Michael Klein | Econofact

Economic Statistics

How Fast Did the Economy Grow Last Year?

March 5, 2019

The Issue:

The growth of Gross Domestic Product (GDP) is one of the most visible measures of economic performance. There are concerns with GDP as a measure of well-being: for example, it does not include non-market production that people value (such as parents caring for children or charitable work) nor does it

Monetary Policy

What Information Does the Yield Curve Yield? (UPDATED)

December 6, 2018

The Issue:

Forecasting the twists and turns of the economy is difficult. One set of indicators used to gauge where the economy is headed draws on information from financial markets since the yields paid by financial assets reflect the collective market view of the future state of the economy. An inverted yield ...
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International Macroeconomics and Exchange Rates

Is China Weakening the Yuan to Fight U.S. Tariffs?

August 7, 2018

The Issue:

The Chinese currency has declined in value against the dollar by over 7 percent since mid-May. This lowers the cost of Chinese exports to the United States and could help counteract the effect of United States tariffs that would make imports from China more expensive. The Trump administration has interpreted ...
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Immigration Policy

Weak Links in the Chain Migration Argument

February 14, 2018

(Click here for a larger version.)

The Issue:

The term "chain migration" is currently being used to describe a process in which one legal immigrant can generate many new admissions by sponsoring his or her relatives — each of whom, in turn, leads to even more immigrants. President Donald Trump called for an end ...
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Monetary Policy

What’s the Problem with Low Inflation?

August 6, 2017

The Issue:

Today's low inflation has some economists puzzled. The Federal Reserve has persistently undershot its inflation target of 2 percent since 2012, when it established this level of inflation as one of its policy goals. Modest inflation has a number of benefits, and some concerns have been raised by the persistence ...
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Fiscal Policy

Government Budget Deficits and Economic Growth

July 12, 2017

The Issue:

The United States government budget deficit was $587 billion in 2016, representing 3.2 percent of that year’s Gross Domestic Product (GDP). The Congressional Budget Office (CBO) projects that the budget deficit will rise to 5 percent of GDP in 2027, even if the economy is operating near full capacity ...
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International Macroeconomics and Exchange Rates

The Decline in the Dollar

June 2, 2017

The Issue:

The dollar got stronger (appreciated) against the currencies of its major trading partners in the immediate wake of the election of President Trump. This reflected the market’s view of the expected effects of policies advocated by Candidate Trump, such as tax cuts, infrastructure spending, and higher ...
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International Trade

What Do We Learn from Bilateral Trade Deficits?

May 25, 2017

The Issue:

The Trump administration proposes using United States’ trade deficits with its trading partners to gauge whether the trading relationship with that country is “fair.” An executive order signed on March 31 requires officials to produce an “omnibus” report naming U.S. trading partners with “significant” ...
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Monetary Policy

Leaning on The Fed

April 13, 2017

The Issue:

The Federal Reserve walks a tight balance between maintaining low unemployment and preventing the economy from heating up and unleashing inflation. Its decisions impact groups differently: raising interest rates can be painful for borrowers and businesses seeking to invest and expand; lowering them can ...
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