The economy is collapsing. That’s not news. What is interesting is that nonresidential fixed investment has been falling since 2019Q1.
Figure 1: Nonfarm fixed investment in billions Ch.2012$ SAAR (blue, left log scale), and Economic Policy Uncertainty index (red, right scale). 2020Q2 investment is St. Louis Fed nowcast as of 6/1; 2020Q2 EPU is for first two months, as of 6/1. Source: BEA 2020Q1 2nd release, St. Louis Fed FRED, policyuncertainty.com 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 May 28th and The Guardian.
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%.
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.
From the Philadelphia Fed Coincident Index release today:
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.
I hear a lot about deaths rising with recessions. What does the data indicate about the robustness of such a relationship?
From the Washington Examiner, and op-ed, via AEI:
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).