Joseph Lavorgna @Lavorgnanomics Twitter profile

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Joseph Lavorgna

@Lavorgnanomics

2 years

And ⁦ @federalreserve ⁩ doesn’t think financial conditions have tightened. They’re clearly looking at the wrong metrics.

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Joseph Lavorgna

@Lavorgnanomics

11 months

Why is growth so strong? One factor has been government spending which grew an unsustainably 4.7% in real terms over the last year. Outside the pandemic, this is one of the fastest rates in decades and works at a cross purpose with monetary policy objectives

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Joseph Lavorgna

@Lavorgnanomics

2 years

What’s the “no landing” crowd thinking?

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Joseph Lavorgna

@Lavorgnanomics

2 years

My strong guess is that the people arguing for Fed policymakers to hike rates more will be loudest in calling them to cut when the time comes

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Joseph Lavorgna

@Lavorgnanomics

2 years

. @federalreserve is going to raise rates at the fastest pace in over four decades into an economy with terrible underlying productivity, massive elevated debt and bad demographics and we’re going back to have a “soft landing.” Ok

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Joseph Lavorgna

@Lavorgnanomics

2 years

. @federalreserve completely missed this which they shouldn’t have because the yield curve has been massively for months now

Nick Timiraos

@NickTimiraos

2 years

One of the big questions for the Federal Reserve this week: just how much will the banking crisis tighten financial conditions, which has been a principle objective of the effort to raise interest rates to combat high inflation

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Joseph Lavorgna

@Lavorgnanomics

2 years

The Fed shouldn’t have been tightening into a slowing economy and a deeply inverted yield curve. One mistake (waiting way too long to remove policy accommodation) was replaced by another (singularly focusing on a lagging indicator to the detriment to everything else.)

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Joseph Lavorgna

@Lavorgnanomics

9 months

Inflation is up a cumulative 18% since January 2021 while average weekly worker earnings are up only 13% as per official BLS figures. This represents an effective 5% decline in living standards

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Joseph Lavorgna

@Lavorgnanomics

10 months

Markets don’t like the fact that the half-point rise in unemployment rate that signaled recession has not been triggered because of revisions. But make no mistake about it, the December employment report was weak, weak, weak.

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Joseph Lavorgna

@Lavorgnanomics

1 year

“DEVASTATING” since 2020

Liz Ann Sonders

@LizAnnSonders

1 year

Devastating data from National Oceanic and Atmospheric Administration ( @NOAA ) show 2020s are averaging only 18 days between each billion-dollar disaster … cost of each event adjusted for inflation and disasters include droughts, flooding, cyclones, winter storms, wildfires, etc.

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Joseph Lavorgna

@Lavorgnanomics

10 months

The “soft landing” crew is rightly cheering the big slowdown in #inflation which I foresaw but is missing the fact that most of the drop had little to do with @federalreserve policy. This has big implications for 2024

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Joseph Lavorgna

@Lavorgnanomics

2 months

Level of March 2024 employment to be revised down 818k, 2nd largest downward adjustment ever recorded, only behind March 2009 which was during the “Great Recession”

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Joseph Lavorgna

@Lavorgnanomics

2 years

It is not unusual for the labor market to experience large gains in employment in the months leading right up to recession. It happened ahead of the 1973-75, 1980, 1981-82 and 2001 downturns. Payrolls never tell us where we are going, only where we have been

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Joseph Lavorgna

@Lavorgnanomics

10 months

Excluding the pandemic, ISM services employment is at its lowest level since August 2009. Who said the jobs market is strong?

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Joseph Lavorgna

@Lavorgnanomics

1 year

Most importantly nearly all the downward revision in consumption was in services which tend to be sticky. With all of the consumer headwinds ahead, household spending is on a much shakier foundation than previously reported

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Joseph Lavorgna

@Lavorgnanomics

10 months

Since 1984 the Fed has not initiated an easing cycle in a Presidential Election year. I’m speculating that policymakers want to cut much sooner than some investors think.

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Joseph Lavorgna

@Lavorgnanomics

10 months

I remember the many who told me in Q2 2008 that we had avoided #recession because POTUS helped pass fiscal stimulus, JP bought Bear, @federalreserve created a newfangled lending facility (TSLF), financial conditions were easing etc.

