May 03, 2012
Thinking about the Double Dip Recession in the UK
The news is well-known now: There the UK is in the first double dip recession since 1975 thanks to among other things the government’s contractionary fiscal policies. This recovery is in fact worse than that of the Great Depression [Macroscope] Here are three other observations that might not be so obvious: (1) Growth has been lackluster ever since the election of the coalition government in May 2010; (2) growth under the program of austerity has compared poorly against the (admittedly insufficiently stimulative) fiscal policy framework in the US, and; (3) UK GDP growth has been lackluster even with the depreciated pound, which is interesting given that exchange rates can act as a shock absorber.
Continue reading "Thinking about the Double Dip Recession in the UK"
Posted by Menzie Chinn at 07:10 AM permalink | Comments (26)
April 27, 2012
Sluggish U.S. growth continues
The Bureau of Economic Analysis reported today that U.S. real GDP grew at a 2.2% annual rate during the first quarter, down from the 3.0% growth of 2011:Q4, and below the 2.4-2.9% range that the FOMC indicated yesterday it is anticipating for 2012 as a whole. I see some reasons to agree with the Fed that the rest of the year may be slightly better than the first quarter.
Continue reading "Sluggish U.S. growth continues"
Posted by James Hamilton at 09:58 AM permalink | Comments (26)
April 23, 2012
What Are These Two Time Series?
Figure 1
Continue reading "What Are These Two Time Series?"
Posted by Menzie Chinn at 06:56 PM permalink | Comments (18)
April 16, 2012
The current recovery in historical context
Or why Ed Lazear should have heeded R&R a bit more.
From "Credit: A Starring Role in the Downturn," by Òscar Jordà, based on an examination of 14 advanced economies over 140 years:
We are unlikely to learn how the United States will recover from the Great Recession by examining other post-World War II downturns. In the United States, the past six decades have completely lacked another financial event like the one experienced from 2007 to 2009. ...
Continue reading "The current recovery in historical context"
Posted by Menzie Chinn at 02:38 PM permalink | Comments (10)
April 12, 2012
Professor Lazear Doubles Down on 1980/82 = 2007
Professor Lazear on CNBC yesterday reiterates and unhedges his thesis that the causes of the 1980 and 1982 recessions are essentially the same as that of the 2007-09 recession.
Continue reading "Professor Lazear Doubles Down on 1980/82 = 2007"
Posted by Menzie Chinn at 01:02 PM permalink | Comments (14)
April 09, 2012
The Recovery Compared
Following up on my post The Recovery According to Ed “We are not in a recession” Lazear , reader Rick Stryker writes:
Lazear's points are clear: 1) Real growth has been sub-par in this recovery compared to previous recoveries...
This point is clearly falsified by the graphs from the St. Louis Fed:
Continue reading "The Recovery Compared"
Posted by Menzie Chinn at 08:54 PM permalink | Comments (34)
March 25, 2012
Disentangling the channels of the 2007-2009 recession
Harvard Professor James Stock and Princeton Professor Mark Watson presented a very interesting paper last week at the Spring 2012 Conference for the Brookings Papers on Economic Activity. Their paper studied similarities and differences between the 2007-2009 recession and other U.S. business cycles.
Continue reading "Disentangling the channels of the 2007-2009 recession"
Posted by James Hamilton at 07:06 AM permalink | Comments (17)
February 27, 2012
More on Potential GDP and the Output Gap
In the wake of St. Louis Fed President James Bullard's statement on the output gap [0] (which I frankly did not understand), there was renewed debate over output gap measurement [Duy] [Thoma] [Krugman]. I thought this was a good time to recap and update some of the material I'd written on this subject of output gaps.
Continue reading "More on Potential GDP and the Output Gap"
Posted by Menzie Chinn at 10:25 PM permalink | Comments (12)
January 27, 2012
U.S. GDP: not a recession, but still not very encouraging
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 2.8% during the fourth quarter of 2011. That's better than any of the previous 5 quarters, which tells you more about how disappointing the previous year and a half has been than it does about how great the fourth quarter was. The average historical growth rate for the U.S. economy over the last 60 years has been about 3.2%.
Continue reading "U.S. GDP: not a recession, but still not very encouraging"
Posted by James Hamilton at 10:22 AM permalink | Comments (34)
January 25, 2012
UK: Into Recession
So much for expansionary fiscal contraction in the UK. Not that that’s a surprise.
Continue reading "UK: Into Recession"
Posted by Menzie Chinn at 06:51 PM permalink | Comments (15)
January 18, 2012
Links for 2012-01-18
FT Alphaville on crude oil and the eurozone crisis.
Jeff Miller does not buy into recent forecasts of a U.S. recession. On a related note, Bonddad deconstructs the ECRI Weekly Leading Index.
VoxEu notes the systematic international tendency for official deficit figures to understate the magnitude of the change in public debt.
Liberty Street Economics on forecasting with internet search data.
Posted by James Hamilton at 09:30 AM permalink | Comments (5)
December 08, 2011
Lost Decades, Illustrated
When I discuss Lost Decades I always stress the fact that the “s” denotes the plural. Figure 1 shows that a decade and a half in, the trajectory of output has been noticeably depressed since 2001Q1.
