Markets

Is California in Recession? (Part VI)

Back in mid-December, Political Calculations asked if California was in recession. The release of April state-level employment figures provides an opportunity to revisit this question — it’s likely no recession occurred, and is currently not occurring. Figure 1: Log nonfarm payroll employment for California (blue), and for US (black), normalized to 2011M01=0. Source: BLS, and author’s calculations. Note that California has cumulatively outpaced the Nation by 5% (log terms) since Governor Brown took office in 2011M01. California’s Department of Finance April forecast projects continued growth. The DoF forecast is based in part on IHS’s national forecast (see description here), and the Department’s in-house macroeconometric model. For a check, I include the UCLA Anderson Forecast’ March proj...

How to Reduce the US-China Trade Deficit by $200 Billion: A Modest Proposal

Jim Tankersley/NYT discusses how hard it will be to reduce the $337 billion US-China gross trade deficit by $200 billion by increasing exports (as I point out in this post, our trade deficit in value added is probably about half the $337 billion). The enormity of the task of cajoling the Chinese into buying $200 billion more is shown in Figure 1 (see the light blue arrow). Figure 1: US exports to China (blue) and US imports from China (red), in billions of USD, SAAR. NBER defined recession dates shaded gray. Increasing exports to China by $200 billion over two years (light blue arrow); decrease imports from China by $200 billion over two years (pink arrow). Source: BEA/Census, NBER, author’s calculations. A much simpler way to reduce the deficit; instead of browbeating the Chinese into buy...

Tales from the Midwest (Macro Spring Meetings, That Is)

Program here. Here are a couple of papers I found of interest. From the Empirical Macro session: “Output response to government spending: Evidence from new international military spending data,” By Viacheslav Sheremirov; Federal Reserve Bank of Boston, Sandra Spirovska; University of Wisconsin, Madison Using 25 years of military spending data from more than a hundred countries, this paper provides new evidence on the effect of government spending on output. Following a popular assumption that military spending is unlikely to respond to output at business-cycle frequencies—and exploiting variation in military spending of a significantly larger magnitude than in the previous literature based on U.S. data—we find that the pooled government spending multiplier is small: below 0.2. This estimat...

Semi-automatic Rifle Use and Mass Shooting Casualties, 1982M08-2018M04

Figure 1: Cumulative mass shooting fatalities from incidents where semi-automatic rifles used (blue), non-fatal injured (light blue), fatalities where other weapons (handguns, semi-automatic handguns, rifles, shotguns) used (red), non-fatal injured (pink), through April 2018. Light green denotes assault weapons ban. Orange denotes 2017M01-2018M04. Source: Mother Jones, accessed 5/18/2018, and author’s calculations.

New 3 World Trade Center to mark another step in NYC’s downtown revival

It’s finally happening. More than 16 years after the World Trade Center tragedy, a major component of the rebuilt WTC site is getting ready to open. In early June, 3 World Trade Center will be opening with lead tenants including music streaming firm Spotify and advertising giant GroupM. It will join 1 and 4 World Trade Center — the two other major buildings on the site — along with 7 World Trade Center on Greenwich Street. The completion of this phase of the World Trade Center comes as New York’s financial district is experiencing a renaissance. I was at the World Trade Center during the 9/11 tragedy and worked at the NYSE in the immediate years after. Back then, the financial district was filled with vacancies and relatively sparsely populated. And then, it began to change. &#...

Cumulative Mass Shooting Casualties since 2009M01, 2017M01

Thankfully, Mr. Trump in conjunction with the Republican controlled Congress have implemented policies to address this issue in manner supported by evidence-based research. Figure 1: Cumulative fatalities from mass shootings since 2009M01 (blue), since 2017M01 (red), on a log scale. May observation assumes lower bound of 8 fatalities. Source: Mother Jones accessed 5/18, news accounts, author’s calculations. It took 4-1/2 years from 2009M01 to match the number of fatalities that have been recorded in the 16 months since 2017M01. Figure 2: Cumulative injuries from mass shootings since 2009M01 (blue), since 2017M01 (red), on a log scale. May observation assumes zero injuries. Source: Mother Jones accessed 5/18, news accounts, author’s calculations.

