Policy Parlor with Franklin Serrano

My conversation with Franklin during his visit to Bucknell University. We talked about the supermultiplier and its applications to understanding real economies. The quality of the sound is better than I had expected, even if the camera is moving somewhat, and could be distracting.

On the coming American Recession: Some skeptical notes

Everybody, including Trump, is talking about the forthcoming recession. In Trump's case, he suggests that while painful in the short run, it would be good in the long (when possibly will be dead). At any rate, I did comment (mostly on social media and podcasts) that most of that is based on subjective perceptions of what might happen, which is certainly not impossible if government spending is truly slashed by the Department of Government Efficiency (DOGE). But again, most evidence so far has been based on impressions, things like consumer confidence.

Most of the objective data, at least for now, does NOT suggest a recession, but rather a slowdown at worst. The new data that came out last week suggests still the same. The personal income and outlays report of the Bureau of Economic Analysis (BEA) suggests that real personal consumption remains more or less steady, a little below December, but with a minimal increase in February.

On the other hand, spending seems to be still on target to continue to grow at the same pace (in fact faster so far) even if many of the categories have changed, and winners and losers should be expected. If you cut Medicaid spending, and delay payments on Social Security while expediting government contracts to Space-X this might have distributive consequences, even if the level of activity does not fall.

The Brookings Institution real time federal spending tracker suggests that spending is higher in 2025 than in 2024, at least so far. Something that has been reported by several other outlets. Sure enough the Fed kept interest rates up, but there is no evidence that this has affected the housing market yet. Maybe the key word is yet. But there is a reasonable scenario that this Trump presidency, at least on this, will look like that previous, a slow expansion pushed by regressive tax cuts and higher spending on military/space contracts, with negative social consequences.

By the way, the Post indicated that on deportations, something similar is happening. Numbers are not up, with respect to Biden, even if the targets and methods have changed (and are certainly nastier). No doubt in other areas, the second term might be more problematic.