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Paul Donovan @pdonovan-econ.bsky.social · 10h

Policy discussion in a data vacuum

The Federal Reserve minutes showed quite a range of views on policy, but acknowledged the fragile state of the US labor market.

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Policy discussion in a data vacuum

French politicians have been doing politics. This week’s prime minister, Lecornu, has suggested that a majority of national assembly members favor seeking a compromise budget. The suggestion is less f...

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Paul Donovan @pdonovan-econ.bsky.social · 1d

How bouncy is the bounce back?

It has been suggested US furloughed government workers may not receive back pay. That would threaten any post-shutdown economic bounce back.

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How bouncy is the bounce back?

Economists traditionally do not worry too much about the growth impact of US government shutdowns, as the short-term loss of economic output tends to be paid back with an economic bounce when governme...

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Paul Donovan @pdonovan-econ.bsky.social · 2d

French lettuce?

While tempting to draw parallels, France’s situation is different from the UK’s Truss debacle of three years ago.

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French lettuce?

French Prime Minister Lecornu resigned, but will work for 48 hours—President Macron wants Lecornu to find a fiscal solution that would command National Assembly support. Despite obvious parallels, thi...

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Paul Donovan @pdonovan-econ.bsky.social · 3d

Pro-growth policies?

Japan’s prime minister-presumptive, Takaichi, is seen as a pro-growth leader inclined to favor later rate increases.

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Pro-growth policies?

The Liberal Democratic Party of Japan elected former economic security minister Takaichi as its leader, and thus Prime Minister-presumptive. Takaichi is seen as a pro-growth leader, and has signaled s...

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Paul Donovan @pdonovan-econ.bsky.social · 6d

Not employment report Friday

The impenetrable fog of the US government shutdown hides the state of the labor market from the eyes of economists.

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#EconSky

Not employment report Friday

Today is US employment report Friday—except it is not, because of the impenetrable fog of US government shutdown. As low fear of unemployment is a crucial line of defense keeping the US from recession...

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Paul Donovan @pdonovan-econ.bsky.social · 7d

Losing jobs

Threatening to fire US federal government workers may awaken fear of unemployment, but this is a very small part of the US workforce.

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Losing jobs

The US government shutdown continues—Senate Republicans failed to pass their measure to end it. US President Trump indicated some federal government workers may be fired, not furloughed. That would do...

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Paul Donovan @pdonovan-econ.bsky.social · 8d

The market also skews to valuing official data a lot more - roughly three times as many economists make forecasts for payrolls as for ADP.

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Paul Donovan @pdonovan-econ.bsky.social · 8d

Which is not to say that those biases cannot be corrected for when ADP converts its sample into its final number (the final data is about five and a half times its sample). But it needs official data to try and correct the biases by reweighting, and the sample still has to be presumed representative

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Paul Donovan @pdonovan-econ.bsky.social · 8d

But ADP does not include local, state, or federal government, self-employment (a growing trend), has an underrepresentative sample for small businesses, and must be presumed to suffer from selection bias - most firms do not use ADP for their payrolls, so what motivates those companies that do?

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Paul Donovan @pdonovan-econ.bsky.social · 8d

Through the keyhole

The US government shutdown denies economists official data. Private sector data has a narrower field of vision, and is a poor substitute.

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Through the keyhole

The US Congress failed to either change the rules or come to an agreement to avert a government shutdown. Economists now lack official economic data from the US. Private sector data is a poor substitu...

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Paul Donovan @pdonovan-econ.bsky.social · 9d

www.weforum.org/stories/2025...

What the great wealth transfer means for economic growth

$80 trillion of wealth will be transferred into new hands in the coming years – women and Gen-Z will now come to the fore. Their priorities are different.

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Paul Donovan @pdonovan-econ.bsky.social · 9d

Growth and guessing

The UK cemented its position as the fastest growing G7 economy this year. The US may ask investors to guess what is happening economically

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Growth and guessing

The final guess at UK second quarter GDP led to some modest increases in growth—cementing the UK’s position as the fastest growing G7 economy year-to-date. Better investment figures led the upgrade. C...

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Paul Donovan @pdonovan-econ.bsky.social · 10d

Paying for government

French Prime Minister Lecornu talked of tax justice. US President Trump will meet Democrats over another impending US government shutdown.

