Reader Steven Kopits opines on the CBO projection: “by historical standards [1982-2007], we might expect the 10 year rate around 5.0% for the next decade”. I thought it useful to look at the data:
The American People on the Incipient Tariffs
From a fascinating paper by Oli Coibion, Yuriy Gorodnichenko and Michael Weber, “The Upcoming Trump Tariffs: What Americans Expect and How They Are Responding“:
CBO on the “Trump 10/60 Tariffs”
That’s my name for Trump’s 10% universal tariffs plan augmented with additional 60% on Chinese-made imports. h/t to Torsten Slok for the CBO letter. I show implied effects on PCE deflator inflation, and GDP relative to January 2025 CBO projection.
“… the turn of the 21st century was a significant inflection point in the US economy. “
A reader sends me a missive with this line, and (among others) a picture of manufacturing employment. I reproduce (on an annual basis) this series back to 1960 in the figure below.
CBO, Biden Administration, IMF and Other Forecasts
CBO released its ten year outlook today (as did the IMF in the WEO January update). Continued but decelerating growth, slightly less optimistic than Administration, noticeably less than the IMF, and FT-Booth survey.
Business Cycle Indicators as of Mid-January
Industrial and manufacturing production (+0.9% m/m vs. +0.3% consensus; +0.6% m/m vs. +0.2% consensus), retail sales (control) surprise on the upside. First, indicators followed by the NBER BCDC:
Administration Forecast vs. FT-Booth, SPF vs. Nowcast
From the Economic Report of the President, 2025, forecast finalized 7 November 2024.
Chinn and Irwin: “International Economics” (Cambridge Univ Press), Available Now
Are you teaching international economics in the spring? Or just want to learn more about the field? Consider adopting/purchasing this new textbook, by myself and Douglas Irwin (available now in digital format, January 31st in hardcopy from Cambridge University Press).
The CPI Rose…as Did Wages (mid-2022 to 2024)
Heritage Foundation’s EJ Antoni shared this graph of the CPI level:
Instantaneous Inflation
Headline up, core down.