tag:blogger.com,1999:blog-34323687.post8238098259529420820..comments2024-03-18T18:27:47.714+00:00Comments on Macro Man: How Big Is The Output Gap?Macro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger25125tag:blogger.com,1999:blog-34323687.post-71473979281261091942009-10-16T22:27:47.452+01:002009-10-16T22:27:47.452+01:00My rates are quarterly saar rates....yours look ve...My rates are quarterly saar rates....yours look very much like y/y, which include base effects. The war "proper" was well over by 3Q03, as "Mission accomplished" was declared on May Day of that year. <br /><br />In any event, the Taylor rule is itself based on the output gap concept; price trends in certain areas (such as housing) were pretty clear signals that policy was kept too easy for too long.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-17854511028076316952009-10-16T20:42:04.048+01:002009-10-16T20:42:04.048+01:00MM - my data had 3Q03 REAL gdp at 2.9% then 3.8, 4...MM - my data had 3Q03 REAL gdp at 2.9% then 3.8, 4.1, 4.0 while Employment was at -.3,-.1,.4 and 1.1%, peaking at the end of 2004 at 1.6% yoy. That's a pretty large difference. Mine is straight from the BEA web site. In any case hindsight might suggest tightening but there was a war if you'll recall, and employment stayed very weak. Going back to that Macroblog post that would suggest that policy was pretty much following the Rule, wouldn't it?<br />p.s. - your correction on Fail makes me feel much better :)dblwyonoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-90210077746944158022009-10-16T18:34:24.691+01:002009-10-16T18:34:24.691+01:00There is basically no inventory in the UK, and no ...There is basically no inventory in the UK, and no intention on the part of dealers to replenish inventory, so all cars have to be made to order . If you're lucky, you'll get a new one in March or April....So much for the yawning output gap...<br /><br /><br />this partially xplains the spike in the new orders and lead components in the PMI and other indices. inventories were run down to zero it seems . The output gap is still there. lots of underutilised swedes and factory capacity in torslanda, Göteborg (if you're going for the volvo) but take Audi.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-6009737373580366472009-10-16T10:21:54.483+01:002009-10-16T10:21:54.483+01:00That chart is the change in total capacity, not ca...That chart is the change in total capacity, not capcity utilization.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-12571124717136174262009-10-16T10:14:08.408+01:002009-10-16T10:14:08.408+01:00the YOY change in capacity utilization doesn't...the YOY change in capacity utilization doesn't actual mean anything - you need to look at the level.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-28551718178512320262009-10-16T08:54:36.823+01:002009-10-16T08:54:36.823+01:00What I do know is loose monetary policy is going t...What I do know is loose monetary policy is going to get seriously tested by energy this winter. Seasonality going to be stood on it's head like much other seasonality this year.<br /><br />Let's just see how much energy inflation they can take.Watch for Asian currency pressures.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-48519187175873275092009-10-16T08:17:05.373+01:002009-10-16T08:17:05.373+01:00Cars are already frickin' expensive, not only ...Cars are <i>already</i> frickin' expensive, not only in absolute terms but also indirectly, via insurance/petrol duties/road tax/etc. I think at these levels the price elasticity of demand is quite high for most vehicles...or at least the income elasticity of demand.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-52609937754679951862009-10-16T08:12:21.126+01:002009-10-16T08:12:21.126+01:00MM, so why don't they put up the price of thei...MM, so why don't they put up the price of their cars in the UK? It seems bizarre to keep prices unchanged and then refuse to ship anything because it's unprofitable.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-66489985937165040722009-10-15T19:27:18.127+01:002009-10-15T19:27:18.127+01:00Oil's broken out.Been consolidating for 3 to 4...Oil's broken out.Been consolidating for 3 to 4 months while the dollar went down the toilet so not expecting it to stop going up soon.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-45198208638258051262009-10-15T17:02:59.664+01:002009-10-15T17:02:59.664+01:00MM, nothing says I love you more than a 12.5kg gol...MM, nothing says I love you more than a 12.5kg gold bar "off the shelf" from Harrods to go with that new car.Crisis Managementnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-78899898111107878012009-10-15T16:22:18.134+01:002009-10-15T16:22:18.134+01:00MM -
