Price index for gross value added in farm sector is falling (cumulative 8% under Trump) while that in the nonfarm business is rising (cumulative 3.5%).
Figure 1: Log price index for gross value added in nonfarm business sector (blue), and farm sector (red), 2017Q1=0. Pink shading denotes period during which China has tariffed US soybeans. Source: BEA 2019Q1 3rd release, authors’ calculations.
On July 12th, 2018, the closing price for a CBOT soybean futures contract expiring on July 12, 2019, was 885.75. As of 1:40PM Central on July 2nd, the price of the July 2019 contract was 877.00, 0.99% difference. In other words, soybean futures are (still) doing pretty well in terms of forecasting.
Figure 1: Price of contract for soybeans futures expiring July 2019 (black line), fifty data moving average (blue line). Source: ino.com accessed 7/2 1:40PM, and author’s annotations.
In other words, despite the Trump-Xi trade truce, soybean prices remain mired at where they were nearly a year ago (which is why I think Brad Setsers’ “standstill” better describes the outcome).
I’ve noticed a tendency for some commentators to believe the Chinese economy is about to topple. One such instance is Gordon Chang writing in the National Interest:
Take the year 2016 as an example. The NBS reported that China’s gross domestic product grew 6.7 percent that year. In 2017, however, the World Bank issued a bar chart showing that China’s GDP increased only 1.1 percent
One has to wonder why in 2019 Chang is citing an unspecified 2017 World Bank report regarding 2016 performance. Well, time to — gasp — look at the data.
(7/1 – with update including credit spread augmented specification.) Estimated probit over 1986M01-2018M06 period (assuming no recession as of 2019M06):
Prob(recessiont+12=1) = -0.323 – 0.869Spreadt
McFadden R2 0.295, observations = 390, bold denotes significance at 5% msl. Spread in percentage points.
The Walker Administration tried to hide lackluster economic progress with the suppression of the Wisconsin Economic Outlook, for nearly 4 years (strangely, just like in Brownback’s Kansas). The new Evers administration has resumed publication, and added a set of nifty interactive tools.
I am constantly amazed that people write stuff that is easily falsifiable, in an era of easily accessible databases (I am tempted to go into an old fogey rant about “in my day I had to go to the library and hand copy down numbers from the hard copy volumes of International Financial Statistics”…but I will resist). Or ask me for the “raw” data when it’s freely available.
Just to remind the frequent commenters on this blog, there exist freely available data here:
Suppose you wanted to detect anomalies in nonfarm payroll employment (NFP). Would you want to apply a filter that relied on trend stationarity of NFP (like reader CoRev does in his “anomaly analysis”)? My short answer is “no”…
Here is a graph of the front-month futures (July 2019, expires 12th) for soybeans:
Source: ino.com, accessed 6/26/2019 10AM Pacific.
Facebook last week announced plans for Libra, a new global cryptocurrency. The name seems to be a marriage of the words “livre”, the French currency throughout the Middle Ages based on a pound of silver, and “liber,” which is Latin for “free.” Facebook claims that Libra will give the freedom to easily transmit funds across borders to the 1.7 billion adults in the world without access to traditional banks.
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