That means that while the euro area has experienced, on average, a 0.7 percentage-point decline in GDP growth alongside each 1 percentage-point U.S. drop, it could be that every recession has reflected a common monetary policy shock, David Mackie writes.
Since the ECB remains accommodative this time around, “then the co-movement between U.S. and euro-area growth should be less than the historical average, if the U.S. enters recession in the next few years.”
Tax Gain, Fed Pain
The U.S.’s tax reform passed at the end of 2017 is “multi-faceted, complex, and leaves considerable uncertainty as to how the system will look in just a few years,” according to a review of the legislation by International Monetary Fund researchers including U.S. mission chief Nigel Chalk.
The reform could have been better structured to support the middle class, they write, specifically calling out provisions like a doubling of the estate tax exemption. That said, the authors say the tax law could create both a short-term fiscal boost and a “modest improvement” to potential growth, largely because it may spur capital investment.
Against that backdrop, the U.S. may spend more than a decade with unemployment below its natural rate, and thanks to that sugar-high economy, the Fed will have to hike interest rates higher and faster than they otherwise would. That could “potentially create volatility and disruptions in U.S. asset markets,” the economists write.
(Demo)graphic: Middle Child Syndrome
Family size has been on the decline -- but mothers with postgraduate degrees are actually having more children today than in 1995. “Highly educated women are the only group with a declining share of one-child families and a rise in families of three or more,” according to a Pew Research analysis by Kristen Bialik.
Interestingly, the share of Americans who see families of three or more children as ideal has risen across education levels since 2011, though the share of mothers having that many kids hasn’t budged much on aggregate.
This article provided by Bloomberg News.