Exercise – The Neoclassical Model: GDP and Shocks
Consider the following model (from Garin, Lester and Sims):
r vs. g
Olivier Blanchard and Larry Summers had an interesting exchange about interest rates and secular stagnation, and target inflation rates today, at PIIE. Blanchard mentioned the evolution of r vs. g as a key issue in thinking about secular stagnation, and this spurred me to look at the data.
Recession 6 Months Away?
Following up on the proposition that the recession is seemingly always six months away (as noted in WSJ’s ‘Godot’ recession”), I thought it would be interesting to see if the market had been saying a similar thing. To wit, here’s the one year-6 month Treasury spread.
The “Godot” Recession?
From WSJ:
“It’s the ‘Godot’ recession,” said Ray Farris, chief economist at Credit Suisse. Mr. Farris found himself among a small minority of economists last fall who predicted the economy would narrowly skirt a downturn this year. Every six months, economists have predicted a recession six months later, he said. “By the middle of the year, people will still be expecting a recession in six months’ time.”