Frank Warnock, an expert on US capital flows and stocks, has just written a piece for CFR entitled Two Myths About the U.S. Dollar. In it, he examines “two factors that could substantially alter the long-run value of the U.S. dollar: the dollar’s reserve status and the sustainability of U.S. international debt.”
When do recessions end?
Warren Buffett thinks the U.S. is still in a recession, declaring in a CNBC interview last week:
I think we’re in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any– on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.
I don’t presume to be able to tell Warren Buffett what investment strategies work best. But I can provide some clarity on how economists use the term “recession,” and hopefully shed some light on the issue that Buffett and others have raised.
Portfolio Crowding Out, Illustrated
I have been updating graphs for my money and banking course, and here is the graph I generated to illustrate the tremendous impact of government borrowing on interest rates via portfolio crowding out (as argued in this post).
Back of the Envelope Estimates of Chinese Trade Elasticities
And pitfalls in partial equilibrium analyses
Following up on my previous post, I want to examine what would happen if the Chinese yuan appreciated in real terms, either because of nominal appreciation, or because of more rapid inflation in China versus its trade partners. Here are some back of the envelope estimates.
The Yuan’s Course, Updated and Extended
Since China’s currency is in the news [NYT], [Reuters] [Economix/Leonhardt], I thought it useful to update and extend the data depictions from the post a week ago.
What’s the Fed signaling?
There’s an aspect of Tuesday’s statement from the FOMC that’s not being emphasized by many analysts.
Some Policy Implications of the Interdependence of Cyclical and Structural Unemployment
I have decided to forego discussion of the potentially heavy burdens faced by households with incomes in excess of $250,000 should the tax cuts not be extended for income in excess of $250K (see the poignant story here), and focus on the challenges of the unemployed, and what challenges persistent unemployment in turn poses for macroeconomic policy. (Side note: our assessment of the plight of the +$250K income households should be tempered by the knowledge that even those households with income in excess of $250K will see a tax cut under the President’s proposal, since household income below the $250K threshold would be taxed at the current lower marginal rate [0])
The fat lady sings
The NBER Business Cycle Dating Committee issued a statement today declaring that the bottom of the most recent recession was reached in June of 2009, with the economy in the expansion phase of the business cycle during the 15 months since then. This confirms the announcement issued by the Econbrowser Business Cycle Dating Committee last April.
What’s holding back employment growth?
I certainly agree that the most important factor holding back employment growth at the moment is low demand for firms’ products and services. But I disagree with those who suggest that this is the only factor.
Keep on Cooking Your Eggs and Washing Your Pre-Washed Spinach Thoroughly
Fortunately for me, I don’t like peanut butter. From NYT, on the Senate bill to expand FDA powers and increase funding: