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 [...]
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 [...]
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 [...]
Janet Yellen was apparently “hawkish” again in her latest speech, though the reasons why she may have been continue to elude the media and many markets. In many ways, she doesn’t even know, a fact that she expressed several months ago to likewise very little appreciation. The FOMC may or may not raise rates in the next meeting or the [...]
There were no surprises in the updated JOLTS estimates for December 2016, just more of the same sideways. The level of Job Openings was 5.501 million (SA), practically unchanged from November’s 5.505 million. The BLS estimates that Job Openings have been stuck at around that level since April 2015. In terms of Hires, that series, too, was practically unchanged in [...]
Factory orders rose 2.0% in December 2016 year-over-year (NSA), the fourth positive number in the last five months. In what is a perfect commentary on the sorrowful state of the economy, it was highest growth rate since September 2014. It seems increasingly likely that the manufacturing recession attached to the “rising dollar”, the one that created a near-recession for the [...]
For two years now, the ISM Chicago Business Barometer has not failed to disappoint. Whether you were bullish or bearish on the manufacturing sector, if you were frustrated by the index one month you needed only wait to the next, maybe two, to be turned around. The index value for October 2015 was 56.2, for example, but 48.7 the month [...]
As a practical policy matter, monetary neutrality almost forces all official considerations to the downside. If you believe that money cannot alter the baseline for the economy, then the only time to consider the upside is where it is clearly “overheating.” In addition to placing inordinate importance on determining trend, in the aftermath of the Great “Recession” it has meant [...]
Inventories in the fourth quarter rebounded rather sharply, at least in terms of how inventory is calculated as a contribution to GDP. The GDP version of inventory turned negative in Q2, and was only slightly positive in Q3. In the final quarter of 2016, however, the total change is preliminarily estimated to have been $51.1 billion. That isn’t quite back [...]
Gross Domestic Product for the fourth quarter of 2016 disappointed once again, which is to say that it was perfectly consistent. At just 1.856%, quarter-over-quarter, it was the fifth time out of the past six quarters less than 2%. Only last quarter where unusual export activity pushed GDP up was the growth rate anywhere close to what it should be [...]
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