Continue reading "Lost Decades, Illustrated"
Posted by Menzie Chinn at 07:30 PM permalink | Comments (23)
December 05, 2011
Consumption: Distinguishing between Keynesian and Permanent Income Motivations, and Deleveraging
One of the startling things about consumption behavior is that, despite the burst of spending surrounding the holiday season, per capita consumption in 2011Q3 has only re-attained the levels of 2008Q3. Various explanations have been forwarded, ranging from the failure of Keynesian economics [0], to the decline in income prospects or higher income uncertainty, or to the decline in observed net worth [1] (deleveraging, in certain interpretations).
Posted by Menzie Chinn at 09:15 PM permalink | Comments (26)
November 06, 2011
Autos, housing, and the business cycle
Here I offer some observations on what's been holding back the recovery.
Continue reading "Autos, housing, and the business cycle"
Posted by James Hamilton at 06:44 AM permalink | Comments (39)
October 27, 2011
Could be worse
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 2.5% during the third quarter of 2011. That's below the average postwar growth rate of 3.2% and well below the 4.3% growth for an average expansion quarter. Even so, it's better than any of the previous 3 quarters, and better than many analysts had been expecting when the quarter began in July.
Continue reading "Could be worse"
Posted by James Hamilton at 09:34 AM permalink | Comments (15)
October 24, 2011
Guest Contribution: The Great Slump is Not Yet Half Over
By David Papell and Ruxandra Prodan
Today, we’re fortunate to have David Papell and Ruxandra Prodan, Professor and Clinical Assistant Professor of Economics at the University of Houston, as Guest Contributors.
Continue reading "Guest Contribution: The Great Slump is Not Yet Half Over"
Posted by Menzie Chinn at 01:33 PM permalink | Comments (22)
October 08, 2011
Is another U.S. recession a 'done deal'?
Today we're pleased to feature a guest contribution from Michael Dueker, chief economist at Russell Investments and formerly an assistant vice president in the Research Department at the Federal Reserve Bank of St. Louis. Dueker is also a member of the Blue Chip forecasting panel. Econbrowser readers may remember that in February 2008 Dueker correctly predicted the onset of the current recession, using a model-based forecast. In a depths-of-recession piece from December 2008, he predicted in this forum that the recession would last until July or August of 2009, but that employment growth would not resume until March of 2010. We asked Mike to share the latest macroeconomic predictions from the Dueker Business Cycle Index model, subject to the disclaimer that the content does not constitute investment advice or projections of the stock market or any specific investment.
Continue reading "Is another U.S. recession a 'done deal'?"
Posted by James Hamilton at 12:39 PM permalink | Comments (22)
October 05, 2011
Slow growth continues
The stock market has looked scary. But economic indicators suggest U.S. growth is continuing.
Continue reading "Slow growth continues"
Posted by James Hamilton at 08:37 AM permalink | Comments (21)
September 07, 2011
Double Dip or Not? The Data and Policy Implications
We know that in the aftermath of combined housing busts, financial crises, and recessions, recoveries are typically modest if not halting, even if the recession is deep. [0] This characterization appears to have held true, with the question now whether we will enter into a new recession, or merely plug along with growth that technically constitutes a recovery, but is not sufficient to close the output gap with appreciable speed.
Continue reading "Double Dip or Not? The Data and Policy Implications"
Posted by Menzie Chinn at 07:35 AM permalink | Comments (18)
August 17, 2011
Not dead yet
We had a couple of pretty scary economic developments last week, but as far as I can tell, we're still standing.
Continue reading "Not dead yet"
Posted by James Hamilton at 08:32 AM permalink | Comments (46)
August 14, 2011
Economic consequences of recent oil price changes
Earlier this year, disruptions in Libya and the resurgence of demand from the emerging economies sent oil prices up sharply, a development that many economists believe contributed to the slow growth for 2011:H1. The chaotic markets of the last few weeks saw oil prices drop back down to where they had been in December. Will that be enough to revive the struggling U.S. economy? There is some evidence suggesting that it may be too late.
Continue reading "Economic consequences of recent oil price changes"
Posted by James Hamilton at 08:33 AM permalink | Comments (31)
August 10, 2011
Losing your AAA
On Friday, Standard & Poor's, one of the three main credit rating agencies, downgraded U.S. Treasury debt from AAA to AA+, citing doubts about the effectiveness, stability, and predictability of American policymaking and political institutions in being able to deal with the rising debt burden by the middle of the decade. It's been a wild ride for equity and commodity markets ever since.
Continue reading "Losing your AAA"
Posted by James Hamilton at 07:50 AM permalink | Comments (33)
August 05, 2011
More on the debt ceiling aftermath
Here are interviews I did earlier this week on the debt deal:
Posted by James Hamilton at 06:01 AM permalink | Comments (40)
July 29, 2011
Yet another discouraging GDP report
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.3% during the second quarter of 2011, and revised down its estimate of first-quarter growth to an even more anemic 0.4%. We knew the first half of the year was disappointing, but this is even weaker than most of us were anticipating.
Continue reading "Yet another discouraging GDP report"
Posted by James Hamilton at 09:09 AM permalink | Comments (33)
June 02, 2011
A weakening economy
Incoming data over the last two weeks paint a consistent picture that the U.S. economy, which had been growing at a disappointingly slow rate, has weakened further.
