Forecasted GDP rises yet again, with considerable dispersion.
The Price Level Shortfall
Had we run a 2% price level target since December 2007 (the beginning of the previous recession).
Oil Prices and Oil Futures
As of March 7th:
Are Market Expectations of Inflation Really Rising?
A typical market-based measure of expected inflation is the inflation breakeven calculated by subtracting the TIPS yield from Treasury yield at corresponding maturities. The breakeven spread is shown as the blue line in Figure 1.
Interest Rate Projections
The CBO recently released long term projections for Federal budget variables, including debt. These projections rely upon the assumed path of interest rates. Here, there is considerable uncertainty. Figure 1 presents the 10 year Treasury yield, and CBO projections at various dates.
The Employment Release and Business Cycle Indicators as of 5 March
The positive surprise in nonfarm payroll (NFP) employment — 379K vs Bloomberg consensus of 182K — was good news. However, it’s important to place this in context. NFP is 9.5 million lower (i.e., 6.2% lower) than the NBER peak in February 2020. In the context of key macro indicators followed by the NBER Business Cycle Dating Committee:
A Literature Review on Economic Policy Response to Covid-19
An excellent review of empirical findings regarding the various provisions is contained in this FEDS Notes article, by Elena Falcettoni, and Vegard Nygaard.
The COVID-19 pandemic has kept economists busy analyzing many aspects of economic side of the coronavirus impact. This note is meant to present an overview of what economists have analyzed regarding the implications of two of the main components of the CARES Act that affect individuals: the increased UI benefits and the stimulus checks. We present the findings from the literature on these two policies with an eye on potential future governmental interventions.
Taken together, these two components have been effective at providing stimulus and lowering poverty. In the aggregate, Kaplan et al. (2020) (PDF) find that the initial UI benefits and stimulus payments boosted aggregate consumption by 2 percentage points, while Bayer et al. (2020) show that the CARES transfers reduced the output loss due to the pandemic by up to 5 percentage points.
Complete note here.
Business Cycle Indicators as of 3 March
The goods production side of the economy continues to recover, and monthly GDP comes close to October 2010 levels. Nonfarm payroll employment as implied by the Bloomberg survey is for a slight increase of 182K. Some key indicators followed by the NBER Business Cycle Dating Committee.
The RMB’s Progress (in Internationalization)
The rapid ascent in CNY reserves was in 2018, with some resumption in 2020. From 2016 to 2019, Renminbi turnover rose from 4% to 4.3% (out of 200%).
Business Cycle Indicators as of 26 February: Consumption Rebound
The goods production side of the economy continues to recover, consumption jumps, while other indicators faltered. Some key indicators followed by the NBER Business Cycle Dating Committee.