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2018-01-21T10:15:30.586Z
0
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From Vasco Curdia of the SF Fed:

Vasco Curdia, research advisor at the Federal Reserve Bank of San Francisco, stated his views on the current economy and the outlook as of January 11, 2018.

Real GDP grew at an annual rate of 3.2% in the third quarter, according to the final estimate of the Bureau of Economic Analysis. We forecast that GDP growth averaged 2.5% for 2017. The momentum in GDP growth reflects strong gains in personal income and consumer confidence, supported by continued strength in the labor and financial markets. As monetary policy continues to normalize over the next two to three years, we expect growth to gradually fall back to our trend growth estimate of about 1.7%.

We continue to see strengthening in labor market conditions. Nonfarm payroll employment increased by 148,000 jobs in December, a bit below expectations. Over the past six months, job gains have averaged close to 166,000, well above the amount needed to absorb the flow of new workers into the labor force.

The unemployment rate was unchanged in December from its November value of 4.1%. We expect the rate to fall below 4.0% in 2018 as the economy continues to strengthen. With the gradual removal of monetary policy accommodation,...

"So will our modern know-nothings prevail?":

Know-Nothings for the 21st Century, by Paul Krugman, NY Times: These days calling someone a “know-nothing” could mean one of two things..., you might be comparing that person to a member of the Know Nothing party of the 1850s, a bigoted, xenophobic, anti-immigrant group that at its peak included more than a hundred members of Congress and eight governors. More likely, however, you’re suggesting that said person is willfully ignorant, someone who rejects facts that might conflict with his or her prejudices.
The sad thing is that America is currently ruled by people who fit both definitions. ...
The parallels between anti-immigrant agitation in the mid-19th century and Trumpism are obvious. ...
After all, Ireland and Germany, the main sources of that era’s immigration wave, were the shithole countries of the day. Half of Ireland’s population emigrated in the face of famine, while Germans were fleeing both economic and political turmoil. Immigrants ... were portrayed as drunken criminals if not subhuman. They were also seen as subversives: Catholics whose first loyalty was to the pope. A few decades later..., immigration ... of Italians, Jews and many other peoples inspired similar prejudice.
And here we are again..., there are always new groups to hate.
But today’s Republicans ... aren’t just Know-Nothings, they’re also know-nothings. The range of issues on which conservatives insist that the facts have a well-known liberal bias just keeps widening.
One result of this embrace of ignorance is a remarkable...

We have a shithead president.

That is all.

"Republicans in Congress are increasingly determined to participate in obstruction of justice":

The Worst and the Dumbest, by Paul Krugman, NY Times: Like millions of people around the world, I was reassured to learn that Donald Trump is a “Very Stable Genius.” You see, if he weren’t — if he were instead an erratic, vindictive, uninformed, lazy, would-be tyrant — we might be in real trouble.
Let’s be honest: This great nation has often been led by mediocre men, some of whom had unpleasant personalities. But they generally haven’t done too much damage, for two reasons.
First, second-rate presidents have often been surrounded by first-rate public servants. ...
Second, our system of checks and balances has restrained presidents who might otherwise have been tempted to ignore the rule of law or abuse their position. ...
But that was then. Under the Very Stable Genius in Chief, the old rules no longer apply.
When the V.S.G. moved into the White House, he brought with him an extraordinary collection of subordinates — and I mean that in the worst way... And many incredibly bad lower-level appointments have flown under the public’s radar. ...
And while unqualified people are marching in, qualified people are fleeing. There has been a huge exodus of experienced personnel at the State Department; perhaps even more alarming, there is reportedly a similar exodus at the National Security Agency.
In other words, just one year of Trump has moved us a long way toward a government of the worst and...

Tim Duy:

Data Lining Up For The Fed’s Rate Hike Forecast, by Tim Duy: Last Friday the Bureau of Labor Statistics released a fairly lackluster employment report. In most ways, the story remains the same – steady improvement in the labor market but no signs of overheating in the form of wage growth. The mix will keep the Fed on track for three rate hikes this year, as the consensus policymaker will view this kind of report as a reason to neither accelerate nor slow the pace of tightening. ...Continued here...