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Paying for government

Current French Prime Minister Lecornu outlined their policy intentions, if they remain in power. A 4.7% GDP deficit target, no public holidays to be abolished, and no general wealth tax imposed—but ta...

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Paul Donovan @pdonovan-econ.bsky.social · 13d

Is everyone else playing nicely?

US trade tariffs have distorted global trading patterns, but most of the world seems to be trading nicely with non-US counterparts

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Is everyone else playing nicely?

This year, global trade patterns have been distorted by unusual US inventory cycles. US wholesalers rushed to stockpile imported goods in anticipation of tariffs. That pattern of stockpiling was not e...

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Paul Donovan @pdonovan-econ.bsky.social · 13d

National security vanities

The US is to impose tariffs on pharmaceuticals, and additional tariffs on furniture products. As ever, the impact is not straightforward.

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National security vanities

Social media posts from US President Trump overnight indicate a series of new trade tariffs. US buyers of foreign vanity units, soft furnishings, etc., as well as heavy trucks, and pharmaceuticals wil...

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Paul Donovan @pdonovan-econ.bsky.social · 14d

A US day today

US growth data is revised, but the pattern is heavily distorted year to date. Details of inventory data offer interesting insights.

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A US day today

The US releases revised second quarter GDP data. The market consensus is for no change (given data quality problems, “no change” in the details may be unlikely). US growth has been distorted this year...

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Paul Donovan @pdonovan-econ.bsky.social · 15d

Adding uncertainty in uncertain times

Federal Reserve Chair Powell appeared to want to inject less certainty into expectations about Fed policy

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Adding uncertainty in uncertain times

Yesterday saw some increase in macro uncertainty, in case investors thought the world was getting predictable. US President Trump’s comments on Ukraine, and on Russia presented a change of tone. That ...

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Paul Donovan @pdonovan-econ.bsky.social · 16d

Quite like old times

Central bankers are arguing over policy. Argentina is expected to request a US bailout. It is all very nostalgic.

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Quite like old times

Federal Reserve Chair Powell is to speak on the economic outlook at the Greater Providence Chamber of Commerce. The outlook is not likely to stray far from the tone of the last policy decision. Fed Go...

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Paul Donovan @pdonovan-econ.bsky.social · 17d

Exactly. A company whose recent applicant numbers have gone up less than 100% might want to examine their poor relative attractiveness as an employer. Especially if in a sector where applicants are likely to be disproportionately tech literate younger people

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Paul Donovan @pdonovan-econ.bsky.social · 17d

More policy insights

There are many central bank speakers. Markets may want to know why Fed Governor Miran seems so pessimistic about the US.

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#EconSky

More policy insights

South Korean exports fell in the first part of September (when adjusting for the number of working days). Exports to the US and China (which often ultimately end up in the US) were weaker. Semiconduct...

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Paul Donovan @pdonovan-econ.bsky.social · 17d

Any company that does NOT have surging applications is in serious trouble. Any labour market NOT experiencing falling externally advertised job vacancies must be dangerously unstable. And anecdotal comparisons to the recent past make for dramatic journalism but are not helpful economic analysis.

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Paul Donovan @pdonovan-econ.bsky.social · 17d

4. Employment participation amongst the younger population has been increasing sharply, which is not especially suggestive of a dramatic weakening of the labour market in these sectors

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Paul Donovan @pdonovan-econ.bsky.social · 17d

2. Other measures of job vacancy data, especially online vacancies, remain high in these sectors.

3. AI distorts job application data dramatically, making comparisons over time useless. Younger applicants will be happy to use AI to make multiple applications

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Paul Donovan @pdonovan-econ.bsky.social · 17d

Poor quality official data unfortunately elevates anecdotal evidence.

1. "Job vacancy" data ONLY measures externally advertised job vacancies. A surge in labour market churn followed by a normalisation can create a rise and then a fall in the numbers without changing the total vacancies.

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Paul Donovan @pdonovan-econ.bsky.social · 20d

The kids are alright?

Young US citizens are struggling to find work. This seems to be due to a hiring freeze, not because AI is replacing graduates

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The kids are alright?

The unemployment rate of US citizens younger than 25 shot up this year. Moreover, the increase has been mainly amongst people with some education. Those who failed to complete high school have not exp...

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