Tag Archive: Federal Reserve/Monetary Policy

Some Notes On GDP Past And Present

2017-03-01

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2017-03-01

GDP PCE Deflator QQ YY, January 2009 - April 2016
The second estimate for GDP was so similar to the first as to be in all likelihood statistically insignificant. The preliminary estimate for real GDP was given as $16,804.8 billion. The updated figure is now $16,804.1 billion. In nominal terms there was more variation, where the preliminary estimate of $18,860.8 billion is now replaced by one for $18,855.5 billion.

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Durable Goods Groundhog

2017-02-28

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2017-02-28

Durable Goods New Orders, NSA 1993-2017
If the economy is repeating the after-effects of the latest “dollar” events, and it does seem more and more to be that case, then analysis starts with identifying a range for where it might be in the repetition. New orders for durable goods (ex transportation) rose 4.3% year-over-year in January 2017 (NSA, only 2.4% SA), the highest growth rate since September 2014 (though not meaningfully faster than the 3.9% rate in November 2016).

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It Was ‘Dollars’ All Along

2017-02-28

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2017-02-28

Giant Sucking Sound 1960 - 2015
Ross Perot famously declared the “giant sucking sound” in the 1992 Presidential campaign. The debate over NAFTA did not end with George H. W. Bush’s defeat, as it simmered in one form or another for much of the 1990’s. Curiously, however, it seemed almost perfectly absent during the 2000’s, the very decade in which Perot’s prophecy came true. Americans didn’t notice because there was a bubble afoot.

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Not Recession, Systemic Rupture – Again

2017-02-25

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2017-02-25

Pyramid - Total US Gold Stock, January 2017
For the very few in the mainstream of economics who venture further back in history than October 1929, they typically still don’t go much last April 1925. And when they do, it is only to further bash the gold standard for its presumed role in creating the conditions for 1929. The Brits under guidance of Winston Churchill made a grave mistake, one from which gold advocates could never recover given what followed.

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The Market Is Not The Economy, But Earnings Are (Closer)

2017-02-23

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2017-02-23

S&P 500 EPS April 1996 - April 2016
My colleague Joe Calhoun likes to remind me that markets and fundamentals only sound like they should be related, an observation that is a correct one on so many different levels. Stock prices, in general, and GDP growth may seem to warrant some kind of expected correlation, but it has proven quite tenuous at times especially in a 21st century sense.

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The Stinking Politics of It All

2017-02-22

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2017-02-22

Potential Real Gross Domestic Products 1999Q1 - 2017Q1
It is largely irrelevant, but still the political theater is fascinating. As is now standard operating procedure, whatever comes out of the Trump administration immediately is conferred as the standard for awful. This is not my own determination, mind you, but that of the mainstream, whatever that is these days. And so it is with the first set of budget figures that include very robust growth projections, a point of contention and an obvious one...

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No Acceleration In Industry, Either

2017-02-20

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2017-02-20

U.S. Industrial Production Jan 2000 - Jan 2017
Industrial Production in the United States was flat in January 2017, following in December the first positive growth rate in over a year. The monthly estimates for IP are often subject to greater revisions than in other data series, so the figures for the latest month might change in the months ahead. Still, even with that in mind, there is no acceleration indicated for US industry.

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Their Gap Is Closed, Ours Still Needs To Be

2017-02-19

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2017-02-19

Potential Real GDP, 1999Q1 - 2009Q1
There are actually two parts to examining the orthodox treatment of the output gap. The first is the review, looking backward to trace how we got to this state. The second is looking forward trying to figure what it means to be here. One final rearward assessment is required so as to frame how we view what comes next. As I suggested earlier this week, the so-called output gap started at the trough of the Great “Recession” at around 10% of the CBO’s...

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Why Aren’t Oil Prices $50 Ahead?

2017-02-18

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2017-02-18

Oil Prices Oil Inflation Economy Circular
Right now there are two conventional propositions behind the “reflation” trade, and in many ways both are highly related if not fully intertwined. The first is that interest rates have nowhere to go but up. The Fed is raising rates again and seems more confident in doing more this year than it wanted to last year. With nominal rates already rising in the last half of 2016, and with more (surveyed) optimism than even 2014, it may at times seem the...

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U.S. CPI after the energy push

2017-02-17

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2017-02-17

U.S. Consumer Prices Changes on Energy January 1995 - 2017
The Consumer Price Index for January 2017 rose 2.5%, pulled upward by its energy component which thanks to oil prices now being comparing to the absolutely lows last year saw that part of the index rise 11.1% year-over-year. Given that oil prices bottomed out on February 11, 2016, this is the last month where oil prices and thus energy inflation will be at its most extreme (except, of course, should WTI actually rise between now and the end of...

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Real Wages Really Inconsistent

2017-02-16

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2017-02-16

Average Weekly Earnings Production and Nonsupervisory August 2007 - February 2017
Real average weekly earnings for the private sector fell 0.6% year-over-year in January. It was the first contraction since December 2013 and the sharpest since October 2012. The reason for it is very simple; nominal wages remain stubbornly stagnant but now a rising CPI subtracts even more from them.

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A New Frame Of Reference Is Really All That Is Necessary To Start With

2017-02-15

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2017-02-15

Evolution Fractional Lending Bank Reserves 1900 - 1921
In the middle of 1919, the United States was beset by a great many imbalances. Having just conducted a wartime economy, almost everything before then had been absorbed by the World War I effort. With fiscal restraint subsumed by national emergency, inflation was the central condition. Given that the Federal Reserve was by then merely a few years old, no one was quite sure what to do about it.

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Brazil: Continuing Problems

2017-02-13

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2017-02-13

Brazil Industrial Production 1975 - 2016
The cruelest part, perhaps, of this economic condition globally is how it plays against type. In all prior cycles, economies of all kinds and orientations all over the globe would go into recession and then bounce right of it once at the bottom. It was often difficult to see the bottom, of course, but once recovery happened there was no arguing against it.

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No China Trade Interpretations

2017-02-12

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2017-02-12

China Exports and Imports, January 2011 - January 2017
The National Bureau of Statistics (NBS) of China does not publish any of the big three data series (Industrial Production, Retail Sales, Fixed Asset Investment) for the month of January. It combines January data with February data because of the large distortions caused by Lunar New Year holidays.

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Jobless Claims Look Great, Until We Examine The Further Potential For What We Really, Really Don’t Want

2017-02-10

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2017-02-10

Initial Jobless Claims, January 1967 - January 2017
Initial jobless claims fell to just 234k for the week of February 4, nearly matching the 233k multi-decade low in mid-November. That brought the 4-week moving average down to just 244k, which was a new low going all the way back to the early 1970’s. Jobless claims seemingly stand in sharp contrast to other labor market figures which have been suggesting an economic slowdown for nearly two years.

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