Go with the Q5. The wife and I picked up on...MM - <br /><br />Go with the Q5. The wife and I picked up one of the first wave to hit the shores here in the US, and we've been thrilled with the performance, mileage, fit, finish, etc. We traded in a Q7 for the Q5, and the difference is remarkable. Audi is doing great work at the moment.Joehttps://www.blogger.com/profile/07667524926292550335noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-79971730594287646942009-10-15T16:13:39.614+01:002009-10-15T16:13:39.614+01:00MM, "The problem is that it is uneconomic for...MM, "The problem is that it is uneconomic for foreign makes to sell cars here at prices that prevailed when €/£ was at 0.73...."<br /><br />Yes. Got ya.MarcoPolohttps://www.blogger.com/profile/03352448231722876114noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-60449802036523600942009-10-15T14:58:55.199+01:002009-10-15T14:58:55.199+01:00Sure, because there's a 15% (soon to be 17.5%)...Sure, because there's a 15% (soon to be 17.5%) VAT on them. Marco Polo, for a number of cars, slightly used vehicles are trading at or even slightly above list for new models, and premium used cars are up 10-15% (at least!) over March prices. <br /><br />The problem is that it is uneconomic for foreign makes to sell cars here at prices that prevailed when €/£ was at 0.73....so they have curtailed supply. The only way supply will return is if prices go up...by a lot. While the manufacturer might feel like there's a big output gap, to the UK consumer (and, eventually, policymakr), it's an illusion.<br /><br />dbl, my "Fail" in the previous post was directed at Easy Al, not you, btw.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-876181967644703262009-10-15T14:53:45.391+01:002009-10-15T14:53:45.391+01:00MM - UK car prices still eyewatering relative to t...MM - UK car prices still eyewatering relative to the US?Ianhttps://www.blogger.com/profile/12325797293534490304noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-48353645276459223292009-10-15T14:53:18.165+01:002009-10-15T14:53:18.165+01:00Anon @ 12.57: those y/y declines are last year...Anon @ 12.57: those y/y declines are last year's story. The actual import price index is at its highs on the year.<br /><br />dbl, 3Q03 real GDP rose 6.9%(and was released at the time up 7.2%)and Q4 rose 3.6% (initially released as 4%.) At the same time, the dollar got clumped...hard. It was obvious at the time that policy was too easy (which many people observed at the time), but Easy Al weighted til the end of 2Q04 to move rates, and then moved in only the tiniest increments.<br /><br />The conundrum was a different issue- that was the product of FX reserve accumulators buying UST with their dollar purchases (the BOJ alone bought the best part of $150 billion in 1Q04 ), an effect that Greenspan singularly failed to observe (there's nary a mention of this phenomenon in Age of Turbulence, for example.)<br /><br />In the parlance of today's yoof: Fail.Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-76826019204428354932009-10-15T14:50:42.050+01:002009-10-15T14:50:42.050+01:00Macro Man seems to have missed important parts of ...Macro Man seems to have missed important parts of the dynamic. Car sales are down by half. Unit costs are up correspondingly. Volvo cannot sell your wife a car below cost. Whether or not Volvo has cut capacity is a bit more nuanced. The labor that bolts bumpers on a Volvo is strictly variable. Turn it off, turn it on as demand requires. But there are other human capital inputs that take longer to train and install. So, it’s hard to know if capacity is down. The important thing is capacity is still way over demand. <br />Concede China has been the manufacturer of choice. Also a), b) & c) though import prices may not fall for the same reason as in the case with Volvo. China works on tiny margins. You should not be surprised there is a limit to the fall.<br />Not sure what that means to FOMC & MBS. Output gaps wouldn’t seem to be directly related to those prices. $ is a confidence game. IMO the FOMC should be looking at the perceived value of the $ relative to anything other than yuan as their single indicator.MarcoPolohttps://www.blogger.com/profile/03352448231722876114noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-51780788336510112292009-10-15T14:41:58.525+01:002009-10-15T14:41:58.525+01:00Using the word "gay" on a finance messag...Using the word "gay" on a finance message board probably qualifies....Macro Manhttps://www.blogger.com/profile/12324967552369915949noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-27967952352402462382009-10-15T14:15:26.639+01:002009-10-15T14:15:26.639+01:00is there anything more gay in this world than a ce...is there anything more gay in this world than a central banker?<br /><br />is there anything more gay than moaning in code as if the message is destined only for the chosen ones? who are they kidding at this point?<br /><br />and is there anything more gay than grown up men reading and compare statements issued by said gay central bankers, and if a comma is missing they think they discovered the holy grail of wealth?<br /><br />if there is I'd like to know.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-64336245896052534982009-10-15T14:06:57.995+01:002009-10-15T14:06:57.995+01:00Here's a question :