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Joseph Lavorgna

@Lavorgnanomics

2 years

Wage gains are a function of productivity. Inflation is a monetary phenomenon. @federalreserve is making a major policy mistake by focusing obsessively on “low” unemployment. “Too many” people working doesn’t cause inflation. It’s a good thing

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Joseph Lavorgna

@Lavorgnanomics

1 year

BINGO!!!

zerohedge

@zerohedge

1 year

People are not moving their money because of deposit loss fears: everyone already knows unlimited insurance is guaranteed, especially in blue states; they are moving because it takes 30 seconds to transfer from a 0.01% yielding checking account to a 5.1% money market.

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Joseph Lavorgna

@Lavorgnanomics

10 months

With only slight changes in its economic projections, the Fed went from not talking about cutting rates to talking about cutting rates all in less than 2 weeks.

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Joseph Lavorgna

@Lavorgnanomics

4 months

If the economy is so good and the labor market so strong, why is consumer sentiment at such deep recessionary-type levels?

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Joseph Lavorgna

@Lavorgnanomics

3 months

At least we can end the silly talk of the “no landing” which never made any economic sense

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Joseph Lavorgna

@Lavorgnanomics

1 year

@NickTimiraos “…but then again, too few to mention.”

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Joseph Lavorgna

@Lavorgnanomics

1 year

The economy is fundamentally weak. Real GDI grew only 0.6% annualized in the first half of this year and is up only 0.2% from 4 quarters earlier

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Joseph Lavorgna

@Lavorgnanomics

2 years

18 tightening Fed cycles since 1951 and the average time from last hike to first cut is 3 months. Will history repeat?

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Joseph Lavorgna

@Lavorgnanomics

7 months

. @federalreserve is in a serious but it can’t cut rates with high and rising #inflation rate so the only way the yield curve can normalize is if term premium surges which it could given record large budget deficits. Soaring long term interest rates would depress risk assets

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Joseph Lavorgna

@Lavorgnanomics

2 years

@elerianm @opinion And then you would have faulted the Fed for hiking to much

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Joseph Lavorgna

@Lavorgnanomics

1 year

An important factor behind today’s low unemployment rate is a decline in labor force participation. Nearly 5 million people have left the workforce since the pandemic, almost 90% of whom are in the 65 and older age cohort

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Joseph Lavorgna

@Lavorgnanomics

2 years

The people saying that the Fed has to hike next week because if they don’t it will cause panic clearly haven’t looked at their screens

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Joseph Lavorgna

@Lavorgnanomics

2 years

How will a 25 bp hike help anything next week? It won’t

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Joseph Lavorgna

@Lavorgnanomics

2 years

The people arguing the Fed has to do more to crush inflation likely will be the ones complaining the most for the Fed to cut when unemployment starts rising

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Joseph Lavorgna

@Lavorgnanomics

2 years

Economists arguing for rate hikes don’t seem to understand (or choose to ignore) that a record rise in fed funds and QT helped get us in the current position. Have they looked at various measures of expected inflation? More hikes and QT will only further inflame the situation

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Joseph Lavorgna

@Lavorgnanomics

6 months

Sub 50 readings on ISM headline, employment and new orders. 60+ reading on prices. #Stagflation

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Joseph Lavorgna

@Lavorgnanomics

10 months

Revisions tell us about the underlying health of the economy. Employment has been revised down in 10 out of the last 11 month. The cumulative 2023 revision is -443k, the largest figure outside a recession since 2002.

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Joseph Lavorgna

@Lavorgnanomics

2 years

Recessions and soft landings are indistinguishable in the early stages. And the no landing view is beyond silly

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Joseph Lavorgna

@Lavorgnanomics

1 year

Employment costs and inflation moderating in the face of a tight labor market provide more evidence (not that it was needed) that the Phillips Curve doesn’t work and never really did. People working doesn’t create inflation @federalreserve

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Joseph Lavorgna

@Lavorgnanomics

2 years

How can @federalreserve & likeminded economists argue financial conditions have eased when consumers at 70% of #GDP are now paying double the cost of mortgages, record high rates on credit cards and much higher rates on auto and consumer loans?!?!

