Soybean prices continue to plunge (July ’19 futures). Some have argued that decreased demand for soybeans, due to the ongoing African swine fever epidemic in China. The April 9th USDA FAS report contained information on both this, and soy market conditions. If decreased demand for soybeans was due to news about Chinese swine stocks, we would have expected rising US hog and declining soy prices. Yet hog prices have fallen for most of the time since then.
Guest Contribution: “No Moore Golden Era for Monetary Policy”
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 on April 27th.
Crazy Things People Write
Reader Zi Zi writes:
Higher short rate actually precedes better [US GDP] growth (not lower): GBP3M
I … don’t … think…so.
Figure 1: Libor 3 month based on British pound (dark blue, left scale), four quarter growth rate of US real GDP (red, right scale), both in %. NBER defined recession dates. Source: IBA, BEA via FRED, NBER, and author’s calculations.
Granger causality (2 lags) test fails to reject US growth rate causes Libor; rejects Libor causes US growth rate.
The Risk Adjusted Real Long Term Real Rate
One argument against the secular stagnation thesis is that the risk-adjusted real rate is not particularly low. I’m dubious.
Equipment Investment, Capital Goods Imports, and the Impending Slowdown
Almost exactly 12 years ago, I noted the decline in equipment and software investment and the contemporaneous plateauing of capital goods imports, and repeated my worries in mid-June. At the time, I didn’t dare suggest an impending recession. Jim Hamilton (in July) warns “All of which is a reminder that the latest GDP numbers do not prove that we’re out of the woods yet” as the recession probability indicator rises to 26.2%.
U.S. economy keeps growing
The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.2% annual rate in the first quarter of 2019. That’s better than the 2.2% average rate since the recovery from the Great Recession began in 2009:Q3, and even a little better than the average 3.1% growth over the last 70 years.
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Ramesh Ponnuru on the Conduct of Optimal Monetary Policy
I agree with
@realDonaldTrump: We need to keep interest rates low now to keep our economy growing.
Who’s Getting the Rents?
The import quota rents that is. From Brian Riley/NTUF:
Thoughts on the Next Recession
CEA Chair Kevin Hassett has stated a recession by next summer is impossible. I’m wary of such definitive statements.
CEA Chair Hassett: US recession ‘impossible’ by summer next year
That title from an article in FoxBusiness.