Continue reading "A weakening economy"
Posted by James Hamilton at 09:52 AM permalink | Comments (34)
May 24, 2011
When the economy reaches stall speed
If an airplane is moving too slowly, the plane is about to head down. Federal Reserve economist Jeremy Nalewaik has an interesting new paper exploring whether the same is true for the U.S. economy.
Continue reading "When the economy reaches stall speed"
Posted by James Hamilton at 08:48 AM permalink | Comments (22)
May 04, 2011
Will high oil prices bring a new recession?
Ten of the 11 recessions in the United States since World War II have been preceded by an increase in oil prices. Does the recent surge in oil prices mean we should be looking for recession number 12?
Continue reading "Will high oil prices bring a new recession?"
Posted by James Hamilton at 08:05 AM permalink | Comments (41)
April 28, 2011
Economy still growing and still disappointing
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 1.8% during the first quarter of 2011. Not exactly what the doctor ordered for a still very sick patient.
Continue reading "Economy still growing and still disappointing"
Posted by James Hamilton at 08:26 AM permalink | Comments (55)
January 31, 2011
UK: No Expansionary Fiscal Contraction Yet
The UK can be seen as a kind of test case for the proposition that contractionary fiscal policy can induce an economic expansion, a proposition forwarded by most recently Alesina and Ardana (2010) [wp version] (following up earlier work by Alesina and Perroti). So far, admittedly early in the process, the evidence is not consistent with the view of expansionary contraction. Here's Gavyn Davies' view:
...The statistics were expected to show a significant slowdown in output growth, but nothing like the drop of 0.5% in real GDP (-2 per cent quarter-on-quarter annualised) which was actually announced this morning. ...
Continue reading "UK: No Expansionary Fiscal Contraction Yet"
Posted by Menzie Chinn at 12:10 PM permalink | Comments (12)
January 28, 2011
A modestly brighter GDP report
The Bureau of Economic Analysis reported today that U.S. real GDP grew at an annual rate of 3.2% during the fourth quarter of 2010. That's about the historically average growth rate. But we expect much better than average at this point in the cycle, and need much better than average to make real progress with the unemployment rate.
Continue reading "A modestly brighter GDP report"
Posted by James Hamilton at 09:09 AM permalink | Comments (29)
January 26, 2011
Three Years after the Great Recession's Start
I thought it useful to take a look at a few retrospective macro indicators pertaining the December 2010, three years after the beginning of what some term "the Great Recession". In particular, recall that some observers were, even ten months into the recession, and a month after Lehman's collapse, denying the possibility of a truly deep loss in employment, and the idea of a lack of credit availability.
Continue reading "Three Years after the Great Recession's Start"
Posted by Menzie Chinn at 07:55 AM permalink | Comments (27)
January 17, 2011
Cumulative Output Loss
...lest we forget how much the mindless deregulation and irresponsible fiscal policy induced-crisis [1] [2] [3] and great recession has cost us in terms of lost output, and how difficult the road to recovery remains. (Very important as certain forces seek to gut financial regulation by way of "defunding". [4])
Continue reading "Cumulative Output Loss"
Posted by Menzie Chinn at 10:03 PM permalink | Comments (35)
January 15, 2011
Oil shocks and economic recessions
I've just completed a new research paper that surveys the history of the oil industry with a particular focus on the events associated with significant changes in the price of oil. Here I report the paper's summary of oil market disruptions and economic downturns since the Second World War. Every recession (with one exception) was preceded by an increase in oil prices, and every oil market disruption (with one exception) was followed by an economic recession.
Continue reading "Oil shocks and economic recessions"
Posted by James Hamilton at 08:18 AM permalink | Comments (60)
December 29, 2010
Looking back at the Great Recession
Some people use the end of December as an opportunity for a retrospective on the year. But I decided to take a look back at the last three years, by way of updating some comparisons I made in April 2009 between the Great Recession and the average characteristics of other postwar recessions.
Continue reading "Looking back at the Great Recession"
Posted by James Hamilton at 05:58 AM permalink | Comments (16)
October 29, 2010
Another disappointing GDP report
The U.S. economy managed to keep growing in the third quarter, but well below what's needed for a normal economic recovery.
Continue reading "Another disappointing GDP report"
Posted by James Hamilton at 07:25 AM permalink | Comments (11)
October 06, 2010
Hangin' in there
Recent economic indicators tell more of the same story-- disappointingly weak growth.
Continue reading "Hangin' in there"
Posted by James Hamilton at 06:00 AM permalink | Comments (20)
September 29, 2010
When do recessions end?
Warren Buffett thinks the U.S. is still in a recession, declaring in a CNBC interview last week:
I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.
I don't presume to be able to tell Warren Buffett what investment strategies work best. But I can provide some clarity on how economists use the term "recession," and hopefully shed some light on the issue that Buffett and others have raised.
Continue reading "When do recessions end?"
Posted by James Hamilton at 07:15 AM permalink | Comments (39)
September 20, 2010
The fat lady sings
The NBER Business Cycle Dating Committee issued a statement today declaring that the bottom of the most recent recession was reached in June of 2009, with the economy in the expansion phase of the business cycle during the 15 months since then. This confirms the announcement issued by the Econbrowser Business Cycle Dating Committee last April.
Continue reading "The fat lady sings"
Posted by James Hamilton at 08:04 PM permalink | Comments (15)
September 16, 2010
"Is the U.S. heading toward another recession?"