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Joseph Lavorgna

@Lavorgnanomics

2 years

@jasonfurman This is so ivory tower and fails to acknowledge what got us here in the first place—a Fed that forgot about lags in monetary policy. Hiking short rates will make instability worse because it will lead to even greater inflows into money markets

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Joseph Lavorgna

@Lavorgnanomics

6 months

US inflation data was accidentally released 30 minutes early - The Economic Times

US inflation data was accidentally released 30 minutes early

The US Bureau of Labor Statistics released Consumer Price Index data early, impacting Wall Street investors and central bank officials. The BLS statement mentioned the incident, raising questions...

economictimes.indiatimes.com

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Joseph Lavorgna

@Lavorgnanomics

2 years

. @federalreserve will keep policy tight until unemployment rate rises but when that happens the economy will already be in recession. This seems to be lost on many investors in terms of macro implications

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Joseph Lavorgna

@Lavorgnanomics

1 year

@zerohedge The median pivot is 2 months over the last 18 tightening cycles

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Joseph Lavorgna

@Lavorgnanomics

2 years

New lows in treasury curve inversion coupled with a collapse in term premium are not economically heathy signals

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Joseph Lavorgna

@Lavorgnanomics

1 year

“No landing” is back!!! 😂

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Joseph Lavorgna

@Lavorgnanomics

2 years

Risk management aside, how could anyone think Fed policymakers could raise rates (and QT) at the speed and pace they did and not break something along the way?

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Joseph Lavorgna

@Lavorgnanomics

2 years

@MacroAlf Totally different Alf. 17 consecutive 25 bp hikes over 2 years, not what will be 450 bps in just 12 months

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Joseph Lavorgna

@Lavorgnanomics

1 year

@GameofTrades_ From its highest reading ever

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Joseph Lavorgna

@Lavorgnanomics

10 months

One reason #inflation is falling so hard is because demand is nowhere near as robust as the #GDP data suggest

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Joseph Lavorgna

@Lavorgnanomics

1 year

Inflation-adjusted spending on consumer services is up exactly 0.65% in the last 6 months—not good

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Joseph Lavorgna

@Lavorgnanomics

1 year

According the latest Census data on wages, it appears that 2022 payroll employment could be overstated by nearly 1 million jobs.

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Joseph Lavorgna

@Lavorgnanomics

2 years

Hi Jason! Does this mean that if we take everything out, inflation didn’t go up? Asking for a friend. 😉

Jason Furman

@jasonfurman

2 years

A month ago 3 month-annualized supercore inflation (i.e., ex food, energy, shelter and used cars) was 1.8%. Now with new seasonal adjustment and an additional month of data it is 3.7%. Time to update your inflation views.

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Joseph Lavorgna

@Lavorgnanomics

1 year

It’s probably nothing but corporate profits are down 2.7% over the past four quarters, the weakest since the pandemic.

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Joseph Lavorgna

@Lavorgnanomics

1 year

The unemployment rate rose 0.1% to 3.9%, which is now 50 bps above its cyclical trough (Jan23 & Apr23). This has marked the peak in economic activity every time in the past. Will this time be different?

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Joseph Lavorgna

@Lavorgnanomics

2 years

On any given month #NFP is a random number generator. What matters is the underlying trend which appears to be firmly pointing lower

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Joseph Lavorgna

@Lavorgnanomics

9 months

New tenant rental index is down about 5% over the past year thus pointing to a collapse in residential rents which are the biggest subcomponent of the cost of living

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Joseph Lavorgna

@Lavorgnanomics

1 year

Ahead of what should be strong GDP figures investors ought to remember these data are highly preliminary so they’re prone to massive revision. They’re backwards looking, meaning they don’t tell where we’re going. And the income version of GDP have been showing near 0% growth!

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Joseph Lavorgna

@Lavorgnanomics

1 year

How many equity PMs know what the implications of a bond market bear steepening are?

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Joseph Lavorgna

@Lavorgnanomics

10 months

What happened to the argument the summer’s upward surge in yields was due to increased supply? Can someone show analysis that more supply is a statistically significant predictor because my work shows it’s not

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Joseph Lavorgna

@Lavorgnanomics

10 months

If ISM #employment is accurate, simple regression analysis says jobs should be falling around 200k per month. #recession

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Joseph Lavorgna

@Lavorgnanomics

2 years

What’s happening with the “no landing” nonsense?

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Joseph Lavorgna

@Lavorgnanomics

2 years

@jnordvig Jens you can’t file for unemployment insurance while you’re receiving severance. So claims are likely to rise and quickly in the months ahead

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Joseph Lavorgna

@Lavorgnanomics

11 months

Over the last 5 tightening cycles, the average time from the last hike to the first cut has been 8 months. That takes us to March 2024 and futures are now pricing 60% chance of rate cut

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Joseph Lavorgna

@Lavorgnanomics

1 year

Index of leading economic indicators down 0.6% in April, its 13th consecutive drop

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Joseph Lavorgna

@Lavorgnanomics

11 months

. @federalreserve hiked too far too fast but why the abrupt and sudden change?

