economic indicators

Yikes! Trade and Economic Policy Uncertainty

First, overall (news-based) economic policy uncertainty: Figure 1: Economic Policy Uncertainty index (blue), and centered seven day moving average (red). Source: policyuncertainty.com accessed 6/11, and author’s calculations. Second, how the trade policy component has jumped in the Trump era. Figure 2: Economic Policy Uncertainty index (blue), and trade policy categorical index (dark red), through March 2018. Source: policyuncertainty.com accessed 6/11.

Measurement and Forecasts of the Puerto Rico Economy

As one of the largest social and humanitarian disasters in the American homeland, remarkably little coverage has been devoted to evaluating the economic consequences of Hurrican Maria. Here is a high frequency index, the GDB-EAI (Government Development Bank-Economic Activity Indicator): Source: Government Development Bank for Puerto Rico. The growth rate of this indicator with GNP at the annual frequency over the 1982-2016 fiscal years is 0.78, R2 = 0.91. It is based on nonfarm payroll employment, electricity generation, gasoline sales and cement production. The indicator is calculated in a manner similar to that used by the Conference Board for its coincident index (description here). The decline from August to December was 14.3% (log terms), or an annualized rate of 43%. Estimates of agg...

Is California in Recession? (Part V)

Back in mid-December, Political Calculations asked if California was in recession. Following last week’s state-level GDP release for 2017Q4 and Philadelphia Fed indices from a week and a half ago — it’s likely no recession occurred, and is currently not occurring. Figure 1: California GDP in millions of Ch.2009$ SAAR (blue, left log scale), California coincident index (red, right log scale). 2018Q3 observation is forecast implied by Philadelphia Fed leading index. Source: BEA, Philadelphia Fed, author’s calculations. California GDP continues to rise, with the most recent period of q/q negative growth in 2017Q1, not in the latter part of the year suggested by Political Calculations. Hence, by the rule of thumb of two consecutive quarters of negative q/q growth, no recession has occurred in ...

Arthur Laffer’s RSPS Economic Outlook Ranking and Subsequent State GDP Growth

Using today’s state level GDP release, we can assess how highly ranked states like Kansas performed subsequently, as compared to poorly ranked states like California. Figure 1: Log California real GDP (blue), Kansas (red), and US (black), normalized to 2011Q1=0. NBER defined recession dates shaded gray. [##] denote Rich States, Poor States 2013 Economic Outlook rankings for 2013 (based on 2012 data). Source: BEA, May 2018, NBER, ALEC, and author’s calculations. Notice that California was ranked 47th in economic outlook by ALEC’s Rich States, Poor States, 2013, using data for 2012. Hence, this ranking should reflect policies enacted by the Brown administration. Kansas ranked 11th in that year, reflecting 2012 data and policies of the Brownback administration. If one wanted to take into acco...

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...

A little slower growth

The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 2.3% annual rate in the first quarter. That’s a modest slowdown from the 3.1% average we saw over the previous 3 quarters. 3.1% is also the average growth rate for the U.S. economy over the last 70 years. But the Q1 reading is pretty much on par with the 2.2% average growth since the Great Recession ended in 2009. Real GDP growth at an annual rate, 1947:Q2-2018:Q1, with the 1947-2018 historical average (3.1%) in blue and post-Great-Recession average (2.2%) in red. Slightly softer first-quarter growth is something that’s become pretty typical in the recent data. Since 2010, first-quarter real GDP growth averaged 1.3% at an annual rate, compared with 2.5% for the other three quarters. We get a smoother impression lo...

Yield Curves Flattening in High Income Countries

A recent article on the predictive abilities yield curves (Shrager/Quartz) includes a nifty interactive which allows you to look at yield curves over time. Below, I do a snapshot comparison, across the world. Figure 1: Ten year-three month term spread (blue bars), as of 9 July 2016. China observation is Five year-three month term spread. Euro ten year rate is for Germany. Source: Economist, data as of April 18. It’s hard to compare across countries, particularly without knowledge of what is the average term premium in each country. (See Chinn and Kucko (2015) for a cross country assessment of the predictive power of yield curves for eocnomic activity and recessions.) However, one can easily compare what the spreads have done since a last check (in this case July of 2017). This is shown in ...

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 ...

Net vs. Gross Investment

Deregulatory moves, both actual and anticipated, have been hailed as spurring business fixed investment [1] Is there content to this assertion? A glance at nonresidential fixed investment seems to be supportive. Figure 1: Private nonresidential fixed investment, in billions of Ch.2009$, SAAR (blue). NBER defined recession dates shaded gray. Source: BEA, 2017Q4 3rd release. However, the standard investment series reported in the NIPA tables pertain to gross investment spending, i.e., not taking into account depreciation. As capital expenditures have skewed more toward information and communication technology (ICT) equipment and software, the pace of capital depreciation has accelerated. As a consequence, the net and gross series have deviated more profoundly over time. Plotting net investme...

Comovement in Economic Policy Uncertainty

Reader Ed Hanson makes a puzzling assertion regarding trade policy measures announced by Mr. Trump, and the evolution of policy uncertainty as measured by Baker, Bloom and Davis: As for the uncertainty, I can not make your author’s calculation but I can look at the front page of the policyuncertainty.com site and look at the headline monthly index they present. All the countries, except India, show a similar chart. So I doubt if such uncertainty across the spectrum is caused by a minor thing such as TPP. But I would not be surprised if some of the spike is coming down from the Chinese US trade spiff. Both these countries show very similar recent chart. In response to my expressed dubiousness, he writes: I believe you when you say, “I honestly don’t see what he’s claiming.” But if you had f...

TPP: Maybe Not So Horrible

From The Hill: President Trump on Thursday instructed top administration officials to explore re-entering the Trans-Pacific Partnership (TPP) — a trade pact he pulled the U.S. out of last year while calling it a “disaster.” With this whipsaw of trade policy announcements, is it any wonder that economic policy uncertainty is rising? As measured by the Baker, Bloom and Davis index: Figure 1: Daily EPU index as of April 12 (blue), and 7 day centered moving average (bold red). Source: policyuncertainty.com, and author’s calculations. A longer term perspective on economic policy uncertainty is shown in this post. And of course, most of us knew it wasn’t so horrible at all, back when we had a chance to influence the nature of TPP.

A Deceleration in Economic Activity?

Third release numbers on GDP are out. Growth of Gross Domestic Output — the average of GDP and GDI — is down much more than that of GDP: nearly a percentage point. Figure 1: Quarter-on-quarter output growth as measured by GDP (red), and by GDO (blue), SAAR. 2018Q1 figures are forecasts as for March 29, from Macroeconomic Advisers (red solid square) and from Atlanta Fed (red triangle). Source: BEA, Macroeconomic Advisers and Atlanta Fed. The downshift in Atlanta Fed nowcasts from 5.5% to 2.4% is pretty interesting.

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