What does Gold trading at...Here's a question :<br /><br />What does Gold trading at an all time high tell you about the fate of the dollar and the inflation/ deflation debate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-20023095221288463382009-10-15T13:40:17.896+01:002009-10-15T13:40:17.896+01:00"the underlying dynamic is heavily dependent ..."the underlying dynamic is heavily dependent on the velocity of money, and so he prefers to focus his analytical energies in that direction" ...<br /><br />Indeed, very interesting things are happening on US M2 measure that I don't fully understand. If you look at six-monthly change rates M2 in March was growing at the fastest rate (over 9%) since the beginning of the weekly series in 1980. Success for QE and risk of inflation, some would say.<br /><br />But since then growth has stagnated, and the fall in the last two weekly observations, although small (1.3%) is still the largest since the beginning of the weekly series. So the impact of QE has been temporary and very small. We are still faced with the prospect of deflation, others will say.<br /><br />As you, I don't claim to know which way this is going. If you are interested in seeing the data I refer to above I have plotted it in my most recent post or you can create your own from the Fed's FRED2 online database.@RandomSpaniardhttps://www.blogger.com/profile/02297221263049066355noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-687920672360390802009-10-15T13:01:17.575+01:002009-10-15T13:01:17.575+01:00MM - in the spirit of open-minded debate rather th...MM - in the spirit of open-minded debate rather than religious shibbolethery :) might I suggest:<br />1) quite right on the velocity issue - dropping like a rock<br />2) Bullard also said we won't raise rates until GDP grows and Unemployment begins to improve significantly (not the interpretation that most put on his statements)<br />3)Greenspan didn't leave rates low to long according to the problems with Employment not to mention a small war; plus there was the notrious long-end conundrum; cf. this Macroblog post:<br />http://macroblog.typepad.com/macroblog/2009/10/reviewing-the-recession-was-monetary-policy-to-blame.html<br />4)in any case US inflation was due almost entirely to the importation of said inflation via energy prices not domestic cost pressures which in turn<br />5) was caused by S/D imbalances because of under-investment in aging fields and political inaccessibility of news ones plus the escalating demands of the REE. If China/Inda don't grow as fast will D>>S and have as big an impact? Possible but not as likely imho<br />6)at the intermediate term and beyond all that changes the $ debate as well.dblwyohttp://llinlithgow.com/bizzX/noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-30568513131916070292009-10-15T12:57:14.245+01:002009-10-15T12:57:14.245+01:00a macro man (or gurl) should look at the compositi...a macro man (or gurl) should look at the composition of imports. also a macro man (or gurl) should know import prices are down 15% yoy (granted before latest oil jump). given all this, nothing will happen before (or unless) VAT introduction, which a macro man (or gurl) should know pelosi started to stirr shit about.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-56192225948416184572009-10-15T12:00:20.964+01:002009-10-15T12:00:20.964+01:00I might add to that post with the simple observati...I might add to that post with the simple observation. Why is money chasing high yields ? Because we already know what is waiting for us ahead on returns nullified by depreciation in our currency.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-28152403865793540842009-10-15T11:57:53.574+01:002009-10-15T11:57:53.574+01:00The US and UK thanks to their fiscal position can ...The US and UK thanks to their fiscal position can look forward to stagflation. Higher growth economies will move through to inflationary growth. The bottomline is one type of economy will get real returns on investments and the other type under stagflation won't. That's the bill to be paid for loose monetary policy going into and coming out of this GFC and we're already seeing it setup through currency adjustments.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-17412180021649452672009-10-15T11:07:08.600+01:002009-10-15T11:07:08.600+01:00Viz China, its interesting to note that they are d...Viz China, its interesting to note that they are desperately trying to close that output gap in steel and aluminium. In most other sectors it doesn't seem to have that much slack.Nemo Incognitohttps://www.blogger.com/profile/07345185457108156269noreply@blogger.com