July 01, 2009
No rebound for autos
Autos are worth watching as one sector where economic growth could resume first. But despite what others are saying, I don't believe that it's happening yet.
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Posted by James Hamilton at 05:25 PM permalink | Comments (6) | digg this | reddit
A V-shaped recession?
As James Morley has pointed out, often a sharp economic downturn is followed by an equally sharp economic recovery. One reason for that is the liquidation of inventories that accompanies any recession and restocking that takes place in recovery. What should we expect this time?
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Posted by James Hamilton at 01:41 PM permalink | Comments (16) | digg this | reddit
June 30, 2009
The Newest Data on Foreign Exchange Reserves
The IMF has released its estimates for 2009Q1 reserves (COFER data). Below I update and extend my recent post on the dollar as a reserve currency.
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Posted by Menzie Chinn at 12:56 PM permalink | Comments (16) | digg this | reddit
June 29, 2009
New Papers on International Finance: Crises, Puzzles, and Exchange Rates
Summertime is conference season, especially for those of us who don't live close to a major airport hub. The first conference I attended was the NBER's International Seminar on Macroeconomics, co-organized by Lucrezia Reichlin and Ken West. The conference was broken up into several sections: Financial Crises, International Economic Puzzles, Exchange Rates and Financial Development. Lot's of interesting papers, and plenty of stimulating discussion. I can't do justice to the proceedings, but I can provide the summaries of the papers.
Continue reading "New Papers on International Finance: Crises, Puzzles, and Exchange Rates"
Posted by Menzie Chinn at 09:40 PM permalink | Comments (0) | digg this | reddit
June 27, 2009
On grilling the Fed Chair
I got a bit angry at accounts of the latest appearance of Federal Reserve Chair Ben Bernanke before the U.S. Congress.
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Posted by James Hamilton at 07:26 AM permalink | Comments (75) | digg this | reddit
June 26, 2009
Links for 2009-06-26
The Federal Reserve Bank of New York has put together some very useful timelines of the financial crisis, if you want a handy reference for what happened when in both the United States and around the world.
The BEA reported that disposable personal income increased 1.6% between April and May. In the absence of the stimulus cuts to personal taxes and increases in social benefit payments, the number would have been 0.2%. Real personal consumption expenditures were up 0.2% for the month, though that leaves the April-May average 0.1% below the January-March average. Calculated Risk, always your go-to source for these matters, sums it up this way:
Usually PCE and Residential Investment (RI) lead the economy out of recession, and right now both remain weak. As households increase their savings rate to repair their balance sheets, it seems unlikely that PCE will increase significantly any time soon.
And via Craig Newmark, earn $11 a day by working in hell.
Posted by James Hamilton at 08:43 AM permalink | Comments (5) | digg this | reddit
June 25, 2009
So Much for "Exorbitant Privilege" and "Dark Matter" As Well: Anticipating the 2008 NIIP Release
In my last post, I cited Jeff Frankel's keynote speech from a recent Bank of Canada-ECB workshop. He also pointed to the end of "Exorbitant Privilege" and "Dark Matter", and other arguments of American exceptionalism. I think we'll see resounding evidence of this in Friday's release of the US end-2008 Net International Investment Position (NIIP).
Posted by Menzie Chinn at 09:30 AM permalink | Comments (6) | digg this | reddit
June 24, 2009
The leading economic index
The Conference Board Leading Economic Index increased by more than 1% in both April and May. Since I've been scratching my head trying to find some confirmation for recent economic optimism, I was curious to take a look at what's responsible for the favorable reading from the LEI.
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Posted by James Hamilton at 08:09 AM permalink | Comments (21) | digg this | reddit
June 23, 2009
Update on US Exports and Imports: The Collapse Continues
Here's an update of US imports and export behavior. The trade collapse remarked upon a couple of months ago is still in play.
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Posted by Menzie Chinn at 05:00 PM permalink | Comments (12) | digg this | reddit
June 22, 2009
The Global Saving Glut: Rest in Peace? Mirage? Bete noir?
I've just come back from two weeks on the road, during which time I attended a couple of conferences. The first conference (NBER International Seminar on Macroeconomics) dealt with issues of exchange rates, reserve accumulation and financial crises (more on that later). The second one, a joint Bank of Canada-ECB workshop (not online), focused on exchange rates in the global economy. At the latter, Jeff Frankel delivered the keynote speech, entitled "On Global Currency Issues", in which he outlined what's "out" and what's "in" in international finance (Powerpoint presentation here). One of the phenomena he concluded was no longer relevant was "the global saving glut".
Continue reading "The Global Saving Glut: Rest in Peace? Mirage? Bete noir?"
Posted by Menzie Chinn at 01:51 PM permalink | Comments (36) | digg this | reddit
June 21, 2009
Gasoline prices and consumer sentiment
Gasoline prices (in case you've been hiding in a cave and didn't know) have been on something of a roller coaster the last few years. And it looks as though we're climbing back up another hill at the moment. How much are the recent increases in gas prices likely to weigh down American consumers?
Continue reading "Gasoline prices and consumer sentiment"
Posted by James Hamilton at 07:39 AM permalink | Comments (14) | digg this | reddit
June 17, 2009
Clive Granger memorial pages
The UCSD Economics Department has set up a remembrance page in honor of Clive Granger. Those of you who contributed such moving remarks here at Econbrowser are invited to enter them also on the UCSD remembrance page, as well as to visit the other material collected there.
Posted by James Hamilton at 11:51 AM permalink | Comments (1) | digg this | reddit
Guest Blog: The Impact of the Trilemma Configurations on Macroeconomic Performance
By Hiro Ito
Today, we're fortunate to have Hiro Ito, Associate Professor of Economics at Portland State University as a guest blogger.
In my last posting, I introduced a recent paper coauthored with Menzie Chinn and Joshua Aizenman (UC, Santa Cruz) on the "trilemma," or "impossible trinity" -- a country simultaneously may choose any two, but not all, of the three goals, monetary independence, exchange rate stability and financial integration.
Posted by Menzie Chinn at 05:40 AM permalink | Comments (0) | digg this | reddit
June 15, 2009
The Dollar as a Reserve Currency: Apres le Deluge
Time to review trends in reserves, against the backdrop of financial crisis, recession, and dollar gyrations. (I'll try to be original, but Brad Setser has been more diligent than I in covering these issues over the past few months. [0] [1] [2])
A few observations:
- Known dollar reserves as a share of world reserves appear to be falling.
- Total dollar reserves have likely not declined as precipitously.
- Even with the decline in the dollar share, it is probably not as low as it was during the early 1990's.
- The dollar share is (mechanically) linked to the dollar's value.
- Known dollar reserves at end-2008 are less than predicted by a historical correlation.
- But this differential is infinitesimal compared to the "unallocated" share of total reserves.
Continue reading "The Dollar as a Reserve Currency: Apres le Deluge"
Posted by Menzie Chinn at 04:20 PM permalink | Comments (22) | digg this | reddit
June 14, 2009
Do you see what I see?
I'm still looking for, and still not seeing, the economic recovery that everybody is talking about.
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Posted by James Hamilton at 06:24 AM permalink | Comments (33) | digg this | reddit
June 11, 2009
How to lose on a sure-fire bet
There was a wonderful story in today's WSJ about how some big banks managed to lose some of their hard-earned TARP money.
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Posted by James Hamilton at 04:08 PM permalink | Comments (34) | digg this | reddit
June 10, 2009
How Important Is China to World Growth?
This is a tough question to answer. But I can provide an answer of a mechanical sort. Consider how big the Chinese economy is, compared against the US, the Euro area and Japan.
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Posted by Menzie Chinn at 06:30 PM permalink | Comments (34) | digg this | reddit
June 09, 2009
More on disaggregate bank landing
I'd like to mention two more useful analyses of the disaggregated behavior of bank lending over the last year. The first is from James Kwak at the Baseline Scenario, and the second is a new research paper by Silvio Contessi and Johanna Francis.
Posted by James Hamilton at 08:00 PM permalink | Comments (12) | digg this | reddit
June 08, 2009
DeGlobalization: Transitory or Persistent?
It's not news that the US current account, trade balance and trade balance ex.-oil are all moving toward zero percentage points of GDP. As I've observed before, time will tell how much of this movement is durable (see Bertaut, Kamin and Thomas for skeptical look; see also Cline-Williamson); this in turn depends on whether the adjustment reflects standard macro effects, including a permanent downshift in US consumption growth [0], and how much reflects perhaps transitory effects like a credit crunch in trade financing (as speculated upon here). Here's the trade balance situation for the US.
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Posted by Menzie Chinn at 07:37 PM permalink | Comments (14) | digg this | reddit
June 07, 2009
Not a robust recovery
Often after a sharp economic downturn we observe an equally dramatic recovery. But nobody can claim to be seeing that so far in the currently available data.
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Posted by James Hamilton at 11:14 AM permalink | Comments (42) | digg this | reddit
June 05, 2009
James Pethokoukis: "An improving job market"
Hmm. I'm not sure about this statement.
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Posted by Menzie Chinn at 08:11 PM permalink | Comments (7) | digg this | reddit
Relevant and Irrelevant Criticisms of the Stimulus Package
Keith Hennessey critiques the stimulus package. Some points make sense, some points, well, I wonder. For instance, Hennessey argues the stimulus is not timely. As I've noted before, it's not timely only if you think this will be a relatively short recession, characterized by a rapidly dissipating negative output gap. [0] [1] [2].
Continue reading "Relevant and Irrelevant Criticisms of the Stimulus Package"
Posted by Menzie Chinn at 02:12 PM permalink | Comments (23) | digg this | reddit
June 03, 2009
Output, Employment and Industrial Production in the "1980-82 Recession"
In today's NYT, Casey Mulligan presents an interesting picture of GDP during the "1980-82 recession" -- the conjoining of the two NBER defined recessions in 1980 and 1981-82. Based on the comparison with the current recession, he concludes:
While the job losses, foreclosures, stock declines and other casualties of the current recession have been very painful, substantially more bad economic news is needed to make this recession worse than the downturns of 1980-'82, at least in G.D.P. terms.
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Posted by Menzie Chinn at 06:09 PM permalink | Comments (20) | digg this | reddit
June 02, 2009
More on bank lending data
Further evidence on the decline in bank lending.
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Posted by James Hamilton at 06:01 PM permalink | Comments (11) | digg this | reddit
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