Follow Joshua McCallum
Severe weather can have a severe effect on economic activity, but some parts of the economy are hit worse than others. Looking at past harsh winters, it seems that most of the affected activities are only delayed, not stopped. Seasonal adjustment factors also have an effect on the data – the adjustment is meant to smooth out predictable volatility to reveal the underlying trend; but have recent factors caused the adjustment to create patterns that are not actually there?
Emerging markets (EM) have grown significantly faster than developed markets (DM), but this has only been true for the past decade. For most of the 1980s and 1990s, EM growth was similar to DM growth. It may be that the years of outperformance in the 2000s were the exception not the rule and investors may need to accept the idea of a new normal for EM.
The US unemployment rate has dropped significantly since its peak in 2009 but this is mostly due to a sharp drop in the participation rate (the proportion of working age people who either have a job or are looking for a job). Is this being driven by structural or cyclical factors? This is the question the Fed needs to answer to set its monetary policy at the right level.
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