That was the title of the Minnesota Public Radio's Midmorning show, with Kerri Miller. Charles Wheelan, of The Naked Economist, and I were the guests.
Continue reading ""Is the U.S. heading toward another recession?""
Posted by Menzie Chinn at 10:35 AM permalink | Comments (21)
September 15, 2010
Links for 2010-09-15
Quick links on sources of job creation, recession probabilities, and alternative ways to access your favorite economic books.
Continue reading "Links for 2010-09-15"
Posted by James Hamilton at 08:44 AM permalink | Comments (14)
September 01, 2010
What Kind of Model Is Brian Riedl Using?
If one wants to be taken seriously in the world of policy analysis, one should at least use an internally consistent framework. This consideration, apparently, has not troubled Mr. Reidl.
Continue reading "What Kind of Model Is Brian Riedl Using?"
Posted by Menzie Chinn at 08:55 PM permalink | Comments (36)
August 25, 2010
More thoughts on what to expect from the Fed
There is disagreement within the FOMC. How will it be resolved?
Continue reading "More thoughts on what to expect from the Fed"
Posted by James Hamilton at 03:49 PM permalink | Comments (28)
August 18, 2010
Will the Fed do more?
If conditions deteriorate further, I believe the answer is yes.
Continue reading "Will the Fed do more?"
Posted by James Hamilton at 07:54 AM permalink | Comments (32)
August 09, 2010
"Future Recession Risks"
That's the title of a new FRBSF Economic Letter. From Future Recession Risks, by Travis Berge and Oscar Jorda:
An unstable economic environment has rekindled talk of a double-dip recession. The Conference Board's Leading Economic Index provides data for predicting the probability of a recession but is limited by the weight assigned to its indicators and the varying efficacy of those indicators over different time horizons. Statistical experiments with LEI data can mitigate these limitations and suggest that a recessionary relapse is a significant possibility sometime in the next two years.
Continue reading ""Future Recession Risks""
Posted by Menzie Chinn at 10:38 AM permalink | Comments (9)
August 08, 2010
Current economic conditions
Last week's new economics data were a mixed bag. But on balance I'd have to say I'm more discouraged than when the week began.
Continue reading "Current economic conditions"
Posted by James Hamilton at 06:46 AM permalink | Comments (13)
August 01, 2010
Options for monetary stimulus
The latest economic data have surely warranted a downward revision in the Federal Reserve's assessment of near-term economic performance. It therefore might be a good time to review the steps the Fed could take if it wishes to provide further economic stimulus.
Continue reading "Options for monetary stimulus"
Posted by James Hamilton at 06:51 AM permalink | Comments (42)
July 30, 2010
About that recovery you ordered
"We have met the enemy and he is us," Pogo used to say. Well, we've also now met the recovery, and he is ugly.
Continue reading "About that recovery you ordered"
Posted by James Hamilton at 09:18 AM permalink | Comments (21)
July 25, 2010
Update on the bumpy recovery
I was curious to take a look at how Mike Dueker's Business Cycle Index and other measures assess the current situation.
Continue reading "Update on the bumpy recovery"
Posted by James Hamilton at 06:40 AM permalink | Comments (13)
July 03, 2010
No double dip
Although many people are concerned about the possibility of a second economic downturn, I continue to see an economy that is growing, albeit significantly more slowly than we would have wanted.
Continue reading "No double dip"
Posted by James Hamilton at 01:01 PM permalink | Comments (30)
June 30, 2010
Jobless recoveries
Also in town for last week's International Symposium on Forecasting was Bill Gavin from the Federal Reserve Bank of St. Louis. I had an interesting discussion with him about changes over time in U.S. employment dynamics that I wanted to share with our readers.
Continue reading "Jobless recoveries"
Posted by James Hamilton at 04:41 PM permalink | Comments (39)
June 26, 2010
Identifying business cycles
The 30th Annual International Symposium on Forecasting was held in San Diego last week. Among the many interesting presentations was Princeton Professor Mark Watson's discussion of estimating business cycle turning points using a large number of indicators.
Continue reading "Identifying business cycles"
Posted by James Hamilton at 01:08 PM permalink | Comments (5)
June 05, 2010
Current economic conditions
Yes, we're still in the economic recovery phase, and yes, it still looks pretty sluggish.
Continue reading "Current economic conditions"
Posted by James Hamilton at 11:26 AM permalink | Comments (15)
May 23, 2010
Calling recessions in real time
My latest research paper reviews efforts to supplement the declarations by the National Bureau of Economic Research as to the beginning and ending of economic recessions with determinations made by purely mechanical algorithms.
Continue reading "Calling recessions in real time"
Posted by James Hamilton at 07:00 AM permalink | Comments (7)
May 05, 2010
The sluggish recovery
This week we received more evidence confirming that the U.S. economy has returned to positive, but still disappointing, growth.
Continue reading "The sluggish recovery"
Posted by James Hamilton at 05:29 AM permalink | Comments (20)
April 30, 2010
The recession is over
That's the big take-away from today's report from the Bureau of Economic Analysis that the seasonally adjusted real value of the nation's production of goods and services grew at a 3.2% annual rate during the first quarter of 2010. But the details behind today's report suggest that the recovery so far remains pretty weak by historical standards.
