In 2014-16, production and non-supervisory employment continued to rise even as hours and production declined. In 2018-19 (as discussed here), all three have declined relative to peak.
Figure 1: Manufacturing employment – production and nonsupervisory workers (blue), aggregate hours (teal), manufacturing production (red), in logs 2014M11=0. Source: BLS, Federal Reserve Board, via FRED, and author’s calculations.
Production, employment (production & nonsupervisory), and aggregate hours are all declining, and all down relative to recent peak.
Figure 1: 10 year-3 month constant maturity Treasury spreads (blue), 10 year-2 year (red), 5 year-3 month (green), in %. Source: Federal Reserve, Treasury.
Reader Steven Kopits makes an astounding claim about macroeconomists (including me, and Jim Hamilton, et al.):
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).