Bleg: Puzzles in the Hassett Economic Report of the President, 2019

In the wake of the discussion of Figure 1-6 in the ERP, I thought it might be useful for me to collect up questions about puzzling or misleading graphs/tables or conclusions in the Report.

The entire document is here.

I don’t think I have ever made a similar request. However, I don’t think I’ve ever seen a similar CEA “massage the message” in quite the same way. Even the G.W. Bush CEA (of which I was briefly a part of) did not make such blatantly misleading graphics as highlighted in this post.

Clarification (3PM): I’ll then compile the contributions with my comments in a new post.

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Seven (Business) Days in May

[updated 6/3] Undervalued currencies as countervailable subsidies, tariffs on Mexico, flash mfg PMI drops, Drumpf again insists China pays US tariffs…so the yield curve inverts!

Figure 1: [Updated 6/3) Treasury 10yr-3mo spread (blue, left scale), 10yr-2yr (red, left scale), 5yr-3mo (teal, left scale), in %; 6/3 interest rates on-the-run at 1:30PM EST, and Economic Policy Uncertainty index (black, right scale). Source: Fed via FRED, US Treasury, and policyuncertainty.com, accessed 6/3/2019.

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Yield curve inversion

The gap between long-term and short-term interest rates has narrowed sharply over the last year and is now dipping into negative territory. Historically that’s often been a signal that slower economic growth or even an economic recession could lie ahead.

Gap between average interest rate on 10-year Treasury bond and 3-month Treasury bill during the last month of the quarter (1953:Q2 to 2019:Q1) and May 1-24 for 2019:Q2. NBER dates for U.S. recessions shown as shaded regions.


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The “Blip” Continues! Soybean Edition

A year ago, the July 2019 futures were $10.46, compared to $8.296 today.

Reader CoRev writes on July 9th:

…no one has denied the impact of tariffs on FUTURES prices. Those of us arguing against the constant anti-tariff, anti-Trump dialogs have noted this will probably be a price blip lasting until US/Chinese negotiations end. We are on record saying the prices will be back approaching last year’s harvest season prices.

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