When macroeconomic data such as today’s employment report are released, we often focus on seasonally adjusted numbers. Seasonally adjusted employment numbers smooth through changes in employment that are judged to be part of some annual cycle such as the jump in retail employment every year as the Christmas buying season ramps up. Of course, there […]
Category: Macro
A Consistent Set of Interest Rate and Real Growth Assumptions Suggests Stable Debt to GDP Ratios in the Out Years
Larry Summers recently raised the possibility of the US economy being in danger of facing a long period of subpar growth. The fear is at least somewhat reflected in several long-run growth forecasts. Table 1 shows the most recent estimates of steady state real GDP growth from the FOMC Economic Projections, Blue Chip Economic Indicators […]
The U.S. Budget Outlook, with Consistent Growth/Real Rate Assumptions, Looks Much Less Dire!
The CBO’s recent projection of a federal-debt disaster rests critically on the combination of two projections: 1. Real interest rates will rise substantially, increasing the cost of debt service. 2. Real GDP growth will remain tepid, resulting in tepid growth in tax receipts. Either of these outcomes might plausibly occur. But both history and basic […]
The Euro Crisis: Four Hard Truths
German voters go to the polls on Sunday to determine the future leadership of their country – and perhaps the future of the Eurozone, as well. With the continent’s largest economy, and the political clout to match, Germany is a central player in the Euro crisis. Odds are good that Chancellor Angela Merkel, who has […]