#Trump will rue the day he decides to take on the world on trade issues. With over 100 countries individually running a trade surplus with the US, it will be impossible for the Administration to have any meaningful turnaround in the US current account. Lots of bluster with no real impact.

I recall when the Laffer curve came out, our dept of economics referred to it as the "laugher" curve. It had no theoretical construct or empirical evidence--- just a whimsical notion that appealed to the right wing. Nothing has changed in that regard.

You are so right that Trump's trade policy will hurt aggregate demand, especially regarding taxing intermediate products that form the majority of US imports.

This is just what is happening-- workers are pushed out of the core and far into the suburbs. Now, the suburbs are experiencing huge demand, average house price exceed $1m for 4-bd houses 35 miles from the core. The suburbs have many land use restrictions that just make supply the real issue. The former Bank of Canada Governor is speaking out to forget trying to curb demand, increase supply. Never would I have believed that from a banker.

Not so. I live in Toronto. The housing market here is totally detached from western Canada and the oil industry. Just like NYC the city is not tied to the oil industry.The country is bifurcated in that respect. Even during the recession of 2008 and the collapse in oil prices in 2014 house prices did not fall and just continued up. There is a serious land shortage in the major cities for many different reasons, and the shortage of available listing is acute--- houses are being hoarded in the core of the cities. In 40 years of living here, I have never seen a market with such tight supply.

Not so. I live in Toronto. The housing market here is totally detached from western Canada and the oil industry. Just like NYC the city is not tied to the oil industry.The country is bifurcated in that respect. Even during the recession of 2008 and the collapse in oil prices in 2014 house prices did not fall and just continued up. There is a serious land shortage in the major cities for many different reasons, and the shortage of available listing is acute--- houses are being hoarded in the core of the cities. In 40 years of living here, I have never seen a market with such tight supply.

In the Fed's beige book there is constant reference to producers who are unable to raise final selling prices. You point about competition and excess capacity is borne out by the Fed data.

A very unusual concept. At some point, like the case of Japan, where the labour shortage is acute, this could be `negative unemployment rates`. Interestingly, an unemployment rate of 3%Japan does not generate inflation. Proof that the Phillips curve is dead.

The Fed still believes in the Phillips curve because it has no choice, given its dual mandate.

In Canada, there is no dual mandate, the Bank just has a target of inflation between 1-3% The Fed would love to drop the unemployment target, makes life a lot easier.

Norm

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Gary, thanks.

You comment that the Fed " the Fed is actually telling you this is as good as they figure it will get. " sums it up perfectly. This smacks in the face of those who argue that 4 +% growth is on its way.

The Phillips curve, once the backbone of macro economic policymakers is dead.

China killed the curve when it decided to shift the world supply curve to the right by supplying the US with all it can consume at zero marginal cost.