Continue reading "The recession is over"
Posted by James Hamilton at 08:52 AM permalink | Comments (26)
April 15, 2010
More on oil prices and the economic recovery
On Saturday I commented on whether rising oil prices threaten the economic recovery. Here are some quick links to perspectives from other observers.
Continue reading "More on oil prices and the economic recovery"
Posted by James Hamilton at 06:09 AM permalink | Comments (14)
April 10, 2010
Do rising oil prices threaten the economic recovery?
Ten of the 11 recessions in the United States since World War II have been preceded by a sharp increase in the price of crude petroleum. Oil had been holding around $80/barrel over the last month, but traded as high as $87 last week, leading the Financial Times to ask whether oil could give the "kiss of death to recovery." Here is how I would answer that question.
Continue reading "Do rising oil prices threaten the economic recovery?"
Posted by James Hamilton at 12:27 PM permalink | Comments (36)
April 04, 2010
Looks good to me
Finally we're starting to see some convincing indications of economic recovery.
Continue reading "Looks good to me"
Posted by James Hamilton at 06:22 AM permalink | Comments (22)
March 24, 2010
Not a textbook rebound
Is this as good as it gets? For the time being at least, it seems to be.
Continue reading "Not a textbook rebound"
Posted by James Hamilton at 08:07 AM permalink | Comments (16)
March 18, 2010
Obama after One Year: Crisis, Response, Recovery
A couple days ago, I presented my views on the policy response to the financial crisis and the Great Recession in a UW Center for World Affairs and the Global Economy / UW CIBER / MITA and ICE sponsored event. The power point slides are here (big file, 1.3MB). I took the latitude as the invited speaker to expand the topic from the Obama Administration's measures to encompass the response to the crisis and recession from both the fiscal and monetary policy authorities.
Continue reading "Obama after One Year: Crisis, Response, Recovery"
Posted by Menzie Chinn at 06:15 AM permalink | Comments (6)
March 07, 2010
A new index of financial conditions
What do current financial indicators tell us about where the economy is headed?
Continue reading "A new index of financial conditions"
Posted by James Hamilton at 07:10 AM permalink | Comments (32)
February 23, 2010
Real Wage Decline Ended the 1981-82 Recession?
David Henderson writes in his "Reply to DeLong":
In the 1981-82 recession, the fall in real wages helped end the recession.
I don't see it in BLS series Nonfarm Business Sector: Real Compensation Per Hour.
Continue reading "Real Wage Decline Ended the 1981-82 Recession?"
Posted by Menzie Chinn at 04:28 PM permalink | Comments (21)
January 31, 2010
John Cochrane on the credit crisis
University of Chicago Professor John Cochrane (hat tip: Capital Spectator) has an interesting analysis of the causes of the financial problems of the last few years.
Continue reading "John Cochrane on the credit crisis"
Posted by James Hamilton at 06:34 AM permalink | Comments (28)
January 29, 2010
Strong GDP growth with weak fundamentals
The Bureau of Economic Analysis reported today that the seasonally adjusted real value of the nation's production of goods and services grew at a 5.7% annual rate during the fourth quarter. That's great news, but...
Continue reading "Strong GDP growth with weak fundamentals"
Posted by James Hamilton at 08:54 AM permalink | Comments (21)
January 10, 2010
More of the same
The U.S. economy continues to recover at a painfully slow pace.
Continue reading "More of the same"
Posted by James Hamilton at 07:43 AM permalink | Comments (12)
December 19, 2009
What went wrong and how can we fix it?
That's the title of an article I wrote for the UCSD Economics Department's Economics in Action, which I reproduce below.
Continue reading "What went wrong and how can we fix it?"
Posted by James Hamilton at 04:49 PM permalink | Comments (31)
December 17, 2009
Teaching Macro, after the Great Recession
Or, How to adapt the intermediate macro syllabus to an altered world
This semester is the first time I've taught intermediate macroeconomics link in over two years. The last time I taught this course in the Spring of 2007, the key topics were inflation, the possibility of stagflation, and the possibility of containing the ongoing housing slowdown.
Continue reading "Teaching Macro, after the Great Recession"
Posted by Menzie Chinn at 12:44 AM permalink | Comments (31)
December 03, 2009
Politico American Spectator's Joseph Lawler Goes Nihilist
Be afraid, be very afraid...again. From Joseph Lawler
... I take yesterday's CBO report as affirmation both that ... the number of jobs created by the stimulus cannot be determined without making judgment calls about the underlying economic model ...
Continue reading "Politico American Spectator's Joseph Lawler Goes Nihilist"
Posted by Menzie Chinn at 07:10 AM permalink | Comments (13)
December 02, 2009
Anemic recovery
Recent indictors continue to support the impression that we're in the midst of a weak economic recovery.
Continue reading "Anemic recovery"
Posted by James Hamilton at 08:14 AM permalink | Comments (16)
November 21, 2009
Baselines, Counterfactuals and the Stimulus
Apropos the post on evaluating the impact of the stimulus, here is graphical depiction of what IHS Global Insight, Macroeconomic Advisers, and Moody's predicted under the counterfactual of no stimulus against the w/stimulus outlook (from NYT).
