Category Archive: Uncategorized
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Why You Shouldn’t Get Too Excited About the 1.8% Increase in German Factory Orders
German factory orders increased rather sharply in May, 1.8% in volumes and on a seasonally adjusted basis. The impetus to industrial orders growth on the month was primarily German factories buying capital goods, +2.4%. Factory orders do lead economic activity, so German domestic demand is likely still plugging away. But that’s as good as it [...]
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US Labor Market: Wage and Salary Growth vs. Payroll Growth
The pace of annual jobs growth is too slow to generate strong wage and salary income. Much empirical research has been dedicated to the estimation of consumption functions, generally finding that labor income is the primary driver of consumption (here’s a primer at the Federal Reserve Board). However, by extension jobs growth is highly correlated [...]
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Retail Sales and Fiscal Policy in Europe
In May retail sales in Spain fell 6.6% over the year and on a working-day adjusted basis. Retail sales in Spain haven’t posted positive annual gains since June 2010. In its own right, this is horrendous. Marshall Auerback is concerned, as he highlighted in an E-mail exchange: These declines in retail sales in Spain have [...]
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State and Local Governments Should Be Listed as a Primary Risk to the U.S. Outlook
I don’t see why the aggregate state funding gap is not numero uno on the ‘risks’ to the US outlook (I usually hear oil, Europe, China, etc., in my line of work). According to the Center on Budget and Policy Priorities, the State budget gap is not expected to clear at least through 2013. From [...]
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What Do You Want to Wager that the IMF’s a Bit Overly Optimistic on the Outlook for Greek Nominal GDP?
These jokers have no idea what they’re doing. The IMF has overshot the ex-post path of Greek nominal GDP in each and every one of their World Economic Outlook forecasts since April 2009. What do you want to wager that they’re wrong about 2011, too? And now they want more fiscal austerity… The French are [...]
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Will Someone Please Explain to Me Why the ECB Is Hiking in July
I’ve gotta say, I have absolutely no idea why the ECB is hiking. If I look at key monetary variables (forget about the real economic data for a minute), they should be on hold. (1) inflation expectations has dropped off precipitously across key countries in Europe, as measured by the 10-yr swap linker. One could [...]
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Little Evidence of Convergence Across the Euro Area 12 After Adopting the Euro
Eurostat released measures of annual per-capita GDP expressed in Purchasing Power Standards for the European Union. Purchasing power standards corrects for price differentials in nominal income and is useful for cross-country comparison (Eurostat data). Given the economic dispersion across Europe (a recent article highlighting this using Q1 GDP growth), I wanted to investigate ‘convergence’ among [...]
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Italy: A Growing Credit Risk Lurking in the Shadows
Markets and global economists are focused on Greece, where all the while there are growing non-Greek credit events lurking in the shadows. Specifically, recent news flow out of Italy ensures that the volatility in Europe will follow any near-term Greek resolution. On Friday, Moody’s placed Italy’s Aa2 local and foreign currency bonds on negative outlook, [...]
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Is Internal Devaluation Enough for Europe? Probably Not, Very Unlikely…No
The IMF produced an interesting paper, “Euro Area Export Performance and Competitiveness“, that could have policy implications for the effectiveness of internal devaluation on intra-Euro area export demand. As I interpret Table 1, page 13, intra-Euro area exports are less sensitive to foreign demand (like German demand for Spanish exports, for example) and more sensitive [...]
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Unemployment Rate in Greece: Seriously Uncharted Territory
And you wonder why the Greek citizens are pushing back against austerity. Today the National Statistical Service of Greece released its quarterly labour force figures. From today’s release (.pdf): In the 1st Quarter of 2011 the number of employed amounted to 4,194,429 persons while the number of unemployed amounted to 792,601. The unemployment rate was [...]
