Figure 1: Freight Transportation Services Index (bold black), Truck Tonnage Index (tan), Vehicle Miles Traveled (green), Rail Freight Carloads (red), Rail Freight Intermodal Traffic (blue), Air Revenue Ton Miles of Freight and Miles (purple), all in logs, 2019M08=0. Source: BTS via FRED, and author’s calculations.
All series are below peak.
That’s the name of a new NBER working paper, and a paper presented at ASSA (slides; I didn’t get to see myself). As I get to teach applied econometrics for public policy this semester, I thought this was interesting paper. From the abstract:
December industrial production (red line) adds to the (mixed) picture…
Through 2018M03, US exports to China were growing smartly. The Section 232 and Section 301 actions were announced. The “deal” essentially restores real exports to China to the pre-shock trend for 2020, above for 2021 (if you believe!).
From GAO today on “the drug deal”:
In the summer of 2019, the Office of Management and Budget (OMB) withheld from obligation funds appropriated to the Department of Defense (DOD) for security assistance to Ukraine. In order to withhold the funds, OMB issued a series of nine apportionment schedules with footnotes that made all unobligated balances unavailable for obligation.
Faithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law. OMB withheld funds for a policy reason, which is not permitted under the Impoundment Control Act (ICA). The withholding was not a programmatic delay. Therefore, we conclude that OMB violated the ICA.
By Menzie Chinn and Bill Plumley, at EconoFact, posted a few minutes ago:
U.S. agriculture has been caught in the tit-for-tat of the trade wars. Retaliation by China, Canada, Mexico, Turkey and members of the European Union to tariffs imposed by the Trump administration have taken a bite out of U.S. agricultural incomes. Tariffs on imports of steel and aluminum in the United States have also raised costs for machines, equipment and structures used by the agriculture sector. Agriculture incomes would have shown no growth in 2019 but for massive and unprecedented federal assistance. Even with this assistance, however, the agriculture sector shows signs of stress, with a rise in debt, a decrease in solvency and an increased number of bankruptcies.
Take a look at what exports to China will look like, with an additional $200 bn exports to China over two years, using the 2017 levels, as reported:
From WSJ today, an op-ed by Peter Navarro:
The national-security externalities associated with Trump trade policy may be even more consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran. One must ask the antitariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models?
From Peter Navarro, The Policy Game (Wiley, 1984), p.82, on the national security/trade policy nexus.
National Security Benefits and Costs. On the benefit side, protectionism within certain basic industries like autos, steel, and electronics helps to create and sustain and industrial base that, in times of war or national peril, can be shifted to defense purposes. However, this national security argument–and the existence of any benefits resulting from protecting these industries–can legitimately be called into question for several reasons.
First, the existence of any sizable benefits rests on the assumptions that import competition in our defense-related industries would not only reduce the size of these industries but also shrink them to the point where they would be too small to support our defense needs…
Second, it is highly possible that our defense capability might actually be enhanced–not damaged-by import competition. Without the umbrella of protectionism, our defense-related industries would be forced to operate at lowest cost, engage in more research and development, aggressively innovate to stay one step ahead of the competition, and modernize their plants at a faster pace. …
On the national security cost side, the major effect of protectionism is to threaten the stability of the international economic order through a global trade war. …
Full disclosure: I worked as a research assistant on this book.
Update, 1/15:
A picture of steel production and employment; Section 232 period shaded orange.
Figure 1: Employment in raw steel production (blue, left log scale), and industrial production (brown, right log scale). Light orange shading denotes Section 232 announcement and thereafter. Source: BLS, and Federal Reserve Board via FRED.
Currency manipulation or not? The Treasury’s semiannual foreign exchange report, released yesterday, says no, contra Mr. Trump’s statement a few months ago.
Yesterday’s employment release indicated a deceleration in nonfarm payroll (NFP) employment growth. Data from other sources suggests that the deceleration over the last year is more marked than indicated by the establishment survey.