Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared at Project Syndicate.
Inflation, Gasoline, Recession
I was on WPR’s Central Time today, discussing among other things: “Gas and oil prices are starting to come back down. We explore what that means for inflation and fears of a recession.”
Term Spreads Falling
And negative at the 2s10s:
One Year CPI Inflation Expectations as of Mid-July
NY Fed consumer expectations up in June, Michigan down in July. WSJ July survey mean says y/y inflation will be 3.9% in June 2023.
Inflation in June
A little bit of old news, but it seems useful to see what various indicators show, month-on-month annualized. Chained, trimmed and sticky price inflation are all lower than headline:
A Depressed Growth Trajectory: The Wall Street Journal July Survey
Forecasters are downbeat relative April survey (Figure 1). And about a third forecast negative Q/Q growth in 2022Q2, but the mean (and median) forecast is for positive growth, as shown in Figure 2 (though there being two consecutive quarters of negative growth are not central to determining whether NBER BCDC declares a recession). About a fifth of respondents predict at least two consecutive quarters of negative growth starting later in 2022-23.
Battery Storage Costs for Utilities
(Or…, are renewables useless because of peak load issues?) From IPCC AR6 Working Group 3 report (page 6-24):
China Q2 Takes an (Expected) Dive
A 2.6% q/q dive in Chinese GDP is unsurprising, but unwelcome nonetheless:
Another Quarter of Negative Growth?
The Atlanta Fed’s nowcast for Q2 as of 7/15 was for -1.5% Q/Q SAAR. What does this tell us about what is likely to be the advance print, and then subsequent releases.
Guest Contribution: “The Fed Fell Behind the Curve by Not Following its Own Policy Rules”
Today, we present a guest post written by David Papell and Ruxandra Prodan, Professor and Instructional Associate Professor of Economics at the University of Houston.