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Tag Archives: Economic Growth

What Joe Biden’s Proposed Budget Gets Right

Many reports about the Biden administration’s budget proposal, released Friday, convey the sense that it’s huge. President Biden, scream some of the headlines, wants to spend SIX TRILLION DOLLARS next year. (Sorry, can’t help doing my best Dr. Evil imitation.) It takes some digging to learn that the baseline — the amount the administration estimates we’d spend next fiscal year without new policies — is $5.7 trillion. In fact, one of the most striking things about Biden’s budget initiative —...

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Output Gaps and Interest Rates – Survey of Professional Forecasters vs. Troika

The White House economic assumptions (based on February data) released today in the FY ’22 budget imply full employment output at year’s end, contrasting with 1.4% using Survey of Professional Forecasters (from May) Figure 1: GDP (black), FY’22 budget forecast (blue squares), Survey of Professional Forecasters May forecast (red), CBO estimate of potential GDP (gray line), all in Ch.2012$, SAAR. Source: BEA (2nd release), OMB (May 28), Philadelphia Fed, CBO (February), and author’s...

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The COVID recession is over

The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 4.0% annual rate in the fourth quarter. That’s well above the 3.1% average growth that the U.S. experienced over 1947-2019, and follows a 28.8% logarithmic annual growth rate seen in Q3. Real GDP growth at an annual rate, 1947:Q2-2020:Q4, with the 1947-2019 historical average (3.1%) in blue. Calculated as 400 times the difference in the natural log of GDP from the previous quarter. These numbers...

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WSJ October Survey: Q3 Growth Revised Up, Q4 Down

In levels (incorporating revisions to actual GDP): Figure 1: GDP as reported in 2020Q2 3rd release (black), WSJ April survey (tan), May survey (green), June survey (red), July survey (pink), August survey (blue), September (brown), and October (chartreuse), all in billions Ch.2012$, SAAR, all on log scale. Source: BEA, various vintages, WSJ survey, various vintages, author’s calculations. The three most recent forecasts are for rising levels of Q4 GDP — arising partly from higher reported...

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Deal/No Deal

Macro (GDP) implications of “no deal”. Not sure there’s any specific comparison, but I can show the Goldman Sachs forecast from early September (in the WSJ survey) and the “no deal” forecast from a couple weeks ago. Figure 1: Actual GDP (black), Goldman-Sachs early September forecast (blue), Goldman-Sachs “no deal” forecast of 23 Sept. (red). Growth rates applied to relevant level of GDP. Source: BEA, WSJ September survey, Goldman-Sachs, and author’s calculations. The growth rate in the GS...

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Implications of a “No Recovery Package” Outcome

From Deutsche Bank on Sunday: In the US, fiscal uncertainty is a major issue. As outlined above, we now assume that significant further support will not be forthcoming until after the election. The resulting drop in income support for households is already beginning to depress activity and we see GDP growth slowing to near zero in Q4 as consumer spending slides. Growth will pick up in Q1 with some post-election fiscal support. This manifests in zero (0) growth in 2020Q4. Figure 1: GDP...

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ALEC-Laffer State Competitiveness Index (13th Edition) Is Out!

The webpage announces: The empirical evidence and analysis in this edition of Rich States, Poor States illustrate which policies encourage greater economic opportunity and which are obstacles to growth. The evidence is clear that competitive tax rates, thoughtful regulations, and responsible spending lead to more opportunities for all Americans. State economies grow and flourish when lawmakers trust people, not government, to create long-term prosperity. I’m unsure where in the actual...

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Explaining the Administration’s Economic Forecast

The Economic Report of the President, 2020 is out as of today. Chapter 9 presents the underpinnings for the seemingly implausible GDP forecast presented in the Budget last week — a forecast that’s a full percentage point faster than CBO’s. Source: Economic Report of the President, 2020.  This figure highlights the fact that the out-year forecasts are driven by implementation of deregulatory initiatives and trade liberalization. From page 297: we have decomposed this forecast into a...

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Domination and stagnation

David Economist and economic historian with an interest in population analysis and demographic methods. Especially interested in natural disasters and disruptions to economic activity and changes in population dynamics, as well as fiscal and monetary policy with forecasting implications. Husband, father, Cubs fan. View all posts by David

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Eight Graphs Depicting the Macro Situation as of end January

For now, we know as of 2019Q4, we’re not in a recession, according to Jim’s analysis. But Q4/Q4 GDP growth fails to hit Trump targets (again!), business cycle indicators continue to plug along, but RV sales plunge 16% y/y. And yield curve inverts (again)! Is it flight to safety or lower expected future short rates? Figure 1: Q4/Q4 GDP growth (blue bar), Troika forecast from Mid-Session Review FY2019 (orange line), and Trump-Pence campaign promise (red dashed line).  Figure 2: Nonfarm...

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