Continue reading "Baselines, Counterfactuals and the Stimulus"
Posted by Menzie Chinn at 09:25 AM permalink | Comments (17)
November 18, 2009
Receiver operating characteristics curve
Travis Berge and Oscar Jorda of the University of California, Davis have an interesting new paper on statistical criteria for distinguishing economic expansions from recessions.
Continue reading "Receiver operating characteristics curve"
Posted by James Hamilton at 09:36 AM permalink | Comments (13)
November 04, 2009
Current economic conditions
The U.S. recovery is underway. But so far it doesn't look as strong as we had been hoping.
Continue reading "Current economic conditions"
Posted by James Hamilton at 06:14 AM permalink | Comments (20)
October 31, 2009
On Revisions and on Conditioning
Both have to be "handled with care".
Revisions
We're all tempted to make predictions on the basis of the last data point. And even more difficult to resist is the temptation to make definitive statements on the basis of data that are sure to be revised. For instance, we see this question from Casey Mulligan, "Where's the GDP Disaster?".
Last October, when we were told that spending and incomes were about to collapse, I predicted that "real GDP will not drop below $11 trillion (chained 2000 $)."
Continue reading "On Revisions and on Conditioning"
Posted by Menzie Chinn at 09:50 AM permalink | Comments (15)
October 29, 2009
A welcome GDP report
The Commerce Department reported today that the seasonally adjusted real value of the nation's production of goods and services grew at a 3.5% annual rate during the third quarter, a little better than the 3.2% average seen since 1947.
Continue reading "A welcome GDP report"
Posted by James Hamilton at 05:14 PM permalink | Comments (15)
October 18, 2009
No L
Real output grew significantly this quarter. Will employment follow?
Posted by James Hamilton at 07:31 AM permalink | Comments (25)
October 15, 2009
Dollar Demise and Double Dip: Latest Forecasts
I thought it of interest to see what surveys of forecasters indicate about two questions being asked: Is a dollar collapse imminent -- Martin Wolf is skeptical, while others [0] are convinced the end is nigh -- and is a double dip recession likely? I take a look at the messages conveyed by FX4casts.com and the WSJ October survey of forecasters.
Continue reading "Dollar Demise and Double Dip: Latest Forecasts"
Posted by Menzie Chinn at 03:18 PM permalink | Comments (13)
October 07, 2009
Will stimulating nominal aggregate demand solve our problems?
In which I join the ongoing debate on how much we should expect fiscal and monetary stimulus to accomplish.
Continue reading "Will stimulating nominal aggregate demand solve our problems?"
Posted by James Hamilton at 01:34 PM permalink | Comments (40)
October 04, 2009
"W" and the Stimulus Package in Perspective
In the wake of some recent economic reports, most prominently the employment report, there's some discussion of how the recovery is in doubt [1], possibly leading to a "W", or double dip, [2]. Anxieties focus on 2010 or possibly 2011. I think, in retrospect, such worries cast the criticisms of the stimulus bill in a different light than just a few months ago.
Continue reading ""W" and the Stimulus Package in Perspective"
Posted by Menzie Chinn at 07:50 PM permalink | Comments (41)
October 03, 2009
Not much of a V
The latest auto and employment numbers paint a picture of an economic recovery that remains tepid and potentially fragile.
Continue reading "Not much of a V"
Posted by James Hamilton at 10:35 AM permalink | Comments (16)
September 20, 2009
Economy improves but concerns remain
Last week we received positive readings for some key economic indicators. But I still see plenty to worry about.
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Posted by James Hamilton at 07:32 AM permalink | Comments (28)
September 11, 2009
The ARRA's Progress
...and a Rejoinder to Posner.
The CEA Analysis of ARRA's Impact
Yesterday, the Council of Economic Advisers released the first of its mandated reports on the impact of the ARRA on economic activity. Based upon a variety of approaches (VAR, multiplier based), it concludes:
"...our multiplier analysis and estimates from a wide range of private and public sector forecasters confirm the estimates from the statistical projection analysis. There is broad agreement that the ARRA has added between 2 and 3 percentage points to baseline real GDP growth in the second quarter of 2009 and around 3 percentage points in the third quarter.
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Posted by Menzie Chinn at 04:20 PM permalink | Comments (34)
Guest contribution from Michael Dueker on the economic recovery
Michael Dueker is Head Economist for North America at Russell Investments and a member of the Blue Chip forecasting panel. In February of 2008 he warned Econbrowser readers that it appeared unlikely that the economy was going to escape the slowdown without a recession. In December of 2008, he predicted in this forum that the recession would last until July or August of 2009, but that employment growth would not resume until March of 2010.
With that track record, we were very interested to learn the latest macroeconomic predictions stemming from Russell's Business Cycle Index, subject to the disclaimer that the content does not constitute investment advice or projections of the stock market or any specific investment.
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Posted by James Hamilton at 04:19 PM permalink | Comments (30)
August 30, 2009
Econbrowser Emoticon shifts to neutral
| Date | Status |
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| Sep 13, 2006 | 
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| Feb 21, 2007 | 
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| Apr 25, 2007 | 
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| Jun 27, 2007 |
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| Oct 5, 2007 |
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| Jan 4, 2008 |
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| Aug 30, 2009 |
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If you've only been following Econbrowser since 2008, you may have thought that the crabby countenance in the upper-right corner of our main page was a permanent fixture, conveying our general grumpiness about the state of the economy or perhaps life in general. Despite having been stuck in the pessimistic mode for quite some time now, the emoticon was in fact always intended to be a dynamic feature, adjusted from time to time to provide readers with our overall impression of incoming data. The table on the left provides links to each occasion that our Little Econ Watcher's countenance has changed in the past.