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Joseph Lavorgna

@Lavorgnanomics

2 years

Somehow central bankers the world over have forgotten about lags in monetary policy

Eurozone inflation exceeds expectations at 8.5%

Markets anticipate more interest rate rises after consumer price growth remains high

www.ft.com

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Joseph Lavorgna

@Lavorgnanomics

2 years

Didn’t learn anything new from #Powell talk. You?

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Joseph Lavorgna

@Lavorgnanomics

2 months

The downward revision to employment is worth at least $50 billion of “lost” income

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Joseph Lavorgna

@Lavorgnanomics

9 months

According to my calculations there has been $3 trillion in excess federal spending relative to pre-pandemic baseline since January 2021

The Long View

@HayekAndKeynes

9 months

If you’re wondering why the economy has been so resilient take a look at this thread and let me know what you think … 👇🏻👇🏻👇🏻

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Joseph Lavorgna

@Lavorgnanomics

10 months

Leading economic indicators down 0.5% and nearly 8% over the last year. Nothing to see here

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Joseph Lavorgna

@Lavorgnanomics

2 years

There’s either a soft landing or a recession. Anyone arguing “no landing” doesn’t even know the GDP identity

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Joseph Lavorgna

@Lavorgnanomics

11 months

Over the last 4 quarters real GDP has grown a solid 3.0%. BUT real Gross Domestic Income (GDI) has SHRUNK 0.2%. Which series is correct? Consumer sentiment and various polling strongly imply the latter

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Joseph Lavorgna

@Lavorgnanomics

10 months

Real GDP rose what appears to be a solid 2.9% over the last year. But the more accurate IMO data on real GDI show a -0.2%. It’s no wonder why consumer sentiment is near recessionary levels

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Joseph Lavorgna

@Lavorgnanomics

1 year

Fed funds way too high. Yield curve told us this last July when 2s/10s, the best metric, inverted

zerohedge

@zerohedge

1 year

*MONEY MARKET HOLDINGS HIT RECORD $5.31T IN WEEK ENDED MAY 3:ICI Up $47BN in one week, up $100BN in two weeks... the bank run is accelerating

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Joseph Lavorgna

@Lavorgnanomics

2 years

Last week he said the Fed should go 50 and now he’s equivocating on 25.

Jason Furman

@jasonfurman

2 years

So where does that leave me? I lean towards 25bp, mostly because I still worry about demand & also about sending a falsely reassuring signal to financial markets about the future path. But I don't feel strongly & if the Fed's info leads them to 0bp I'll likely update my views.

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Joseph Lavorgna

@Lavorgnanomics

3 months

If the economy was really that healthy @federalreserve would not be signaling its intention to soon cut rates especially with #inflation still substantially above target

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Joseph Lavorgna

@Lavorgnanomics

1 year

Sharply declining asset prices are always and everywhere deflationary

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Joseph Lavorgna

@Lavorgnanomics

2 years

Employment used to be a coincident indicator but is now a lagging indicator especially with so many post-Covid distortions. Super strong #NFP tells us nothing about the future, only where the labor market was

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Joseph Lavorgna

@Lavorgnanomics

1 year

In the past unemployment rate always troughed before inflation peaked except this cycle. Why? Because a lot of inflation was due to pandemic restraints on the supply side of economy. Unfortunately many economists give the latter short shrift. A recession will take of remaining

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Joseph Lavorgna

@Lavorgnanomics

2 years

Bank reserves declining at 10% annualized rate. Time to stop #QT ?

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Joseph Lavorgna

@Lavorgnanomics

1 year

While good, q3 #GDP is not as strong as it appears. Final sales rose 3.5% and real private nonresidential fixed investment actually slipped 0.1%. The economy remains on track for a consumer-led retrenchment thanks to tight money and a looming credit crunch

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Joseph Lavorgna

@Lavorgnanomics

3 months

The data are the data so why is @federal reserve going to cut rates 75 bps by year end on faster Q2 real #GDP and core #inflation ?

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Joseph Lavorgna

@Lavorgnanomics

1 year

👀

Eric Basmajian

@EPBResearch

1 year

60% of monthly job gains are coming from government, education, and healthcare. All the labor market narratives are illusions at best and misleading at worst.

