Great post! Looking forward to seeing further updates! Would be nice to have live charts with explanations similar to GDPNow, term premia, and r* landing pages on the ATL/NYC Fed websites.
That would be ideal. The closest we come to to that is our NGDP Gap page. We some interactive charts and data download options. https://www.mercatus.org/ngdp-gap
Thank you for sharing these insights and your thoughts. Did you also look at forecast horizons beyond 20 quarters and if so, did it show a declining R squared or did it cap out at about 20 quarters?
No, I have not looked at longer horizons. We stopped at 20 quarters since we thought 5 years was long enough for expectations and trends to update. But I will take a look.
"The NGDP Gap indicates that macroeconomic policy, which reflects both monetary policy and fiscal policy, has been in an expansionary state since late 2021 but is now slowly winding down." Very interesting given that first quarter GDP growth was negative! I am curious, should we have been due for a recession earlier but the stimulative policy kept us out of one until now? I am more of a microeconomist. Curious what the macroeconomists think about this.
The first quarter real GDP was a negative 0.3 percent, but final sales to domestic purchasers was 3.00 percent. This latter measure better gets at domestic demand and indicates it was robust: https://fred.stlouisfed.org/graph/?g=1IMC4 To answer you question, I don't think we are inevitably due for a recession, but yes the ongoing NGDP growth does indicate that macroeconomic policy--particularly fiscal policy--has been supportive.
Oh interesting. I checked out the whole series and I see there are other similar divergence between GDP and domestic demand. Thanks for providing that. I don’t think we are inevitably due for recession either, and after looking at the domestic demand graph I can see why you are skeptical.
Great post! Looking forward to seeing further updates! Would be nice to have live charts with explanations similar to GDPNow, term premia, and r* landing pages on the ATL/NYC Fed websites.
That would be ideal. The closest we come to to that is our NGDP Gap page. We some interactive charts and data download options. https://www.mercatus.org/ngdp-gap
Thank you for sharing these insights and your thoughts. Did you also look at forecast horizons beyond 20 quarters and if so, did it show a declining R squared or did it cap out at about 20 quarters?
No, I have not looked at longer horizons. We stopped at 20 quarters since we thought 5 years was long enough for expectations and trends to update. But I will take a look.
"The NGDP Gap indicates that macroeconomic policy, which reflects both monetary policy and fiscal policy, has been in an expansionary state since late 2021 but is now slowly winding down." Very interesting given that first quarter GDP growth was negative! I am curious, should we have been due for a recession earlier but the stimulative policy kept us out of one until now? I am more of a microeconomist. Curious what the macroeconomists think about this.
Michael,
The first quarter real GDP was a negative 0.3 percent, but final sales to domestic purchasers was 3.00 percent. This latter measure better gets at domestic demand and indicates it was robust: https://fred.stlouisfed.org/graph/?g=1IMC4 To answer you question, I don't think we are inevitably due for a recession, but yes the ongoing NGDP growth does indicate that macroeconomic policy--particularly fiscal policy--has been supportive.
Oh interesting. I checked out the whole series and I see there are other similar divergence between GDP and domestic demand. Thanks for providing that. I don’t think we are inevitably due for recession either, and after looking at the domestic demand graph I can see why you are skeptical.