Last week's data persuaded me to move the Econbrowser Emoticon back into neutral, signifying that I now judge overall output to be growing slowly rather than declining. Here are details on the evidence that prompted this change in assessment, and what it signifies.
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Posted by James Hamilton at 07:15 AM permalink | Comments (30)
August 25, 2009
Good news on house prices
I was happy and surprised to see that the nominal S&P/Case-Shiller seasonally adjusted Home Price Index rose by 0.75% in June for a composite of 20 U.S. metropolitan areas.
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Posted by James Hamilton at 08:52 PM permalink | Comments (23)
August 18, 2009
Replay of 1930?
We know the glass is both half empty and half full. But the real question is whether liquid is being added in or draining out.
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Posted by James Hamilton at 09:06 PM permalink | Comments (52)
August 15, 2009
Current economic conditions
This was another week when everybody but me sees an economic recovery in the works.
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Posted by James Hamilton at 11:01 AM permalink | Comments (44)
August 13, 2009
GDP, Potential, and Debt Forecasts -- and Implied Multipliers
GDP Forecasts
The WSJ August survey indicates a resumption of growth in Q3. What was perhaps a bit surprising was the bump up in the Q3 q/q SAAR growth from about 1 percent to 2.4 percent. The out-quarters were little changed. These forecasts imply the following trajectory for GDP.
Continue reading "GDP, Potential, and Debt Forecasts -- and Implied Multipliers"
Posted by Menzie Chinn at 08:48 AM permalink | Comments (27)
August 10, 2009
Links for 2009-08-10
I spent the last week of July as a visiting scholar at the Federal Reserve Bank of Atlanta, home to Macroblog and a number of superb economists. Their Center for Quantitative Economic Research is now going to be reporting my GDP-Based Recession Indicator Index, as you'll see from following the link.
Jeff Miller has been looking carefully into the BLS birth-death adjustments ( [1], [2], [3]).
And I was interested in this story from the Wall Street Journal:
Houston-based Apache Corp. [APA] has agreed to provide natural gas for export to Asia through a proposed project in Canada, the latest sign that huge gas discoveries in North America are reshaping global energy markets. Kitimat LNG Inc., the Canadian company planning to build the liquefied-natural-gas export terminal in Kitimat, British Columbia, will announce Monday that Apache has become the second major North American gas producer to sign on to the project. Last month, another Houston-based gas producer, EOG Resources Inc., signed a similar deal....
"We're confident that there's going to be plenty of gas available for export for a long time," said Greg Weeres, vice president of Pacific Northern Gas Ltd., which is planning to build a pipeline to supply gas to the Kitimat facility.
Posted by James Hamilton at 12:29 PM permalink | Comments (8)
August 09, 2009
It's not over yet
Some are greeting Friday's employment report as an all-clear signal. But my advice is, keep your helmet on-- they're still shooting real bullets out there.
Continue reading "It's not over yet"
Posted by James Hamilton at 06:56 AM permalink | Comments (27)
August 04, 2009
Current economic conditions
July auto sales might be viewed as the first solid indicator of an improving U.S. economy. But what does it really tell us?
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Posted by James Hamilton at 08:20 PM permalink | Comments (22)
August 03, 2009
Comparing the Current Recession and the "1980-82 Recession"
At least one observer has argued that the current recession is not as bad as that of the 1980-82 recession, when those two separate recessions (1980Q1-1980Q3; 1981Q3-1982Q4) are considered as one (see [1] [2]). Here is my interpretation of this assertion, updated to use the latest GDP data, and normalizing (log) GDP on the recession start dates.
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Posted by Menzie Chinn at 09:41 PM permalink | Comments (26)
Multipliers, under Differing Monetary Regimes
Here's another installment in a series attempting to move the discussion from "my estimate vs. your estimate" (or "prior", as the case may be) [1] [2] [3] [4] [5] [6] to something more constructive (and hopefully more nuanced). From the conclusion to "Expectations and Fiscal Stimulus" by Troy Davig and Eric M. Leeper:
This paper has embedded estimated Markov-switching rules for U.S. monetary and fiscal policy into an otherwise conventional calibrated DSGE model with nominal rigidities to deliver some quantitative predictions of the impacts of government spending increases. When monetary and fiscal policy regimes vary -- from active monetary/passive fiscal to passive monetary/active fiscal to doubly passive to doubly active -- government spending multipliers can vary widely. An increase in government spending of $1 in present value raises output by $0.80 in present value under [Active Money/Passive Fiscal] AM/PF, while it raises output by as much as $1.80 in present value when monetary policy is passive. In our simple model, this translates into a decrease in consumption of $0.20 in present value under AM/PF, but an increase in consumption of about $0.80 in present value under passive monetary policy.
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Posted by Menzie Chinn at 12:00 PM permalink | Comments (3)
August 02, 2009
Cash for clunkers
A victim of its own success?
