Posts tagged 'Output Gap'

On the long-lasting hit to UK productivity

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Oct 16 2012 13:39 | Comment |

Let’s look at the latest from the UK’s Office for Budget Responsibility (our emphasis):

The combination of more robust employment and much weaker GDP growth than we expected together create a significant ‘productivity puzzle’. Output per hour is much weaker than in previous cycles and than in our June 2010 forecast. Several explanations for the puzzle have been put forward and although we believe that some of the weakness of productivity relative to the pre-crisis trend is likely to be a temporary phenomenon, we also assume that a significant proportion of the hit is likely to be permanent or long-lasting. Read more

Why the UK output gap could be a chasm

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Oct 04 2012 12:07 | Comment |

Capital Economics put out a cracker of a note on UK output this week. It’s taken us a while to get through it but we wanted to do it justice. Here’s the key extract:

‘Supply pessimists’ point to high inflation and growing employment as evidence of a small output gap. But inflation was pushed up by temporary factors and has eased recently, while domestically generated inflation has remained low.

 Read more

The collective good of demand needs YOU!

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Jun 21 2012 17:39 | Comment |

From HSBC’s Global Macro Economics team on Thursday:

Matters are being made worse because the world’s savers would rather buy Treasuries than global goods. Read more

The UK economy: it’s the supply, stupid

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

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| Jul 18 2011 11:00 | Comment |

Don’t panic.

With all the talk of ratings downgrades for the US, and actual real-life here-and-now downgrades in some of the eurozone peripherals, have we all been sufficiently worried about the UK? It was not so long ago that it was the subject of a negative outlook from S&P’s, after all. Read more

Carry trade = quantitative easing

Izabella Kaminska joined FT Alphaville in October 2008. Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP's internal magazine.

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| Apr 06 2011 16:55 | Comment |

Can prolonged periods of negative real interest rates ever be good for economies in a globalised world?

Anders Aslund, senior fellow of the Peterson Institute for International Economics, argues no. Read more

The UK’s vanishing productivity (and the data’s gone too)

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Mar 31 2011 09:00 | Comment |

FT Alphaville loves data mysteries — and there’s something particularly ironic about fourth-quarter UK productivity data not being, erm, produced on time.

Anyway, the UK’s Office for National Statistics said earlier this week that the Q4 productivity numbers scheduled for Wednesday would be delayed until April 7 because of “data quality issues.” Read more

More on that commodities vs global demand chart

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Mar 24 2011 20:21 | Comment |

We posted this chart from the San Fran Fed (via Mark Thoma) in yesterday’s further reading list, but it’s worth a second look:

 Read more

Further further reading

| Mar 10 2011 21:35 | Comment |

For the commute home, or while worrying about what Friday may bring,

- ‘What if the stock market was a bond?’ Read more

James Bullard on QE2 and the ‘global output gap’

| Feb 24 2011 15:38 | Comment |

James Bullard delivered an interesting, chart-rich speech on inflation, QE2 and global output gaps on Thursday. (And yes, ‘interesting’ is all subjective.)

The now non-voting St Louis Fed President was a strong advocate of QE2 as a way to reverse alleged deflationary pressures. FT Alphaville noted in December that Bullard was keen to suggest that QE2 was just hunky-dory, impacting on key indicators as predicted. Read more

Selling England by the pound…

| Feb 17 2011 11:03 | Comment |

… is the title of the 1973 album from ‘prog rockers’ Genesis, and it also sums up the UK’s inflation problem, according to Bank of England hawk, Andrew Sentance.

In a speech at the Institute of Economic Affairs ‘State of the Economy’ conference on Thursday, the Monetary Policy Committee member says the value of the pound needs to be a key area of focus (not neglect) for the UK’s central bank, if it is to have any hope of mitigating the impact of global inflationary pressures. Read more

The pre-emptive UK rate hike

Joseph joined FT Alphaville way back in March 2010. He likes all the politically and legally fiddly bits of finance. He also likes credit, rates, global macro, tail risk, and all that stuff. (You should email him story ideas. He’ll take anything.)

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| Feb 07 2011 10:00 | Comment |

Citigroup’s Michael Saunders and Ann O’Kelly, on this week’s Bank of England rate decision:

We expect that the MPC will leave rates on hold at the upcoming [February 10] meeting. However, we believe it may well be a much closer call than many expect, and there is a decent chance that the MPC will tighten policy. If it does decide to tighten, a 25bp hike is the most likely option, with little chance of either a 50bp hike or an early reversal of QE… Read more

John Kemp: There is no global output gap

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Feb 01 2011 13:51 | Comment |

It’s no secret we at FT Alphaville ♥ John Kemp.