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Joseph Lavorgna

@Lavorgnanomics

1 year

As a general rule, the trend in data revisions tells us about the underlying robustness (or lack thereof) in the economy

Kantro

@MichaelKantro

1 year

6th consecutive month of negative Nonfarm Payroll revisions (bottom panel). That's occurred twice before: in 2H 2007 and 1H 2002. #hopE

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Joseph Lavorgna

@Lavorgnanomics

1 year

Well argued but I’m taking the other side

Mark Zandi

@Markzandi

1 year

If you had told me a few months ago that today 10-year Treasury yields would be near 5% and mortgage rates over 8%, I probably would have told you that the stock market would be down big and the economy headed to recession. While that still could happen, odds are good that it

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Joseph Lavorgna

@Lavorgnanomics

8 months

The drain is happening because of the Treasury’s decision to ramp up bill issuance which effectively has accounted for 75% of marketable supply

🇺🇸 Kyle Bass 🇹🇼

@Jkylebass

8 months

The Fed and the Treasury have both been using their ‘slush funds’ to inject enormous liquidity into U.S. markets since mid 2023. The FED has another $400 billion to inject between now and the election. It’s purely a coincidence…right? 1/3

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Joseph Lavorgna

@Lavorgnanomics

2 years

This discount window borrowing vs QE debate is the proverbial difference without distinction

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Joseph Lavorgna

@Lavorgnanomics

2 months

“Several” @federalreserve officials saw the case for lowering rates at July #FOMC meeting

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Joseph Lavorgna

@Lavorgnanomics

1 year

And just about when student loan payments come due

Bravos Research

@bravosresearch

1 year

Consumer savings are expected to run out by Sept 2023 This might be the turning point for the US economy A thread 🧵

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Joseph Lavorgna

@Lavorgnanomics

2 years

Wow!

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Joseph Lavorgna

@Lavorgnanomics

1 year

How can the Fed take much credit for the improvement in inflation, the “super” core specifically, when the unemployment rate has yet to meaningfully rise? @TheStalwart @NickTimiraos

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Joseph Lavorgna

@Lavorgnanomics

1 year

This is really really good

Prometheus Research

@prometheusmacro

1 year

🧵The Impact Of Treasury Issuance 1/ In H2 of 2023, the Treasury is set to issue close to approximately $1.9 trillion in new borrowing. This will likely have significant impacts on liquidity and macro markets. We discuss our views.

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Joseph Lavorgna

@Lavorgnanomics

1 year

Time to get long?

Lisa Abramowicz

@lisaabramowicz1

1 year

"I strongly suspect that the bond bull market that began in the early 1980s is over...The steady economic expansion that followed the 2008 financial crisis is no longer relevant. The paradigm has shifted, and higher yields are back:" Ex-NY Fed's Dudley

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Joseph Lavorgna

@Lavorgnanomics

2 years

As my work has shown the average pivot is 3 months, the median 2 months. Btw this was eminently predictable

Lisa Abramowicz

@lisaabramowicz1

2 years

The question for the Fed this morning isn't whether to hike 25bp or 50bp this week. It's when do they start cutting rates, at least according to fed funds futures, which have priced out rate cuts and priced in rate cuts as soon as June.

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Joseph Lavorgna

@Lavorgnanomics

1 year

More comprehensive data on labor compensation which is based on tax payments shows a sharp slower. There’s no reason to focus on this series

Nick Timiraos

@NickTimiraos

1 year

The Atlanta Fed wage tracker shows composition adjusted wage growth for the three months ended May was up 6.0% from the year ago period, down from 6.1% in April and 6.4% in March—slowing but at levels well above what would be consistent with 2% inflation

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Joseph Lavorgna

@Lavorgnanomics

1 year

The September employment report was strong. It is what it is. Let’s not data parse to find relative minor weaknesses

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Joseph Lavorgna

@Lavorgnanomics

1 year

@Markzandi Soft landings and recessions look similar until they don’t

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Joseph Lavorgna

@Lavorgnanomics

1 year

2s10s UST inversion nearing early March/pre-SVB readings. Nothing to see here! 😟

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Joseph Lavorgna

@Lavorgnanomics

2 years

Time will tell if this is the most important piece of macro data YTD. Production of electric & gas utilities fell 9.9% last month which is the largest drop ever. And data go back to 1939. Maybe unseasonably warm weather accounts to the “no landing” (which makes no sense) story

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