State level quarterly GDP for Q2 was just released today by BEA. Since people are still debating the efficacy of the Scott Walker economic policies in spurring growth (see e.g., here), I thought it of interest to compare the broadest measure of economic activity — real GDP — between Wisconsin and its neighbor, Minnesota. Shown below is the 4 quarter growth rate differential between Minnesota and Wisconsin.
Measured Inflation in August
A CNN headline notes “A key measure of inflation surged to a new 30-year high”, with that key inflation measure being the year-on-year (y/y) personal consumption expenditure (PCE) inflation, very similar to a headline a month ago. But in any case, by focusing on the y/y rate, they missed the main message In today’s release — that month-on-month (m/m) annualized PCE inflation was down from March peak, from 7% to 4% (and roughly the same as in July). Moreover, the core counterpart was also down from the April peak, from 7.7% to 4.1% (3.6% y/y hitting the Bloomberg consensus on the nose, and a little higher than m/m consensus.)
The US Net International Investment Position, and Projections of US Net Income
Today, the BEA released estimates for the US net international investment position (NIIP) — the difference between what assets US residents (including the government) owns abroad and what US assets foreign residents and governments own. The decline in the value as a share of GDP has has stopped, and despite being a large negative number, US net income — income received from assets owned by the US minus income paid on assets owned by foreigners — remains positive. A new CBO working paper (Fried, “CBO’s Model and Projections of U.S. International Investment Holdings and Income Flows” ) tackles the reasons for this seemingly paradoxical phenomenon, and the prospects for its continuation.
Guest Contribution: “El Salvador exemplifies the surrealism of cryptocurrencies”
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.
Market-Based Indicators of Inflation, Growth and Risk
Medium term inflation expectations are muted, growth expectations are recovering slightly, and perceived risk seems contained.
The Debt Ceiling As Kabuki
From Marketplace yesterday, “The debt ceiling explained” (Dylan Miettinen):
Where Do Monetarists Think the PCE Price Level Is Going To?
From an email from Tim Congdon, at the International Institute for Monetary Research (9/20):
A New Database on Individual Central Bank Reserve Composition
Hiro Ito and Robert McCauley have compiled a new dataset of the currency composition of international reserves over the 1999-2020 period.
Summarizing China’s Short Term Economic Outlook
Wells Fargo Economics analyses the extent of the current slowdown, and contemplates the impact on regional economies. Here’s the heat map:
Motivations for Economic Policies in Western China
I’m not a China expert, but 20 years ago, I had the opportunity to hear the Chinese explanation for their planned policies in Western China (Xibu Dakaifa), translated in English journalistic accounts as “Develop the West” (I was the international finance economist on the Council of Economic Advisers at the time, and the Chinese counterpart, the State Development Planning Commission, was coming to Washington to meet with us; I was tasked with overseeing elements of the meeting).