And we output gaps. Or at least, certain policymakers’ over-reliance on them. Read more

Inflated expectations and spare capacity concerns

| Jan 24 2011 15:43 | Comment |

As Nicolas Sarkozy has noticed, worries about global inflation have picked up in the first weeks of 2011.

And according to two notes out on Monday this is not just down to rising commodity prices; there is also a lack of spare capacity that is being reflected in rising core inflation and increased expectations. Read more

Beveridge redux

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

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| Aug 20 2010 05:52 | Comment |

Maybe there’s not so much to this Beveridge Curve business after all.

As we’ve written previously, many economists and other observers have been discussing in recent months the rather large and persistent gap between job openings and the high unemployment rate, which was much higher than you would expect given the previous empirical relationship between the two. Read more

UK economy poised for expansion

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Apr 08 2010 03:38 | Comment |

Britain is on track to have the fastest economic expansion in the first half of this year of any of the world’s large industrialised economies, bar that of Canada, according to a forecast from the Organisation for Economic Co-operation and Development, the FT reports. According to the think-tank, UK output is likely to expand at an annualised rate of 2 per cent in the first quarter and at an annualised rate of 3.1 per cent in the second quarter of 2010. Read more

Inflating the output gap at the BoE

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Feb 23 2010 10:01 | Comment |

. . . the risks to the Committee’s central view of a gradual recovery of output remain to the downside.

That’s Bank of England governor Mervyn King testifying to the UK Treasury Committee about the February inflation report. The output gap has become something of a catchphrase for Monetary Policy Committee members at the BoE, and for some Federal Reserve board members too. Read more

Fishing for QE clues

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Oct 15 2009 10:25 | Comment |

Thursday’s FT has an interview with the Bank of England’s executive director for markets, Paul Fisher, on the subjects of quantitative easing, inflation, deflation, the output gap, money supply, and the UK economy in general.

The whole thing makes for worthwhile reading for QE-watchers, but we’ve provided some excerpts of the most salient points below. Read more

Fed slacker fightback

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Oct 14 2009 09:30 | Comment |

Here’s further evidence that the Fed is somewhat split on the output gap theory and the amount of ‘slack’ in the US economy — and by extension, the inflation and deflation risks that face it.

Slack occurs when the output gap is a negative number — when the economy is below its full potential. In traditional economic theory, that implies deflationary risks as companies cut prices and jobs to deal with the spare capacity. A high deflation risk would imply continued low interest rates — and perhaps liquidity ops — from the US central bank. Read more

Non-slacker at the Fed

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Oct 13 2009 13:22 | Comment |

Reuters columnist Rolfe Winkler points us to a recent speech and presentation by Fed governor James Bullard.

The speech, Winkler says, is a direct refutation of economist Paul Krugman‘s ideas that inflation, potentially triggered by extremely low interest rates and unconventional monetary policy, is not a threat so long as there’s a large amount of `slack’ in the US economy. Slack occurs when the output gap is a negative number — when the economy is below its full potential — and in traditional economic theory implies deflationary risks as companies cut prices and jobs to deal with the spare capacity. Read more

Work work work work…

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Oct 08 2009 16:00 | Comment |

The French are lazy.

Germans are efficient. Read more

Don’t fear the inflation, Goldman says

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Sep 30 2009 09:50 | Comment |

Goldman Sachs is putting an end to the deflation vs inflation debate, once and for all!

In a 30-page research note out on Wednesday, the bank comes down firmly on the side of (moderate) deflation in the near-term. Read more

Deflation dead and deader, Federal Reserve-style

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Sep 28 2009 13:56 | Comment |

Here’s an interesting little chart from BofA Merrill Lynch.

Economy watchers should by now be familiar with the concept of the output gap – a measure of the amount of ‘slack’ in the economy; the bigger the output gap, the greater the amount of spare capacity. Read more

Inflation gestation

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

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| Sep 15 2009 11:44 | Comment |

So where’s the deflation which Bank of England governor Mervyn King is so desperate to avoid?

The UK’s rate of inflation is slowing — but it’s certainly not nearing deflation levels. The Consumer Prices Index annual inflation rate was 1.6 per cent in August, down from 1.8 per cent in July, and its lowest since January 2005. Expectations, however, were for a 1.4 per cent year-on-year rate. Read more