Tags: Open Thread Aug 5. 2022

Tags: open thread

By Joseph Joyce

The Increasing Debtor Status of the U.S.

The Net International Investment Position (NIIP) of a country reflects the difference between foreign assets owned by domestic residents and domestic liabilities held by foreign residents. The difference, positive or negative, determines a country’s status as an international creditor or debtor. The U.S. position, which has been negative for many years, has deteriorated sharply in recent years. When scaled by GDP, the U.S. NIIP/GDP doubled from -18.6% in 2010 to -39.6% in 2015, and fell further to -71.1% in 2021 (data from FRED). What accounts for the decline, and does it represent a vulnerability for the U.S. economy?

Changes in the NIIP can reflect a country’s current account balance,

Tags: open thread

(Dan here…lifted from David Zetland’s One-Handed Economist newsletter are some interesting links on climate change…and we need to consider the US heat dome as well as Great Britain and European heat waves)

Climate chaos (sorry for all the links, but shit’s getting out of control)

Read: Researchers now estimate that humans cannot “tolerate” (=not die) wet-bulb temperatures above 31C (87F @100% humidity), which is much lower than the widely used cited figure of 35C. Some people now experience these temperatures (and feel terrible) but climate chaos will make them more common, in more places. Time for the matrix?Watch: John Oliver describes the clusterfuck of water in the Western US — something I’ve warned about for 15+ years.Read this paper on

Jobless claims continue to trend higher, but no recession signal yet

 – by New Deal democrat

Initial jobless claims rose 9,000 to 244,000 last week, a 7.5 month high. The 4 week average rose 3,250 to 235,750, a 7 month high.  But the news wasn’t all negative, as continuing claims declined 41,000 to 1,331,000, which is only 25,000 above their 50 year low set on May 21:

Two weeks ago I noted that reviewing the entire 50+ year history of initial claims, “there are almost always one or two periods a year where the four week moving average of jobless claims rises between 5% and 10%. About once every other year for the past 50+ years, it rises over 10%. Typically (not always!) it has risen by 15% or more over its low before a recession has begun.

By Barkley Rosser

Just How Bad Is Biden’s Trip To Saudi Arabia?

 Yes, I posted on this a while ago, but at that time it was a maybe. Now he is in the air on his way, although, of course, to Israel and the West Bank first, where I have no complaint or comment much.

So, basically what I said earlier largely holds, that this is not a trip with much good likely to come out of it. Main “goods”?: affirmation of in-place cease-fire in awful war in Yemen, a diplomatic triumph of the Biden admin, but I doubt much improvement on that situation happening from this trip. Yes, it will probably “affirm” it, but that is not much. 

Do not expect much on the Israeli front, either there, in the West Bank, or in terms of Saudi-Israeli relations, main reason

(Dan here…lifted from comments)

Barkley Rosser writes:

There are two things Trump did that added to inflation that Biden has somehow not undone yet. One of them is reversing the Trump tariffs, which he clearly fears doing because of opposition by Organized Labor and many white working-class voters in the crucial Rust Belt states. Some of them even support tariffs that hurt them personally, such as the autoworkers who lost their jobs at the Lordstown assembly plant in Ohio partly due to Trump’s steel tariff, but who reportedly supported it and him as well anyway.

The other thing is his failure to rejoin the JCPOA nuclear deal with Iran, which he should have simply done immediately upon taking office. But he went along with the idea of making

By New Deal democrat

Weekly Indicators for June 27 – July 1 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

There was yet more deterioration this week, focused on the long and short leading indicators.

But consumer spending still seems to be holding up.

As usual, clicking over and reading should bring you up to the virtual moment about the economy, and bring me a little pocket change to buy lunch.

(Dan here…follow the link to the comment section on Kevin Quinn’s somewhat cryptic post to learn more on economics)

Muth and Lucas: Call your offices!

 On his Marginal Revolution blog, Tyler Cowen describes the recent “purge” in the trucking industry. The pandemic shift in demand towards goods, as opposed to services, produced a big increase in the demand for trucking, which in turn produced a huge response, including a  big increase in the number of small trucking companies. Now that is all being reversed, precipitously, with trucking companies falling like flies–the purge.

This all sounds very, very “cobwebby” to me. It was Muth’s article criticizing the cobweb model that inspired Lucas’ “rational expectations revolution.” I am old enough

By Joseph Joyce

The Global Financial Cycle and Emerging Market Economies

The Federal Reserve’s latest increase in its policy rate is a signal of its desire to reestablish its credibility after U.S. inflation rose to 8.6% in May, and a precursor of more hikes.  Similar increases have been implemented by the Bank of England and the Swiss National Bank, and the European Central Bank has announced that an increase in its policy rate will occur in July.  These and other policy moves by central bankers indicate that we are in a new global financial cycle (GFC), which will have wide-ranging implications for emerging market and developing economies (EMDEs).

Maurice Obstfeld of UC-Berkeley and former chief economist of the IMF explains the linkages

Tariffs and Inflation Kevin Quinn, Econospeak

 Jason Furman and Janet Yellen have both suggested that cutting Trump’s tariffs would be anti-inflationary. But most economists agree that the incidence of the tariffs is for the most part on US consumers, not foreign suppliers (pace the treasonous and ignorant former president, who crowed about all the revenues we were raising from China). So how is a tax cut anti-inflationary?  There is a supply-side effect, which is all to the good, but the demand-side effects may well wash that out. So get rid of the tariffs but reverse the Trump tax cuts, which Manchin favors, through reconciliation. Taxes remain the same, so we’ve neutralized the effects on demand;  and we still get the good supply side effects of

Weekly Indicators for June 13 – 17 at Seeking Alpha

 – by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

My paradigm is: first the long leading indicators turn. Then the short leading indicators turn. Then the coincident indicators turn. Finally the lagging indicators turn.

For months I have been documenting the downturn among the long leading indicators. In the past few weeks, that deterioration has been gradually spreading among the short leading indicators.

As usual, clicking over and reading will bring you up to the virtual moment as tho the state of the economy, and will bring me a small reward for my efforts as well

Tags: economic

by New Deal democrat

Weekly Indicators for June 6 – 10 and a comment on COVID

I’m still traveling, so light posting for a couple days more.

In fact, I neglected to post a link to my Weekly Indicators on Saturday. A bit tardy, here it is. Conditions across all time frames do not look so good, and with Friday’s poor inflation report, I expect the Fed to continue stomping on the brakes – especially since we know that the YoY change in rents and “owners’ equivalent rent,” which together make up about 1/3rd of all inflation, are likely to keep rising (since they lag house price indexes, which are still at or near their YoY high growth rates, by a year or more).

Meanwhile, there’s good news and bad news on the COVID front. For the last three

by New Deal democrat

Weekly Indicators for May 30 – June 3 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

The slow drip, drip, drip of decelerating or declining data is continuing, as among other things, the YoY increase in withholding tax payments from workers has declined significantly in the past month.

As usual, clicking over and reading will bring you up to the virtual moment in what is happening in the economy, and reward me a little bit for my efforts.