We’re a month into Trump 2.0. We don’t have February’s prices yet, but since Trump was going to do everything “Day 1”, I thought it useful to take a look at various indices.
What — If Anything — Do Re-inverting Term Spreads Mean?
Open question – we’re not quite there yet.
No Recession until 2025Q4 (Assuming Reciprocal Tariffs w/Retaliation) [graph corrected!]
And CBO’s January projection:
NBC News: “USDA says it accidentally fired officials working on bird flu and is trying to rehire them”
From NBC News.
EPU and Expected Inflation
From election day, five year inflation breakeven up 33 bps; EPU up 231. What could go wrong?
Anthony Diercks, Daniel Soques and Jing Cynthia Wu: “Perfect Recession Indicators”
From the abstract to the paper:
Policy Uncertainty in the US, Globally
as measured by Baker, Bloom and Davis’s EPU. I was in Europe, and conversations were in high gear about how things now seemed. And text mining confirms:
AP: “Trump begins firings of FAA air traffic control staff just weeks after fatal DC plane crash”
Article here.
The Russian Economy: How Many Contingent Liabilities?
It seems like a funny question to ask given Russian government debt to GDP isn’t that large. Craig Kennedy argues that taking into account forced bank lending means that (contingent) government liabilities are much larger than conventionally-defined public liabilities (report here). The summary:
A Trade War Interpreted in a Blanchard IS-LM Model
I was promised an all-out trade war by Trump, and all I got was a lousy 10% tariff on China, and promises of a concept of a plan for reciprocal tariffs. Well, maybe re-arranging my syllabus will still pay off, if Trump gets his act together for destroying the post-War liberal economic order. Notes for a Trade War (cf. Blanchard, Macroeconomics, latest edition).