The trade balance hit -$63.6 billion (monthly, seasonally adjusted) in July. The trade balance has been deteriorating since the recession began, in contrast to what usually happens — an improvement in the trade balance, as imports decline with a decline in domestic economic activity.
August Private Payrolls
ADP released its August numbers, showing slow growth.
Business Cycle Indicators, September 1st
IHM/Markit (aka Macroeconomic Advisers) releases July GDP:
Covid-19 Fatality Projections
Reader Bruce Hall speculates:
It appears that the “second wave” has about peaked. Even the inflated measure of cases (versus April/May testing process) is declining. Hospitalizations for the “expendables” are declining although still the vast majority of deaths.
Maybe. The concept of local maxima/minima might be useful to keep in mind.
Inflation Sensitivity to Gaps and Shortfalls
Suppose maximal output evolves as a line between peaks in output, as discussed in this post updating the Delong-Summers approach. The is the “slack” thus defined (red line) a clearer determinant of inflation than the traditional output gap (black line)?
The Net International Investment Position of the US
Since 2016Q4, the Net International Inestment Position of the US has become more negative.
The Rebound Slows: Business Cycle Indicators, August 28th
Several of the five key indicators referenced by the NBER’s Business Cycle Dating Committee are decelerating, as shown in Figure 1.
Deviations vs. Shortfalls
The Fed’s new framework, as described by Chairman Powell, mentions “shortfalls” (particularly in employment), instead of deviations of the natural rate. The output analog of this shift is moving from the deviation of output from potential (i.e., output gap) to an output slack measure. If we interpret this as requiring a focus on a Friedman-esque plucking model of maximal output, rather than potential GDP as described in most textbooks, what does this mean for where we are right now? I’d say for the short run, we are still in for a world of pain, economically speaking…
Sweden and Norway, Q2 GDP Growth
Reader Bruce Hall brings our attention to the performance of Swedish GDP, given the pandemic response they have adopted – comparing against UK, Germany, France and UK. My guess is that he wanted to show the tradeoff between lives lost and growth. Personally, I think the Sweden vs. next-door-neighbor Norway comparison is at least as interesting.
CDC Covid-19 Fatality Count and Excess Deaths
CDC has released data through 15 August as of today.