Once again we’re seeing a big divergence between what the markets expect the Fed to do and what the Fed expects the Fed to do.
Just how bad is the labor market?
Nonfarm payroll employment growth is 1.3% (12 month log difference). Civilian employment — adjusted to conform to the establishment payroll series — is 1.0%. These are the numbers for August 2007? Almost. Payroll employment growth was actually 1.2%. Those figures are for February 2001, the month immediately preceding the last NBER-defined recession.
Jobs numbers disappoint
Was that the other shoe we just heard drop?
Dueling Recession Probability Estimates
Macroeconomic Advisers says the probability of recession is less than 50%.
Open thread on declining Saudi oil production
An article I wrote on Saudi Arabia’s Ghawar oil field appears in the latest issue of Atlantic magazine. I’m putting up this post primarily to provide a forum for readers who might want to offer comments on that discussion.
Borrowing short and lending long
Here I elaborate on the description of the nature of current problems in financial markets that I offered at the Fed’s Jackson Hole conference last week.
August auto sales
August light-vehicle sales give us an early indication of how the real side of the economy is holding up under the financial turmoil that began August 9. And the results are not too bad, considering.
OECD downgrades growth
The OECD has just released What is the economic outlook for OECD countries? An interim assessment (5th September 2007), which reduces US 2007 y/y growth by 0.2 percentage points relative to what was forecasted five months ago. Yet, in a testament to how fast-moving the situation is, that reduction in growth estimates might have been too conservative (consider today’s pending house sales numbers).
AWOL on safety regulation and the protectionist surge
Many observers have long worried about protectionist pressures even as the economy operates at full-employment. What, I wonder, will occur when the economy slows appreciably and unemployment increases, against a backdrop where the safety of imports is already at issue? Those of us who believe that a open and free trading regime is preferable to a restrictd trading regime should be concerned.
Another suggestion for the GSEs
George Washington University Professor Richard Green has another suggestion for addressing the market distortions generated by Freddie Mac and Fannie Mae that I mentioned in my comments at Jackson Hole.