April 30, 2009
Further progress for initial claims for unemployment insurance
The Labor Department reported today that initial claims for unemployment insurance fell by 14,000 during the most recent available week. That brings the 4-week average down for the third consecutive week and puts it 3.3% below the peak reached April 9.
April 29, 2009
Good economic news?
Today's GDP numbers were about what I was expecting. Although economic activity continued its sharp decline, if we continue to follow the script, things should improve.
April 28, 2009
Links for 2009-04-28
Washington University Professor James Morley on typical recession shapes and why they suggest we might see a strong recovery.
Harvard Professor Lucian Bebchuk on how to buy troubled assets while avoiding some of the problems pointed out by many analysts.
Oil 101 looks like a useful new book by commodity trader Morgan Downey.
And the Shadow Open Market Committee is back in business.
April 27, 2009
The Decline in US Imports
I've been thinking about trying to convey exactly how startling the drop in U.S. imports has been. First, take a look how much non-oil goods imports (in real terms) have dropped, relative to, for instance, GDP.
Figure 1: Log GDP (blue, left scale), log goods import ex.-oil from NIPA (red, right scale), estimated from trade release (purple, right scale), all in Ch.2000$, SAAR. 2009q1 estimate is based on actual January and February data and March estimate incorporating continued 5% decline from February. NBER recession dates shaded gray. Source: BEA, GDP final release of 26 March 2009, February trade release, NBER, and author's calculations.
April 25, 2009
Oil shocks and recessions
Here I provide some more background on the relation between oil price increases and economic recessions.
April 24, 2009
...and the Financial and Economic Crisis
I don't read very many books. At least not during the academic year. But I have read two books recently that are quite germane to thinking about the buildup to the financial crisis, and thinking about how to respond to the current economic downturn. The first is Akerlof and Shiller's Animal Spirits. The second one is actually not yet out -- it's Justin Fox's The Myth of the Rational Market (I got a prepublication copy; here's a hint of it). They are both important books, well worth reading.
April 23, 2009
Initial claims for unemployment insurance
The Labor Department reported today that initial claims for unemployment insurance rose by 27,000 in the most recent available week. Although that's a disappointing development, it's still a small enough increase to allow the 4-week average to fall for the second week in a row. Since that declining 4-week average is one of the few encouraging pieces of news in an otherwise discouraging economic landscape, I wanted to take a closer look at just how significant a statistical signal it really sends.
April 22, 2009
The Great Recession Goes Global
One of the most interesting "boxes" in the IMF's World Economic Outlook (in Chapter 1) is the one entitled, somewhat innocuously "Global Business Cycles", by Marco Terrones, Ayhan Kose and Prakash Loungani at the IMF. Yet, it's important to read until the ending paragraph:
To summarize, the 2009 forecasts of economic activity, if realized, would qualify this year as the most severe global recession during the postwar period. Most indicators are expected to register sharper declines than in previous episodes of global recession. In addition to its severity, this global recession also qualifies as the most synchronized, as virtually all the advanced economies and many emerging and developing economies are in recession.
Growth Forecasts for 2009-2010 from the IMF
The IMF's World Economic Outlook (Chapter 1), released this morning, is grim:
April 21, 2009
The IMF's Global Financial Stability Report Is Out
April 20, 2009
Hi Frequency Output Indicators
The advance release for 2009Q1 GDP will come out on April 29. Until then, we have some readings from the monthly GDP nowcasts, two of which were released on April 15. e-Forecasting identifies an annualized 9.6% decline in first quarter GDP. Macroeconomic Advisers (whose monthly estimates only extend to February) writes "Our latest tracking estimate of a 5.1% decline in GDP in the first quarter includes a 1.2% decline in monthly GDP in March, reflecting a partial reversal in net exports and weakness in PCE and inventory investment." A lot hinges, then, on what happens to net exports.
The Allocation of Stimulus Funds
From Daniel Wilson, "Are Fiscal Stimulus Funds Going to the 'Right' States?" at the SF Fed (h/t Torsten Slok at DB):
...While it is too early to tell whether the overall stimulus package will have its intended effects, this review suggests that, by and large, the distribution of federal stimulus funds is indeed tilted toward those states most likely to spend the funds quickly and effectively.
April 19, 2009
Robert DeYoung on payday loans
I thought this was an interesting editorial in Tuesday's WSJ.
April 17, 2009
How Bad Is This Recession? And Why? -- Illustrated Version
April 16, 2009
Update on the latest economic indicators
Some good news, some bad, in the indicators we follow this week.
