From Cass Freight Index Report – September 2019:
With the -3.4% drop in September, following the -3.0% drop in August, -5.9% drop in July, -5.3% drop in June, and the -6.0% drop in May, we repeat our message from the previous four months: the shipments index has gone from “warning of a potential slowdown” to “signaling an economic contraction.”
The last time we saw equipment investment declining was 08Q1; and capital goods imports in 08Q3
Figure 1: Imports of capital goods other than automobiles (blue, left scale), and equipment investment (brown, right scale), both in billions of Ch.2012$, SAAR. Source: BEA, 2012Q2 2nd release.
Given depreciation, net equipment investment is probably declining.
The slowdown could be coming from tariffs, or from decelerating economic growth. You decide…
Bryan Riley at NTU brings my attention to this press release:
The Coalition for a Prosperous America (CPA) has won the prestigious Edmund A. Mennis Award from the National Association for Business Economics (NABE) for a study showing that a permanent tariff on China would benefit the US economy. The award from the nation’s leading association of business economists confirms a growing acceptance of pro-US trade policies needed to address the nation’s economic challenges.
I wanted to go to this Society of Government Economists (SGE) event, with Prof. Tara Sinclair (GWU) and Chad Stone (CPBB), but I’m in the Midwest… Fortunately, they shared their thoughts with me.
Nominal GDP targeting has been proposed as an alternative to the Taylor principle. One challenge to implementation is the relatively large revisions in the growth rate of this variable (and don’t get me started on the level).
Figure 1: Manufacturing employment – production and nonsupervisory workers (blue), aggregate hours (teal), manufacturing production (red), in logs 2019M01=0. Source: BLS, Federal Reserve Board, via FRED, and author’s calculations.
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.
Reader Ed Hanson remarks:
Red China has been protectionist since its beginning. [A]nd certainly has since it joined the worldwide trade in the 80’s or so. Did protectionism make it weaker?
In light of Mr. Trump’s remarks today:
“China should start an investigation into the Bidens, because what happened in China is just about as bad as what happened with Ukraine.”
What do people like Ed Hanson (I’m guessing old, and still worrying about Commies, but thinking Russians are ok) think Mr. Trump should bargain away in terms of trade sanctions on “Red China” in order to get that investigation?
The video of Jim Hamilton’s inaugural Juli Plant Grainger Institute lecture at the University of Wisconsin-Madison Economics is now up!
Click here for YouTube video.
Must see for anybody who is serious about critically reading the tea leaves regarding an incipient recession (Spoiler: As of 9/11, he was sceptical a recession had begun). Interesting conjecture about using holding period returns on Treasury securities of different maturities to isolate a expectations hypothesis of term structure component (my reading).
(Aside: for conventional wisdom, see my Econ 435 notes for Econ on EHTS/yield curve/recession prediction)