The January numbers are out. March 2019 levels revised down 514 thousands, vs. 501 in preliminary. December numbers revised down 422 thousands. My guess based on December estimates and the March 2019 preliminary benchmark (see this post), the actual reported numbers for December were higher by 79 thousand.
Productivity, Product Wage, and Real Wage
Productivity and costs for 2019Q4 were released yesterday.
What Method Implies 80% Probability of Recession by Nov 2020?
It’s the method described in this intriguing paper, by William Kinlaw, Mark Kritzman, and David Turkington. From the abstract:
The authors introduce a new index of the business cycle that uses the Mahalanobis distance to measure the statistical similarity of current economic conditions to past episodes of recession and robust growth. Their index has several important features that distinguish it from the Conference Board’s leading, coincident, and lagging indicators. It is efficient because as a single index it conveys reliable information about the path of the business cycle. Their index gives an independent assessment of the state of the economy because it is constructed from variables that are different than those used by the NBER to identify recessions. It is strictly data driven; hence, it is unaffected by human bias or persuasion. It gives an objective assessment of the business cycle because it is expressed in units of statistical likelihood. And it explicitly accounts for the interaction, along with the level, of the economic variables from which it is constructed.
DIY Benchmark Employment Release (Establishment)
Friday’s estimate of nonfarm employment will incorporate a benchmark revision, based on unemployment insurance and tax data extending up to 2019Q3. What will we see? Here’s an informed guess, based on what we see now (see the green line in Figure 1).
Eight Graphs Depicting the Macro Situation as of end January
For now, we know as of 2019Q4, we’re not in a recession, according to Jim’s analysis. But Q4/Q4 GDP growth fails to hit Trump targets (again!), business cycle indicators continue to plug along, but RV sales plunge 16% y/y. And yield curve inverts (again)! Is it flight to safety or lower expected future short rates?
Steady growth continues
The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 2.1% annual rate in the fourth quarter of 2019. That’s slightly below the 2.3% average rate since the recovery from the Great Recession began in 2009:Q3.
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Forward Looking Components in GDP
Jim will be writing a more comprehensive assessment of the 2019Q4 advance GDP release tomorrow. For now, I’ll just note that business fixed investment, a forward looking variable, has registered a negative decline for the last three quarters of 2019.
Business Cycle Indicators as of 1/29 as Real 10 Year Rate Goes Negative
Monthly GDP growth is slow in December:
What Is the Size of Russian Forces in Ukraine?
What Determines the Strength of Interest Rate Linkages between Countries?
Decisions regarding the trilemma, but also choices regarding macroprudential policies have an impact. From the revised version of Joshua Aizenman, Menzie Chinn and Hiro Ito, “Financial Spillovers and Macroprudential Policies” (forthcoming Open Economies Review):