The structural, or cyclically adjusted, budget balance has been deteriorating. In accounting terms, what’re the drivers?
When the Textbook Is Right: Implications of the Trump Fiscal/Trade Regime
Today we learned that through March, the Federal budget deficit was 15% larger than the corresponding point in the last fiscal year — as expected given a not particularly stimulative tax cut (so much for tax cuts paying for themselves, as Stephen Moore claimed) and the ending of spending restraints. The dollar remains at elevated levels, as interest rates have risen. The trade deficit, excluding petroleum, continues to deteriorate. As I explained to my macro class today… it’s all textbook (notes).
Trade Policy Uncertainty and World Uncertainty
If measured world uncertainty shocks cause decelerating economic growth, then Trump will be partly responsible for the global slowdown the IMF is forecasting.
Is California in Recession? (Part XVI)
February coincident indices from the Philadelphia Fed are out. Time to re-evaluate this assessment from slightly over a year ago in Political Calculations that California was in recession.
Going by these [household survey based labor market] measures, it would appear that recession has arrived in California, which is partially borne out by state level GDP data from the U.S. Bureau of Economic Analysis. [text as accessed on 12/27/2017]
The release provides an opportunity to revisit this question (the Q3 GDP figures are discussed here). It’s (still) unlikely that a recession occurred.
Guest Contribution: “Global Growth Forecasts Shift Downward—What’s Behind the Numbers and Why It Matters”
Today, we are pleased to present a guest contribution written by Enrique Martínez-García (Senior Reserach Economist and Policy Advisor, Federal Reserve Bank of Dallas). The views expressed here are those solely of the author and do not reflect those of the Federal Reserve Bank of Dallas or the Federal Reserve System. He acknowledges the contributions of Valerie Grossman, Michael Morris, Amro Shohoud, and Mark A. Wynne in preparing these comments.
Don Luskin Speaks: On Trump’s Fed Nominees
Donald Luskin, chief investment officer at Trend Macrolytics, said: “Trump is holding the Fed accountable, and as the man who appoints Fed governors, that is entirely appropriate.” (CNBC)
Why Hasn’t the Incipient Trump-Xi Deal Shown Up in Soybean Futures?
(In honor of reader CoRev), soybean futures for May…
What Would It Take to Implement Cain’s Gold Standard, Interest-Rate-Wise?
Stabilizing the price of gold in US dollars requires adjusting the interest rate (akin to how the exchange rate is managed). Herman Cain’s call for a return to the gold standard would imply that the Fed funds rate would have to be about 15 percentage points higher than it was in January 2000 in order to keep the dollar’s value stable at January 2000 levels — a rate 18 percentage points higher than actually recorded in March 2019.
A Pyrrhic Victory (Perhaps) on China Trade
From Bradsher in NYT:
…spurred by tariffs and trade tensions, global companies are beginning to shift their supply chains away from China, just as some Trump administration officials had wanted.
Does Policy Uncertainty Matter?
The Atlanta Fed along w/Bloom (Stanford) and Davis (Chicago) survey business operators and finds it does!