A Wisconsin Fixed Effect

Wisconsin’s unemployment rate has dropped to 2.8 percentage points in April. The national rate is 3.9 percentage points. Proof of Walkernomics success? Well, since on average Wisconsin’s unemployment rate is typically 0.9 percentage points below, the answer is “no”. Consider the Wisconsin and US unemployment rates. Figure 1: Unemployment rate for United States (blue), for Wisconsin (red). NBER defined recession dates shaded gray; Walker administrations shaded orange. Source: BLS, DWD, NBER. I estimate the mean differential for 1986-2010 (the Great Moderation period pre-Walker) using OLS, and show the actual, the mean differential and the 90% prediction interval, below. Figure 2: Unemployment rate differential US minus WI, in percentage point (black), estimated mean (red), and 90% predictio...

After-hours buzz: PYPL, JWN, AMAT & more

Check out which companies are making headlines after the bell on Thursday: PayPal shares rose nearly 1 percent post-market after the company said it has reached a $2.2 billion deal to buy iZettle, a European financial technology start-up. Shares of AmTrust Financial Services gained 7 percent in extended trading after activist investor Carl Icahn disclosed a large position in the insurer. In a letter to AmTrust’s board, Icahn laid out his opposition to a plan to take the company private. Nordstrom shares fell 7 percent in after-hours trading. While the retailer posted better-than-expected earnings, Nordstrom reported same-store sales growth that missed analyst expectations. The company said comparable sales rose 0.6 percent during the first quarter. Wall Street had projected growth of...

April Employment in Wisconsin

DWD released April figures today. Nonfarm payroll employment fell 1000, private nonfarm payroll employment by 3000 (seasonally adjusted). Corresponding March figures were revised down by 400 and 700, respectively. Minnesota’s April numbers were down as well, as described here. Figure 1: Nonfarm payroll employment in Minnesota (blue), Wisconsin (red), and US (black), all in logs normalized to 2011M01=0. Light green shaded dates indicates data not yet benchmarked using QCEW data. Source: WI DWD, MN DEED, BLS and author’s calculations. A comparison against Wisconsin’s other neighbors is here (through February; BLS will release data for all states tomorrow). One needs to be cautious in interpreting recent data, let alone one month’s worth. In this regard, it’s important to remember that the da...

Stocks making the biggest moves premarket: WMT, CSCO, F, KO, CMCSA, JACK & more

Check out the companies making headlines before the bell: Walmart – The retail giant reported adjusted quarterly profit of $1.14 per share, 2 cents share above estimates. Revenue also beat forecasts. US comparable-store sales were up 2.1 percent, beating consensus estimates. Cisco Systems – Cisco reported adjusted quarterly profit of 66 cents per share, a penny a share ahead of estimates. The network equipment maker’s revenue was also slightly above Street forecasts and Cisco issued current-quarter guidance is in line with estimates. The forecast is sparking concerns, however, about the pace of the company’s transition to a software-focused business. Ford – Ford will restart production of its popular F-150 pickup truck on Friday at its Dearborn, Michigan plant. Production had b...

JC Penney shares tank on sales decline, profit outlook slashed

J.C. Penney on Thursday reported sales that missed analysts’ expectations, blaming the declines on a cooler start to the spring season. The department store chain also cut its full-year earnings outlook. Its shares tumbled more than 12 percent, falling below $3 apiece, in early trading on the news. Revenues fell about 4.3 percent to $2.58 billion during the first quarter ended May 5, missing Street estimates for $2.61 billion, according to a Thomson Reuters survey. Same-store sales rose 0.2 percent but this was also short of analysts’ forecast for roughly 2 percent growth. Penney’s net loss narrowed to $78 million, or 25 cents per share, from $187 million, or 60 cents a share, a year ago. Excluding one-time items, it lost 22 cents a share, 1 cent better than the 23-cent l...

Walmart beats on earnings and revenues as US e-commerce push pays off

Walmart on Thursday reported fiscal first-quarter earnings that beat expectations on the top and bottom lines, as its e-commerce business rebounded. After a disappointing e-commerce performance last quarter, Walmart said U.S. online sales grew 33 percent. The rise implied its investment, namely in online grocery and its website design, is paying off. Here’s how the company did compared with what Wall Street expected: Earnings: $1.14 cents per share vs. $1.12 per share forecast by Thomson Reuters Revenue: $122.69 billion vs. $120.51 billion forecast by Thomson Reuters Same-store sales growth 2.1 percent vs. 2.0 percent forecast by Thomson Reuters “Online grocery continued to accelerate and [we] had the new Walmart.com site redesign late in the quarter. We also have new brands in...