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Posted by James Hamilton at 06:47 AM permalink | Comments (82)
July 31, 2009
Been down so long it looks like up
The Commerce Department reported today that the seasonally adjusted real value of the nation's production of goods and services fell at a 1% annual rate during the second quarter. That's about as bad as things ever got during the recession of 2001. But after the -5.4% and -6.4% growth rates that the Commerce Department now says characterized 2008:Q4 and 2009:Q1, some folks are cheering today's news. Reminds me a little of how I've seen people in Minnesota take off their shirts for the first 40oF day of spring, a little shocking to a traveler from San Diego.
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Posted by James Hamilton at 10:56 AM permalink | Comments (24)
July 26, 2009
Are Unemployment Statistics Meaningless? Are Spillover Effects Zero?
Casey Mulligan rebuts my post asserting slack in the economy by posing the scenario "Construction Workers Teaching Kindergarten" (Note: Mulligan's blog is down; here is an alternative link currently working - 8/2/09). He writes:
Econbrowser now claims* that the stimulus bill can be effective, because unemployment rates are high (whatever that means) in health care and education. Let's take a look at employment changes Dec 2007 - June 2009 (millions) by industry:
Total nonfarm payrolls: -6.5
Construction: -1.3
Manufacturering: -1.9
Education and Health: +0.7
How exactly is fiscal policy going to create 3.5 million jobs by primarily hiring people in education and health? I see only two scenarios, both absurd and/or dishonest:
He argues these two scenarios are: (1) "The construction workers become kindergarten teachers" or (2) "The people in construction and manufacturing stay unemployed."
Continue reading "Are Unemployment Statistics Meaningless? Are Spillover Effects Zero?"
Posted by Menzie Chinn at 02:24 PM permalink | Comments (14)
July 22, 2009
Output Gap Measurement and Prospects in the Wake of the Crisis
Different concepts of potential GDP
For serious macroeconomists, the magnitude (or existence) of the output gap is a central factor for determining the appropriate policy actions (see for instance Weidner and Williams). In several recent posts, I've discussed the variety of approaches to estimating the output gap [0] [1]. A recent symposium on Projecting Potential Growth published by the Federal Reserve Bank of St. Louis is an excellent resource for anybody who wants to think seriously and carefully about the challenges in estimating this variable. In the lead article entitled "What Do We Know (And Not Know) About Potential Output?", the authors Susanto Basu and John Fernald write:
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Posted by Menzie Chinn at 08:33 PM permalink | Comments (15)
July 20, 2009
The Failure of Macroeconomics?
This must be the period of soul searching, with the Economist engaging upon multi-article exegeses on where mainstream macro went wrong [1], [2], [3]. Alternatively, I think this is a happy time for some economists outside the (perceived) mainstream, who can now chortle "I told you so". One recent example is by Mario Rizzo.
Continue reading "The Failure of Macroeconomics?"
Posted by Menzie Chinn at 03:43 PM permalink | Comments (51)
July 17, 2009
Links for 2009-07-17
Some quick remarks about the evidence for economic recovery, central bank independence, and Goldman Sachs.
Continue reading "Links for 2009-07-17"
Posted by James Hamilton at 01:33 PM permalink | Comments (12)
July 15, 2009
Casey Mulligan on the Stimulus: Stock-Flow Mismatch, Sectoral Stimulus Mismatch, and Construction Crowding Out
In today's Economix post, Casey Mulligan argues that the greater than predicted unemployment numbers should not be ascribed to the negative effect of the stimulus, but rather to bigger than anticipated negative shocks.
We cannot blame the Obama administration for failing to predict June's 9.5 percent unemployment rate. That result just shows the size of the shocks hitting the economy: Even the best forecasters can miss the unemployment rate by almost two percentage points, even when forecasting fewer than six months ahead.
Posted by Menzie Chinn at 09:40 PM permalink | Comments (12)
July 14, 2009
A New Survey of Multipliers
For people who want an impartial survey of multipliers, see Patrick Van Brusselen, "Fiscal Stabilisation Plans and the Outlook for the World Economy". It's a useful antidote to the blogposts that cherry-pick multipliers from a given model to make a given point. The survey ranges over US, euro-area, and Japan; and structural macroeconometric models, DSGEs, and VARs.
Continue reading "A New Survey of Multipliers"
Posted by Menzie Chinn at 03:51 PM permalink | Comments (10)
July 07, 2009
Back where we started
BLS reported that the total number of Americans employed in June on nonfarm payrolls came to 131.7 million workers on a seasonally adjusted basis. That's below the June 2000 figure of 131.8 million with which we started the decade.
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Posted by James Hamilton at 07:59 PM permalink | Comments (17)
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 (9)
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 (21)
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)
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?
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Posted by James Hamilton at 07:39 AM permalink | Comments (14)
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.
Continue reading "Do you see what I see?"
Posted by James Hamilton at 06:24 AM permalink | Comments (34)
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)
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)
May 31, 2009
Supply, demand, and the price of oil
Do recently rising oil prices signal a resurgence of economic growth?
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Posted by James Hamilton at 08:08 AM permalink | Comments (21)
May 20, 2009
Rising world oil demand and the U.S. economy
This morning, the Joint Economic Committee of the U.S. Congress took up the implications of rising world oil demand for the U.S. economy. I was invited to participate along with Daniel Yergin, Co-Founder and Chairman of Cambridge Energy Research Associates.
I have some more discussion at the Washington Post as well as the following links: