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August 30, 2008
Obama's acceptance speech
Barack Obama gave a fine speech at the Democratic National Convention on Thursday. But I'm troubled by what I see as its underlying economic philosophy.
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Posted by James Hamilton at 11:43 AM permalink | Comments (92)
August 28, 2008
Why Does It Feel Like a Recession?
The preliminary GDP release today provided a number of surprises. The first surprise was not that GDP was higher than the advance release (given the June trade figures reported earlier this month), but rather that at 3.3% it exceeded the 2.8% (SAAR) of the consensus [0]. The second surprise is that the reduction in imports comprises an even larger proportion of the overall growth.
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Posted by Menzie Chinn at 03:38 PM permalink | Comments (25)
August 26, 2008
Calling a European recession
"Is the first zone wide recession in the short history of the eurozone about to be registered?" asks Edward Hugh. I was curious to apply the algorithm for calculating my U.S. recession indicator index to a euro area GDP measure to get an answer.
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Posted by James Hamilton at 08:16 PM permalink | Comments (13)
August 25, 2008
The Dollar and the Trade Deficit: How Does Productivity Fit In?
Why is the trade deficit, even taking out oil, so large when the dollar is so weak? Maybe some insights can be gleaned from productivity measures.
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Posted by Menzie Chinn at 08:17 PM permalink | Comments (16)
August 24, 2008
Recession indicators
Many people may not care whether our current situation meets the formal definition of a recession, but as I've explained previously, you should. Here's a summary of how I see the economy at the moment. I begin by discussing a new paper by UCLA Professor Ed Leamer, which has also been highlighted by Greg Mankiw, Frank Stephenson, Calculated Risk, and Brian Blackstone.
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Posted by James Hamilton at 08:03 AM permalink | Comments (19)
August 22, 2008
A Different Look at the Labor Market
Over the past few months, I've heard that, while job creation is insufficient to keep unemployment rates constant, job losses have not been consistent with recession. More recently, we've heard a slight modification on this "talking point". Commenting on the August 1 labor market release, WSJ RealTime Economics notes:
So far this year, the economy has shed nearly half a million jobs -- hardly a sign of strength.
But it could have been much worse. In testimony before a congressional panel Friday, Bureau of Labor Statistics Commissioner Keith Hall noted that the last two recessions had resulted in 1.5 million lost jobs. "Economic growth is not strong enough to support job growth," he told legislators, but he added that relative to the last set of official recessions, job losses this time around "have not been as severe."
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Posted by Menzie Chinn at 05:26 PM permalink | Comments (8)
August 21, 2008
More speculation about those oil speculators
I normally leave it to folks like Dean Baker to beat up on the press. But I can't resist shining a bright light on today's story about oil speculators in the Washington Post, which has also been discussed by Mark Thoma and Tyler Cowen.
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Posted by James Hamilton at 07:56 PM permalink | Comments (33)
Consumer Inflation: What Do Alternate Measures Say, and Why
What to make of the different measures of inflation being faced by consumers?
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Posted by Menzie Chinn at 10:43 AM permalink | Comments (2)
August 19, 2008
Economic consequences of falling oil prices
I've maintained that rising oil prices put a significant burden on the U.S. economy in recent months. How much will falling oil prices help to alleviate those concerns?
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Posted by James Hamilton at 07:58 AM permalink | Comments (12)
August 16, 2008
Drilling Offshore to Affect World Oil Prices... and Other Tales from the Iraq-Pakistan Border [0]
Various individuals have argued for drilling in the Outer Continental Shelf (OCS) as a means to affect the price of oil. This is true despite this recent assessment by the Department of Energy's Energy Information Administration, the Federal Government's nonpartisan analytical group on energy issues. From Annual Energy Outlook related analyses (June 2007):
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Posted by Menzie Chinn at 09:15 AM permalink | Comments (50)
August 15, 2008
Core inflation
The Bureau of Labor Statistics reported yesterday that its primary consumer price index CPI-U rose 5.6% over the last year. That's the highest inflation rate in 17 years, the newspapers all call to our attention. Just how concerned should we be about these numbers?
