Released today, and is here.
Reuters report here.
My take on currency misalignment (as opposed to currency manipulation and undervaluation) in this post.
Debasing the Dollar? (Or Inflation Looming, Again?)
Worried about currency debasement? Do we find out anything from the nominal exchange rate? In a flexible price monetary model (sometimes called the monetarist model of the exchange rate), changes in the money supply should be immediately reflected in the exchange rate.
Inflation Looming? Phillips Curve vs. Quantity Theory
Look at this:
Figure 1: Ratio of M1 to real GDP (blue), of M2 to real GDP (brown), of M3 to real GDP (green), 1959Q1-2020Q3. Quarterly money data average of end of month data. Source: Federal Reserve via FRED, and BEA, 2020Q3 2nd release, and author’s calculations.
MV = PQ?
Tautologically, yes; maybe not so much if V (velocity) is constant.
Inflation Looming?
The Economist says unlikely. Surveys and market expectations concur.
The Economic Outlook – WSJ December Survey
No acceleration in growth rates, and short term growth prospects dim, but GDP level higher relative to October — but not November — survey.
Wisconsin Economic Outlook, November 2020
The Wisconsin Department of Revenue has released its Economic Outlook, dated November 22nd. The forecasts incorporate assumptions that include: “November IHS Markit forecast shows a slowing down of the economic recovery in the last quarter of 2020 and beginning of 2021. Several high-frequency indicators point to a further deceleration in October, but the forecast does not include a double dip. ….Wisconsin personal income growth accelerated in 2020 pushed by the federal stimulus funds, but it’s expected to decline 1.9% in 2021, as the fiscal stimulus fades. …The current forecast assumes no further fiscal stimulus and that a vaccine will be available by mid2021.”
Where Are You?
I’m teaching “Macroeconomic Policy” for upper level undergrads this semester. Obviously, the interpretation and suggested conduct of policy depends on how you view the world, which is hard to contextualize simply. But I think annotating this graph works great — and you can ask yourself — “Where am I?” (The “You are here” addresses my students…)
Risks of a Double Dip Rising? [updated]
[Original post, 12/3 5pm Pacific – updates graph for NFP, text in green]
That’s the message all around: The Hill “Slowing job growth raises fears of double-dip recession” (see also this), a CNN article has subheading “Double-dip recession fears”, Fortune has “TIAA CEO Roger Ferguson thinks we could be headed for a ‘double-dip recession'”, while CNBC “Virus surge is leading to a double-dip recession and dollar crash, economist Stephen Roach warns”.
ADP Private Nonfarm Payrolls in November
The increase of 307 thousand in private nonfarm payrolls (as reported by ADP) — under Bloomberg expectations of 410 thousand — suggests further deceleration in employment growth.