Excess Casualties in Puerto Rico, According to Mr. Trump

From Mr. Trump, this morning:

3000 people did not die in the two hurricanes that hit Puerto Rico. When I left the Island, AFTER the storm had hit, they had anywhere from 6 to 18 deaths. As time went by it did not go up by much. Then, a long time later, they started to report really large numbers, like 3000……..This was done by the Democrats in order to make me look as bad as possible when I was successfully raising Billions of Dollars to help rebuild Puerto Rico. If a person died for any reason, like old age, just add them onto the list. Bad politics. I love Puerto Rico!

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“Unsung Success” in Puerto Rico

Following up on examples of the incredible and unsung success of the recovery effort in Puerto Rico described by Mr. Trump, from Begnaud/CBSNews:

What may be millions of water bottles. meant for victims of Hurricane Maria, have been sitting on a runway in Ceiba, Puerto Rico, since last year, according to @FEMA, which confirmed the news to me, late tonight, after pictures, posted today on social media, went viral.

If 2975 dead is a success, what does a failure look like?

But Mr. Trump did pass out some paper towel rolls.

The Trade Deficit Rises

From Goldman Sachs (Hatzius, et al.) today, interpreting today’s July trade release:

The trade deficit rose to $50.1bn in July, from a revised $45.7bn in June. Total exports fell 1.0%, as the total drop in exports ($2.1bn) was comprised primarily of declines in civilian aircraft ($1.6bn) and soybeans ($0.7bn). The decline in soybeans exports likely reflects payback following a sharp increase in June ahead of Chinese retaliatory tariffs. Total imports (+0.9%) rose, reflecting increases in both petroleum imports (+3.7%) as well as nonpetroleum imports (+0.6%).

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The Investment Boom…or Not

Fixed nonresidential investment is rising at a rapid clip. However, there are some nuances to the headline story.


Figure 1: Nonresidential fixed investment, in billions of Ch.2012$ (blue), and in billions of dollars (red), both SAAR, both on log-scale. Source: BEA, 2018Q2 2nd release.

Some sizable portion of recent investment is associated with the mining/drilling/fracking phenomenon.


Figure 2: Contributions to overall nonresidential fixed investment growth of structures investment in mining (red), and all else (blue). Source: BEA, 2018Q2 2nd release, and author’s calculations.

For the moment, investment looks like it should be sustained. However, should oil prices decline, or the spigot of cash diminish (see McLean/NYT today), then the support coming from this sector might disappear. (This article discusses light tight oil (LTO) sector cash flow, financing, and prospective capital investment.)

In addition, investment in equipment, while rising overall, is declining in the industrial sector.


Figure 3: Contributions to overall equipment investment growth of industrial equipment investment (red), and all else (blue). Source: BEA, 2018Q2 2nd release, and author’s calculations.

Right now, increased investment demand coming from the accelerator is more than offsetting the drag coming from higher policy uncertainty. As the effects of the tax cuts wear off, we should expect the balance to shift.