What do simple 10yr-3mo and 10yr-2yr Treasury spreads imply about recession probabilities?
On Tariffs, and Large Country Assumptions
Suppose the US puts a 10% tariff on imports from a foreign country. Will import prices (inclusive of tariffs) rise 10%? It depends on the elasticity of supply of said imports. If the elasticity of supply is less than perfect, then import prices will rise less than 10%. To see this, consider the most basic tariff graph in the known universe (from Feenstra-Taylor) – if you can’t understand it, abandon all hope for comprehension of tariff policy.
More Recession Talk
Articles regarding the signals emanating yield curve appear in Reuters, CNBC, FoxBusiness, Bloomberg, CNN . Here’s a relevant picture:
Prices of Iron and Steel, and Trade Policy
I’m covering the impact of tariffs and quotas (general, antidumping, countervailing subsidy, section 232) and updated some graphs on steel employment, production, and prices. Here’s one particularly interesting one:
Russian GDP Prospects Visualized (again)
Recent forecasts indicate 9.6% GDP y/y decline in 2022 (Bloomberg consensus, 3/25), or 15% (IIF, 3/10, via Reuters). S&P Global (3/22) forecasts 22% decline (q4/q4).
What can I do to help Ukraine?
I asked this question to my friend and prominent academic economist Yuriy Gorodnichenko. Here were his answers for three of the places to which he’s been making financial contributions:
Recession Talk
Andrew Sorkin et al. mention “mixed signals” regarding the prospects of recession. I thought it useful to plot some indicators. First, standard term spreads and one credit spread.
Vehicle Miles Traveled and Fuel Consumption
Gasoline prices have hit a new (nominal) high. The impact on the driving and the economy depends in part on the intensity of use of gasoline and diesel.
The Times We Live In
From WaPo:
Sen. Mike Braun (R-Ind.) said Tuesday that he would be open to the Supreme Court overturning its 1967 ruling that legalized interracial marriage nationwide to allow states to independently decide the issue.
He later revised and extended his remarks.
Guest Contribution: “Surprisingly Strong Sanctions”
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. Also available as a podcast.