Should he? FRB Minneapolis Fed President was at UW Madison today, and stated:
“The fact that the yield curve is now uninverted gives me some indication that we have taken the brakes off the economy,”
The Trumpian World as Natural Experiment
The Trump economic policy regime (if it can be called that) has provided several “natural experiments”. Do corporate tax rate reductions “pay for themselves”? Does expansionary fiscal policy at full employment lead to large increases in output? Does increasing trade protection necessarily lead to an increase in the trade balance? Does a bellicose and confused trade negotiating stance accelerate fixed investment? I think the answers are No, No, No, and No. On this last point, see Altig et al. on Macroblog:
Why Is the 2019 Slowdown Different than the 2016 Slowdown?
Consider the rest-of-the-world… Who’s going to pick up the slack this time?
“CBO’s Economic Forecasting Record: 2019 Update”
From the Highlights of a new CBO study:
If the Administration Is So Concerned about Corruption…
shouldn’t it be doing something about the Russian Federation as well?
Sick of “Winning”: Trade Deficit Edition
Since January 2017:
Wisconsin Manufacturing Employment Peaked in September 2018
National manufacturing employment peaks nearly a year later, August 2019.
Gross vs. Net Investment, Pre- and Post-TCJA
In other words, the sugar high fades. Brad Setser has noted how weak nonresidential fixed investment has been, despite the TCJA. It looks worse when looking at net — rather than gross — investment.
Recession Probabilities, September-October 2020
Plain vanilla 10yr-3mo probit yields 37% probability of recession in October next year. Adjusting the spread by the 10 year term premium estimate (Kim-Wright) implies only a 6.5% probability in September (vs. 46.4% plain vanilla). Augmenting the term spread with the 10 year term premium implies a 42.2% probability for September…
Deceleration
As noted by Jim. Over the last week, we’ve received new readings on employment, income, sales, and monthly GDP: