economic growth

Short Term Growth Prospects

Figure 1: GDP (blue), GDO (red), and GDPPlus (green), q/q SAAR growth calculated as log diferences, and GDPNow (blue square) and NY Fed Nowcast (blue open triangle). Source: BEA 2018Q2 2nd release, Philadelphia Fed, Atlanta Fed (8/30),NY Fed (8/31), and author’s calculations.

Trade Deficit Rising!

Since 2017Q1. By Mr. Trump’s own metric, we’re losing. But it’s a stoopid metric for evaluating “unfair”-ness. From the last GDP release (which incorporates March trade release):Figure 1: Net exports to GDP (blue), and net exports excluding petroleum products (red), as a ratio to GDP, SAAR. NBER defined recession dates shaded gray. Orange denotes 2017Q1-2018Q1. Source: BEA 2018Q1 second release, NBER, and author’s calculations. Here’s a detail, in nominal dollar terms: Figure 2: Net exports to GDP (blue), and net exports excluding petroleum products (red), both nominal, SAAR. NBER defined recession dates shaded gray. Orange denotes 2017Q1-2018Q1. Source: BEA 2018Q1 second release, NBER, and author’s calculations. As noted in numerous instances (EconoFact, Steil/BI), trade deficits usually ...

Guest Contribution: “The ECB’s Strong Euro Problem”

Today, we are fortunate to present a guest contribution written by Ashoka Mody, Charles and Marie Visiting Professor in International Economic Policy, Woodrow Wilson School, Princeton University. Previously, he was Deputy Director in the International Monetary Fund’s Research and European Departments.Guest The euro has appreciated 10 percent against the Swiss franc (CHF) over the past year. The U.S. dollar and the Japanese yen have not made similar gains vis-à-vis the franc. Tracking the franc’s movements relative to the major currencies gives an unusual window onto the deflation-fighting credentials of the world’s major central banks. It illustrates, in particular, the European Central Bank’s half-hearted efforts to fight the risk of price deflation. Financial markets have come to believe...

Comparative Performance of the UK Economy

There was no recession after Brexit. But a slowdown looks like it’s here now… Figure 1: Log real GDP for France (blue), UK (bold red), Germany (green), US (bold black), and euro area (teal), all normalized to 2016Q2. Source: OECD, BEA, author’s calculations. Notice that the UK has continued to grow (except with an essential stall in 2018Q1), but output has lagged other major economies. (Another depiction, comparing to G7 countries, is provided by Laurent Ferrara.) UK GDP growth has lagged its neighbors, even with a depreciated currency. Note however that the Baker, Bloom and Davis index of economic policy uncertainty remains elevated relative to the pre-Brexit average. Figure 2: Graph 1, Quarter on quarter SAAR growth rate of real UK GDP; Graph 2, Log real trade weighted UK pound, 2010=0; ...

Six Pictures of the US Macroeconomy

Nowcasting the US Economy: Figure 1: Reported GDP (blue bars), Atlanta Fed GDPNow (red), NY Fed nowcast (green), and Macroeconomic Advisers (black), all in billions Ch.2009$ SAAR, on log scale. Source: BEA 2018Q1 advance; Atlanta Fed (4/26), NY Fed (4/27), Macroeconomic Advisers (4/26). See Jim’s recent post on the advance release. Tracking GDP using GDO: Furman (2016) notes the fact that GDO better predicts GDP than lagged GDP. Figure 2: GDP (blue), GDI (red), GDO (green), as average of GDP and GDI, all in billions Ch.2009$ SAAR, on log scale. Source: BEA 2018Q1 advance. The fact that GDO growth is lower than that of GDP is suggestive for what 2018Q1 will be revised to. Conditional vs. Unconditional Forecasts: Figure 3: GDP (blue), ARIMA(1,1,1) dynamic forecast over 1967-2018Q1 (red), ARI...

Annual, Annualized, q4/q4 Growth Rates: A Graphical Depiction

Why do reported growth rates differ for the same variable? Refer to the last three years of GDP data to see… Figure 1: Quarterly GDP, SAAR, FRED series GDPC1 (blue line), annual, FRED series GDPCA (green bars), in billions of Chained 2009$. 2017 q4/q4 growth rate (red arrow); annual 2017 y/y growth rate (green arrow); 2017Q4 q/q SAAR growth rate (blue arrow); 2016Q1 y/y SAAR growth rate (black arrow). Source: BEA, 2017Q4 3rd release via FRED, and author’s calculations. So, there are several ways to calculate the growth rate over the course of the year. They will almost invariably differ, perhaps substantially, when GDP is either growing very rapidly or shrinking very rapidly. And there is no “right” way. If one wants to calculate the most recent growth experience, one might stress q/q. If ...

Economic Report of the President, Table 8-2: Projected Productivity Illustrated

Jason Furman points us out to his favorite Table 8-2 in the Economic Report of the President, 2018, released yesterday, with particular reference to the productivity assumption. Figure 1: Nonfarm real output per hour, 1947Q1=1 (blue), Trump Administration forecast of 2.6% (red), historical average (1953Q2-2017Q3) growth rate of 2% (pink). NBER defined recession dates shaded gray. Source: BLS via FRED, NBER, CEA and author’s calculations. Note that this is the officially reported series, rather than the average of GDO and GDI used by CEA. The differences are small, however, in estimated trends, so I think this graph is representative. The 2.6% growth rate forecast is just at the upper end of the 66% confidence interval for an ARIMA(0,1,0) or ARIMA(0,1,2) model, estimated over the 1953Q2-201...