There has been a lot of breast-beating in the press and in the blogosphere about how economists failed to discern the possibility that not all was going well in the years leading up the current financial and economic crisis . I think the notion that all economists were blithely optimistic has been dispelled (well, okay, here's a couple of exceptions: Dan Gross h/t Free Exchange, A. Kaletsky). At the risk of some gross simplifications, I will speculate that there was -- until recently -- less optimism among academic macroeconomists than Wall Street economists. There was probably less anxiety among say finance professors who focused on asset pricing (as opposed those who worked in banking) than macroeconomists (Dani Rodrik highlights the diversity). One divide that I think is not particularly relevant in locating the source of the crisis is the most well known one -- specifically whether prices are sticky.
In my opinion, the big divide in thinking relates to how economists conceive of financial markets working. This is a divide that cuts across other divides. For instance, the Hicksian decomposition (IS-LM), in its simplest incarnation, treats the financial world as one wherein bonds are identical, and the only means of borrowing; there is no separate channel for lending, say via bank loans, to influence aggregate demand (see this post for the many channels of monetary policy). In the real business cycle literature, and many New Keynesian DSGE models, there is a representative bond (and lending rate) which summarizes the asset markets (see Camilo Tovar's survey of DSGEs for a discussion).
IMF World Economic Outlook
- Link to webpage.
- Link to Chapter 3. From Recession to Recovery: How Soon and How Strong?
- Link to Chapter 4. How Linkages Fuel the Fire: The Transmission of Financial Stress from Advanced to Emerging Economies (a preview of some results was in this post).
April 15, 2009
The Aruoba-Diebold-Scotti Business Conditions Index
Last weekend I attended an excellent conference on business cycles hosted by UC Riverside (program details here). Among the many interesting presentations was an update from University of Maryland Professor Boragan Aruoba on the index of current business conditions that he developed with Professor Frank Diebold of the University of Pennsylvania and Federal Reserve economist Chiara Scotti.
April 13, 2009
The Demise of the Dollar? Should We Worry about Quantitative Easing and Deficit Spending?
Over the weekend, I was working on my long delayed manuscript on exchange rate modeling , and pondering how useful the conventional econometric techniques were for making predictions about the future value of the dollar.
April 12, 2009
Why sell crack when taking money from a careless lender is so much easier and more profitable?
April 10, 2009
Growth Expectations Stabilize
The WSJ survey of forecasts has just come out [link]. One key finding is that the mean forecast has barely budged since March. In other words, unlike previous months, the perceived outlook has ceased deteriorating.
April 09, 2009
Initial unemployment claims and the end of recessions
Fed Chair Ben Bernanke a few weeks ago said he saw some green shoots of favorable developments in financial markets. Does today's Labor Department report that the seasonally adjusted number of initial claims for unemployment insurance fell by 20,000 workers in the most recent week constitute another?
April 08, 2009
Guest Blog: The Enduring Trilemma
By Hiro Ito
Today, we're fortunate to have Hiro Ito, Associate Professor of Economics at Portland State University as a guest blogger.
While the current global crisis does not show any sign of bottoming out, policy makers around the globe are reevaluating international macroeconomic policies and discussing the post-crisis future of the international financial architecture -- as we saw in the recent G20 meeting.
Phillip Swagel on the Financial Crisis
I'm behind the curve on recommending Phillip Swagel's BPEA paper on the Administration's response to the financial crisis. But today he talked to the students in my macro course, and his presentation just reinforced my view that his account is one that everbody should read.
April 07, 2009
Some useful resources
Hal Varian and Hyunyoung Choi (paper here) document the usefulness of Google Trends and Google Insights for Search for purposes of updating assessments of current economic magnitudes. I see that Mark Thoma also calls attention to this intriguing data source.
April 06, 2009
2009 NCAA Bracket Econbrowser Challenge Winner
The Yield Curve, across Countries, across Time
A year and half ago, I asked "Does it matter that yield curves (around the world) are sloping downward?" (October 12, 2007). I included this snapshot of term premia in the post:
April 05, 2009
March auto sales
Light vehicles sold in the U.S. last month were down 37% from March 2008, whereas February sales had been 41% below year-earlier values. Does a February-to-March increase and smaller year-over-year drop mean that we've turned the corner?
April 03, 2009
GDP Snapshot: First Read on 2009Q1
Just a quick post to highlight the OECD's recent forecast  for the US (-7.2% SAAR decline in 2009Q1), and e-forecasting's latest take (6.8% SAAR decline in 2009M03).
April 02, 2009
Consequences of the Oil Shock of 2007-08
In a follow-up on my earlier post, I'd now like to discuss the second part of my paper, Causes and Consequences of the Oil Shock of 2007-08, which I presented today at a conference at the Brookings Institution. Here I'll review the role that the oil price shock may have played in causing the economic recession that began in 2007:Q4.
Causes of the Oil Shock of 2007-08
I will be presenting my latest research paper, Causes and Consequences of the Oil Shock of 2007-08, at a conference today at the Brookings Institution. Here I review some results from that paper about what caused oil prices to rise so spectacularly in 2007-08 only to decline even more dramatically afterward.