Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate May 28th and The Guardian.
Business Cycle Indicators, 30 May 2020
Figure 1: Nonfarm payroll employment (blue), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2019M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (5/29 release), Bloomberg, and author’s calculations.
As of Friday, May 29th, NY Fed, Atlanta Fed and St. Louis Fed nowcasts for Q2 are -35.8%, -51.2%, and -49.75% (SAAR), respectively. IHS Markit is -42.9%.
The Hill: “White House to forgo summer economic forecast amid COVID-19, breaking precedent”
That’s from an article today:
The White House will not release an updated round of economic projections this summer, breaking from precedent as the U.S. faces its deepest downturn since the Great Depression, two administration officials familiar with the decision confirmed to The Hill on Thursday.
Geographical Distribution of April Growth – Philadelphia Fed Indexes
From the Philadelphia Fed Coincident Index release today:
No V Recovery: 538.com & IGM COVID-19 Economic Outlook Survey Series
From IGM:
The IGM is administering this new survey on the outlook for the economy in collaboration with fivethirtyeight.com. The FiveThirtyEight/IGM COVID-19 Economic Outlook survey complements the existing IGM expert panels and is being overseen by Professors Allan Timmermann and Jonathan Wright. The list of experts answering the questions is identified in the post along with the responses.
The Elasticity of Mortality with Respect to Recession
I hear a lot about deaths rising with recessions. What does the data indicate about the robustness of such a relationship?
How Many People Are Being Killed by the Lockdown?
From the Washington Examiner, and op-ed, via AEI:
NY Times Cover for 5/24/2020
Trump’s Implicit Valuation of Life: Back of Envelope Calculations from the Pandemic Response
According to researchers at Columbia University, implementation of shelter-in-place/social distance measures one week earlier would’ve saved 36,000 lives. Given the GDP that was generated in that one week, this implies Trump’s implicit valuation of one life is $1.16 million (compared to typical Value of Statistical Life of about $11 million).
How the (Soybean) Trade War Was Won
By the rest-of-the-world, i.e., countries that China did not retaliate against. Thanks, Trump!
See also Carter and Steinbach (2020).
Our reduced-form regression results indicate large and statistically significant trade effects of retaliatory tariff increases for the United States and non-retaliatory countries. The identification is robust to pre-existing trends and anticipatory effects and reveals substantial heterogeneity between products and trading partners. We find that the United States lost more than USD 15.6 billion in trade with retaliatory countries. Soybeans, pork products, and coarse grains recorded the most substantial trade destruction effects. These losses are only partially compensated by additional exports to non-retaliatory countries. At the same time, non-retaliatory countries were able to considerably expand their trade with retaliatory countries. The analysis shows that these countries gained USD 13.5 billion in additional trade with retaliatory countries. The trade diversion effects are dominated
by increasing exports of soybeans and pork products. The primary beneficiaries of retaliatory tariff increases are countries from South America such as Argentina, Brazil, and Chile. Retaliatory countries also increased their imports from Eastern Europe and the EU. These results indicate that the 2018 trade war had substantial redistribution effects for global agricultural and food trade.