‘This Would Very Likely Mark The End Of The Expansion’: Some Trouble With The Curve
"The Fed’s 'mid-cycle adjustment' narrative emphasizes that the level of policy rates has now been lowered to levels which should be supportive for growth and, ultimately, inflation", Deutsche Bank's Stuart Sparks writes, in a note dated Friday. "This is a Phillips curve argument".
"The potential weakness of this argument", he goes on to remark, rather dryly, "is the recent behavior of the Phillips curve".
The Phillips curve debate has become somewhat "mainstream" in recent years, although "
I like that AOC does her homework.
Well, to be clear, she’s made some pretty grievous errors when trying to opine on economics (and history), but what I like about her is that she either learns or doubles down, and unlike Trump, when she doubles down after getting called out, she offers a somewhat plausible rationale, as opposed to just doubling down for the sheer hell of it.
we probably are in a recession now. based on the yield curve normalizing, 5/5 of the last recessions began after the curve un-inverted and hit between 0 and .55% positive spread (10-fed funds rate). each time it had already begun or was a few months out (to the officially dated start date)
Here’s a snapshot of growth and inflation and unemployment in the traditional sense. The actual issue is most likely how data has become biased or at least stagnate: GDP and employment are stalled out while unemployment seems to be also stuck in a downtrend, but I have a theory for a new way to look at this. To be continued …
https://fred.stlouisfed.org/graph/?g=pxxZ
Crap, I give up, but still, here’s a wall of text:
I thought I had a fine idea, but no. My plan was to essentially take the largest states, in terms of Electoral votes and compare some data versus the Blue states of California and New York, to Red states like Texas and Florida and then use Phillips curve ideas at a more localized level, versus national noise. I decided to narrow down the choices to New York versus Florida, and then sadly found that as with a lot of statistical noise and relationships, there isn’t an easy way to cross reference data. The state data seems to get chopped into metro level and thus didn’t see useful ways to compare state level input over time.
I did start with ==> Average Weekly Earnings of All Employees: Goods Producing in Florida, Dollars per Week, Seasonally Adjusted (SMU12000000600000011SA)
But New York State doesn’t offer that stat for the state and instead, FRED offers stuff like: New York-Newark-Jersey City, NY-NJ-PA (CBSA)
If nothing else, this may offer an example as to why unemployment statistics can be distorted in a large mix of data that may not all correlate, and maybe state level data is simply not all grouped in a useful comparable way at FRED. Nonetheless, a lot of papers and opinions do tend to use data that sometimes doesn’t offer clarity and thus the process of polarization kicks in, with debates and biased facts as to who has the right facts.
The unemployment, GDP inflation games have been distorted for decades, which brings us to the booming trump economy and a new way to spin data:
FYI: American Jobs Act
The American Jobs Act reflects the preference for spurring economic growth through stimulating demand, which it would achieve primarily via stimulus spending and reduced taxes on workers.[7]
In the first year of implementation, Moody’s Analytics estimates the American Jobs Act would create 1.9 million jobs.[8] Furthermore, Macroeconomic Advisers, a leading economic forecasting firm, estimates the American Jobs Act would boost GDP by 1.3 percent in its first year, an increase the firm characterizes as “significant.”[9]
Jobs Through Growth Act
The Jobs Through Growth Act embodies conservatives’ belief that economic growth is best fostered through supply-side policies such as reducing taxes on the wealthy and cutting regulation, as well as by reducing government spending.[10]
Setting aside its provision for a balanced budget amendment, the Jobs Through Growth Act would likely have a negligible effect on jobs or GDP in the near term.[11] However, if the balanced budget amendment were passed into law, it would result in a drastic reduction in government spending that would exacerbate the output gap.[12]
The percentage GDP gap is the actual GDP minus the potential GDP divided by the potential GDP.
Two proposals put forth by U.S. policymakers in recent years to stimulate the economy (and thereby help close the output gap) are the American Jobs Act (advanced by President Obama) and the Jobs Through Growth Act (developed by Senate Republicans).
see: Overall, the US produced 24.2% of world GDP in 2018, with only about 4.4% of the world’s population. Four of America’s states (California, Texas, New York and Florida) produced more than $1 trillion in output and as separate countries would have ranked in the world’s top 16 largest economies last year. Together, those four US states produced nearly $7.5 trillion in economic output last year, and as a separate country would have ranked as the world’s third-largest economy.