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Posted by James Hamilton at 07:13 AM permalink | Comments (28)
August 13, 2008
The International Outlook: The View from Dallas
Enrique Martinez-Garcia and Janet Koech at the Dallas Fed present their perspective on the international macro outlook. The first is particularly interesting to me.
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Posted by Menzie Chinn at 10:16 PM permalink | Comments (12)
August 12, 2008
Americans making changes
American energy consumption is dropping. But will falling gasoline prices reverse that trend?
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Posted by James Hamilton at 07:20 PM permalink | Comments (18)
Macroblog returns
It's back!
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Posted by James Hamilton at 01:45 PM permalink | Comments (2)
August 10, 2008
Current Account Adjustment Redux? What's Different this Time Around
The dollar is on the rebound against the euro [0], [1]. The non-oil trade deficit is shrinking as a share of GDP [2]. Is this a replay of the 1980's adjustment process?
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Posted by Menzie Chinn at 10:00 PM permalink | Comments (10)
Oil and the dollar
Although movements in the value of the dollar are one factor contributing to recent changes in the dollar price of oil, I do not believe they are the most important factor. Here I review some of the evidence that persuades me of this.
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Posted by James Hamilton at 12:23 PM permalink | Comments (32)
August 06, 2008
Synergies of the unpleasant kind: recessions, credit crunches and housing busts
From the abstract of a new paper by Stijn Claessens, M. Ayhan Kose and Marco E. Terrones, entitled "What Happens During Recessions, Crunches and Busts?" (paper now online here):
We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the 1960-2007 period. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. We document a rich set of stylized facts about the behavior of key macroeconomic and financial variables during these various events. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of a recession. In particular, we show that recessions associated with credit crunches and house price busts are deeper and last longer than other recessions are. In light of our findings, we examine the implications of recent macroeconomic and financial developments in the United States for the future path of its economy.
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Posted by Menzie Chinn at 12:45 PM permalink | Comments (24)
August 05, 2008
What does the GDP deflator measure?
As Menzie explained yesterday, it isn't inflation. Since there still seems to be some controversy about this issue (e.g., Rich Karlgaard, Instapundit, and Reuters), let me take a stab at it as well.
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Posted by James Hamilton at 10:00 AM permalink | Comments (50)
August 03, 2008
Is the GDP deflator for 2008Q2 plausible?
In my previous post, I discussed how the 2008Q2 advance GDP estimate would be revised, and the possibility that the final figure (after annual revisions) could enter in below zero. One reason that might occur is because the GDP deflator could be revised upward. Suspicion that this might occur is heightened by the seemingly implausible 1.1% SAAR inflation rate recorded for the GDP deflator (see the comments to this post, as well as Felix Salmon, and [0]). One question I want to address is whether this figure is actually so implausible.
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Posted by Menzie Chinn at 10:10 PM permalink | Comments (9)
Oil prices, autos, and the U.S. economy
It's instructive to compare what's currently happening to the auto sector and the U.S. economy with what we saw in the wake of the 1990 oil shock.
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Posted by James Hamilton at 07:17 AM permalink | Comments (21)
August 01, 2008
Revisions matter. So do levels
The 1.9% SAAR growth rate in 2008Q2 [BEA] is widely viewed as a positive [0]; and the fact that GDP growth remained, in this advance release, above zero is a positive. However, when taken with the annual revision, one sees some interesting aspects. Not only was growth in 2007Q4 negative, albeit slightly; the revisions put 2008Q2 real GDP below what the final estimate for 2008Q1 GDP was: $11692 versus $11701. Future revisions will definitely occur to the 2008Q2 figure, and indeed the figures back to 2006Q1 will be again revised come next July.
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Posted by Menzie Chinn at 09:40 PM permalink | Comments (11)
Not exactly a boom, either
While the latest GDP figures suggest an economy that continues to grow, today's employment data are more consistent with the claim that the U.S. economy has entered a recession.
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Posted by James Hamilton at 10:15 AM permalink | Comments (12)