Dean Baker:

Job Growth Slows Modestly, But Black Unemployment Falls to Record Low: The Bureau of Labor Statistics reported slightly weaker than expected job growth in December, with the economy adding 148,000 jobs. There was a modest downward revision to the data for the prior two months, which brought the three-month average to 204,000. The unemployment rate remained unchanged at 4.1 percent for the third consecutive month.
The best news in this report was the drop in the unemployment rate for blacks to 6.8 percent, the lowest since these data were first collected in 1972. The previous low was 7.0 percent in April of 2000. This is consistent with the view that a low unemployment rate disproportionately benefits the most disadvantaged groups. The black unemployment rate averages close to twice the white unemployment rate. This ratio has been reduced somewhat as the labor market tightened. The unemployment rate for whites in December was 3.7 percent.
Healthy job growth has continued to pull more prime-age workers (ages 25 to 54) into the labor market with the employment-to-population ratio (EPOP) edging up to 79.1 percent. This is a new high for the recovery, but it is still more than a full percentage point below its pre-recession level and 2.8 percentage points below the peak high in 2000.
It is worth noting that the EPOPs of varying demographic groups have not followed a predictable pattern since 2000. In the last recovery, women in the 25-to-34 age group showed the sharpest falloff in EPOPs. At present,...

Tim Duy:

5 Questions for the Fed in 2018, by Tim Duy: The Federal Reserve anticipates continued monetary tightening in 2018, as it seeks to match 2017’s pace of interest-rate hikes with another three quarter-point moves. As always, however, that projection depends on actual economic outcomes. With that in mind, here are five questions the Fed will face in 2018 as it charts a course for policy: ...Continued here on Bloomberg Prophets...

"it’s going to be up to the American people":

America Is Not Yet Lost, by Paul Krugman, NY Times: Many of us came into 2017 expecting the worst. And in many ways, the worst is what we got.
Donald Trump has been every bit as horrible as one might have expected; he continues, day after day, to prove himself utterly unfit for office, morally and intellectually. And the Republican Party ... turns out, if anything, to be even worse than one might have expected. At this point it’s evidently composed entirely of cynical apparatchiks, willing to sell out every principle — and every shred of their own dignity — as long as their donors get big tax cuts.
Meanwhile, conservative media have given up even the pretense of doing real reporting, and become blatant organs of ruling-party propaganda. ...
Yet I’m ending this year with a feeling of hope, because tens of millions of Americans have risen to the occasion. ... What we’ve seen ... is the emergence of a highly energized resistance...
Let’s be clear: America as we know it is still in mortal danger. Republicans still control all the levers of federal power, and never in the course of our nation’s history have we been ruled by people less trustworthy. ...
So we can’t count on the consciences of Republicans to protect us. In particular, we need to be realistic about the likely results of Robert Mueller’s investigation. The best bet is that no matter what Mueller finds ... Republican majorities...

I should explain -- taking a few days away -- will be back soon.

"Their disdain for ordinary working Americans as opposed to investors, heirs, and business owners runs so deep that they can’t contain it":

Republicans Despise the Working Class, by Paul Krugman, NY Times: You can always count on Republicans to do two things: try to cut taxes for the rich and try to weaken the safety net for the poor and the middle class. ...
But ... something has been added to the mix. ...Republicans ... don’t treat all Americans with a given income the same. Instead, their bill ... hugely privileges owners, whether of businesses or of financial assets, over those who simply work for a living. ...
The nonpartisan Tax Policy Center has evaluated the Senate bill, which the final bill is expected to resemble. It finds that the bill would reduce taxes on business owners, on average, about three times as much as it would reduce taxes on those whose primary source of income is wages or salaries. For highly paid workers, the gap would be even wider, as much as 10 to one. ...
If this sounds like bad policy, that’s because it is. More than that, it opens the doors to an orgy of tax avoidance. ... We’re pitting hastily devised legislation, drafted without hearings over the course of just a few days, against the cleverest lawyers and accountants money can buy. Which side do you think will win?
As a result, it’s a good guess that the bill will increase the budget deficit far more...