EconVue Spotlight

posted by Lyric Hughes Hale on November 14, 2016 - 10:56am

Just a few days before the US elections, I attended a conference at the Federal Reserve Bank of Chicago on financial stability. The focus was primarily regulatory, including technical discussions about capital requirements and the relative benefits of bail-ins vs bail-outs. But the keynote presentation that in hindsight was most relevant to this week’s events was about politics and income inequality. Karen Shaw Petrou’s speech is first on my list of the thinking that best reflects the signal and rises above the noise this week. EconVue expert Robert Pringle has a similar view, from a British perspective. 

We include global reaction to the election of Donald Trump, and focus on two policy areas most likely to change, trade and infrastructure. The US election and referenda such as Brexit and the upcoming Italian vote on December 4 are delayed political reactions to the Global Financial Crisis, and we shall see more of them.


US Economy

1.  Income Inequality: The Battlefield Casualty of Post-Crisis Financial Policy 
Karen Shaw Petrou 11/3/16 Fedfin, Federal Reserve Bank of Chicago  

Monetary-policy actions-once essential, now unduly prolonged-have changed how markets work and who wins or loses. These market-structure changes have combined with ill-harmonized rules to make banks safer at grave cost to overall financial stability. 

2.  Conducting Monetary Policy in an Evolving Economy
Charles Evans 10/11/16 Federal Reserve Bank Chicago

Chicago Fed Charles Evans' October speech in Sydney is worth reading now as we approach the FOMC decision on December 14.

3.  U.S. Productivity Growth Flowing Downstream 
Michael Sposi and Kelvinder Virdi October 2016 Federal Reserve of Dallas

Measurements of U.S. productivity growth have declined, particularly in the high-tech sector. This may reflect increased U.S. specialization in upstream activities in the global supply chain. Those activities tend to experience slower productivity growth. 

4.  Mortgage rates rise again and look to be headed higher in the coming weeks
Kathy Orton 11/10/16 Washington Post 


12.  Donald Trump’s Jacksonian Revolt
Walter Russell Mead 11/11/16 WSJ

Historical perspective from Walter Russell Mead.  "Mr. Trump’s election sends a signal that leaders and citizens at home and abroad cannot ignore: Andrew Jackson is still the most important figure in American politics, and any political party that pours contempt on Jacksonian values risks a shocking rebuke at the hands of the voters."

13.  Interview With Jim Bianco: The Elite Opinion Does Not Count Anymore
Tyler Durden 11/12/16 ZeroHedge

Sobering discussion with Chicago economist Jim Bianco.

16.  China Doesn't Know What To Think About Donald Trump
China Politics from the Provinces 11/12/16

Bar none, the most realistic analysis of Chinese government reaction to Trump's election: they don't know any more than we do. 

15.  Italian referendum more about public support for PM Renzi than constitutional reform

RT News 11/5/16 


5.  A TPP without the US? It's being suggested
Takeshi Kawanami 11/13/16 Nikkei

Peruvian President Pedro Pablo Kuczynski on Friday told reporters that countries should seek to forge a fresh deal; he even suggested that China and Russia be included.

APEC business meetings are beginning in Lima, Peru; the Leader’s Summit begins this Saturday. Trade is of course at the top of the agenda. Perhaps the TPP just needs to be re-branded as the Trump Pacific Partnership and the US can avoid PPK’s scenario.

6.  100 Days of Trump Trade Policy
K. William Watson 11/11/16 Cato Institute

7.  Canada open to renegotiating free trade with Donald Trump
CBS News 11/10/16 

Canada open to renegotiating free trade with Donald Trump says Canadian ambassador in Washington.

8.  Trade Investment Framework Agreements | United States Trade Representative
Office of US Trade Representative 11/13/16 

TPP is dead- are TIFA's the future? 

9.  Nigeria: D-8 Countries Target U.S.$500 Billion Trade Volume
Christiana T. Alabi 11/8/16 AllAfrica


10.  Infrastructure Gets a Win on Election Night 
Maria Matthews 11/10/16 ASCE

Infrastructure referenda were winners in several states.

11.  Too Much Law and Too Little Infrastructure
Francis Fukuyama 11/8/16 American Interest

12.  Building Smart Cities in India: Allahabad, Ajmer, and Visakhapatnam
Shamika Ravi, Adie Tomer, Ankit Bhatia, and Joseph Kane 8/18/16 Brookings


What Brexit and Trump’s Victory have in Common
Robert Pringle 11/10/16

Many facile comparisons have been made between Brexit and the election of Donald Trump today. They have an important element in common. But the commentators have missed it.

TOE Report: Third Term for Abe
Richard Katz 11/10/16 Subscription content; email for a complimentary PDF

Third Term for Abe, Early election escapades, The Politics of Japan’s trade strategy, Economy Watch

Data Round-Up: FMI Weekly UI Claims & Rail Traffic
Michael Lewis 11/10/16 

FMI continues to believe that Yellen will be reappointed. It is 13 months until the end of Yellen’s first term which is an eternity in politics and a decent stretch in monetary policy. Trump would pay a political price for refusing to reappoint the highest-ranking female official in the nation. There also would be little benefit for his new administration. Trump has complained that Yellen has kept interest rates too low (and on that, FMI agrees). But Yellen is raising rates. Another funds rate hike looks certain for December, and the FOMC “dot plot” shows a couple more coming in 2017.  

UI Claims remain remarkably low – this was the 88th straight week below 300K. Intermodal rail freight, another ‘real-time’ indicator, has picked up over the past four weeks, volume is up 1% vs. a year ago.

HealthCare.Gov’s Death-Defying 2013 Launch: Implications for CMS-Led Payment Reform
David W. Johnson 11/10/16’s near-death experience raises profound questions regarding the CMS’s (Centers for Medicare and Medicaid Service) ability to manage major value-based payment reform. It also offers several lessons for designing and implementing successful programs.