Paul Donovan
@pdonovan-econ.bsky.social
Economist. Part time farmer. Amateur boxer. Occasional author. Egotist. Advocate of economics without jargon. Inflation, environmental economics, the economics of prejudice, structural change.
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Can politicians afford an affordability problem?
“Affordability” is more than worrying about the headline inflation rate, and the factors that drive it are likely to endure.
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#EconSky
“Affordability” is more than worrying about the headline inflation rate, and the factors that drive it are likely to endure.
www.ubs.com/global/en/we...
#EconSky
Can politicians afford an affordability problem?
“Affordability” has suddenly become a political focus. People are angry about the loss of affordability, and are inclined to blame incumbent governments for this.
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November 14, 2025 at 1:32 PM
Can politicians afford an affordability problem?
“Affordability” is more than worrying about the headline inflation rate, and the factors that drive it are likely to endure.
www.ubs.com/global/en/we...
#EconSky
“Affordability” is more than worrying about the headline inflation rate, and the factors that drive it are likely to endure.
www.ubs.com/global/en/we...
#EconSky
Tying tariffs to inflation perceptions
The US is rushing to do trade deals with food exporters, to tackle US consumer inflation perceptions. There are risks to this strategy.
www.ubs.com/global/en/we...
#EconSky
The US is rushing to do trade deals with food exporters, to tackle US consumer inflation perceptions. There are risks to this strategy.
www.ubs.com/global/en/we...
#EconSky
Tying tariffs to inflation perceptions
There are more reports of the US administration scrambling to cut tariffs using framework trade deals with Latin American economies. Heightened political concerns about US consumers’ inflation percept...
www.ubs.com
November 14, 2025 at 10:50 AM
Tying tariffs to inflation perceptions
The US is rushing to do trade deals with food exporters, to tackle US consumer inflation perceptions. There are risks to this strategy.
www.ubs.com/global/en/we...
#EconSky
The US is rushing to do trade deals with food exporters, to tackle US consumer inflation perceptions. There are risks to this strategy.
www.ubs.com/global/en/we...
#EconSky
Inflation fears without inflation
We will not get US October inflation data, but administration officials seem concerned about inflation perceptions
www.ubs.com/global/en/we...
#EconSky
We will not get US October inflation data, but administration officials seem concerned about inflation perceptions
www.ubs.com/global/en/we...
#EconSky
Inflation fears without inflation
US October consumer price inflation should have been published today. It is unlikely the number will ever be calculated, because there was no one to collect the price data. This highlights a problem —...
www.ubs.com
November 13, 2025 at 8:37 AM
Inflation fears without inflation
We will not get US October inflation data, but administration officials seem concerned about inflation perceptions
www.ubs.com/global/en/we...
#EconSky
We will not get US October inflation data, but administration officials seem concerned about inflation perceptions
www.ubs.com/global/en/we...
#EconSky
Fiscal boosts and bonds
There will be US fiscal boosts early next year, but bond markets do not seem to be pricing any chance of sizeable household rebates.
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#EconSky
There will be US fiscal boosts early next year, but bond markets do not seem to be pricing any chance of sizeable household rebates.
www.ubs.com/global/en/we...
#EconSky
Fiscal boosts and bonds
US President Trump has suggested that most US households could receive a USD2,000 cheque from the government. Such a move would require legislation. The bond market seems sceptical about Congressional...
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November 12, 2025 at 10:44 AM
Fiscal boosts and bonds
There will be US fiscal boosts early next year, but bond markets do not seem to be pricing any chance of sizeable household rebates.
www.ubs.com/global/en/we...
#EconSky
There will be US fiscal boosts early next year, but bond markets do not seem to be pricing any chance of sizeable household rebates.
www.ubs.com/global/en/we...
#EconSky
Do tariff cuts cut prices?
Talk of lower tariffs on US imports from Switzerland might offer an important test case: do consumer prices fall when tariffs are reduced?
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#EconSky
Talk of lower tariffs on US imports from Switzerland might offer an important test case: do consumer prices fall when tariffs are reduced?
www.ubs.com/global/en/we...
#EconSky
Do tariff cuts cut prices?
Media reports suggest US importers may face a lower tariff on products from Switzerland (the suggestion is that the August 39% tariff becomes 15%). Swiss imports are a rather modest contribution to th...
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November 11, 2025 at 10:42 AM
Do tariff cuts cut prices?
Talk of lower tariffs on US imports from Switzerland might offer an important test case: do consumer prices fall when tariffs are reduced?
www.ubs.com/global/en/we...
#EconSky
Talk of lower tariffs on US imports from Switzerland might offer an important test case: do consumer prices fall when tariffs are reduced?
www.ubs.com/global/en/we...
#EconSky
Give thanks for quality
When calculating inflation, the data is only supposed to capture price moves. Quality and quantity changes have to be adjusted for.
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#EconSky
When calculating inflation, the data is only supposed to capture price moves. Quality and quantity changes have to be adjusted for.
www.ubs.com/global/en/we...
#EconSky
Give thanks for quality
In 1943, in a pinnacle of radio broadcasting, Commissioner Hinrichs of the US Bureau of Labor Statistics starred alongside his wife in “Housewife versus Economist.” They were debating quality adjustme...
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November 7, 2025 at 12:01 PM
Give thanks for quality
When calculating inflation, the data is only supposed to capture price moves. Quality and quantity changes have to be adjusted for.
www.ubs.com/global/en/we...
#EconSky
When calculating inflation, the data is only supposed to capture price moves. Quality and quantity changes have to be adjusted for.
www.ubs.com/global/en/we...
#EconSky
The Supremes
Tariff-impacted equities rallied as the Supreme Court held a hearing into the legality of the US administration’s tariffs.
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#EconSky
Tariff-impacted equities rallied as the Supreme Court held a hearing into the legality of the US administration’s tariffs.
www.ubs.com/global/en/we...
#EconSky
The Supremes
The US Supreme Court hearing on the legality of the majority of the US administration’s tariffs produced a positive reaction from tariff-related equities. The questioning from some justices, includin...
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November 6, 2025 at 9:21 AM
The Supremes
Tariff-impacted equities rallied as the Supreme Court held a hearing into the legality of the US administration’s tariffs.
www.ubs.com/global/en/we...
#EconSky
Tariff-impacted equities rallied as the Supreme Court held a hearing into the legality of the US administration’s tariffs.
www.ubs.com/global/en/we...
#EconSky
Credit where credit's due?
The US senior loan officers’ survey does not suggest that the economy is particularly weakened by a lack of credit.
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#EconSky
The US senior loan officers’ survey does not suggest that the economy is particularly weakened by a lack of credit.
www.ubs.com/global/en/we...
#EconSky
Credit where credit’s due?
If the US had a functioning federal government, we would be getting September trade data today. In theory, one could calculate US trade numbers by using bilateral trade data from other economies. Unfo...
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November 4, 2025 at 11:14 AM
Credit where credit's due?
The US senior loan officers’ survey does not suggest that the economy is particularly weakened by a lack of credit.
www.ubs.com/global/en/we...
#EconSky
The US senior loan officers’ survey does not suggest that the economy is particularly weakened by a lack of credit.
www.ubs.com/global/en/we...
#EconSky
Polls and politics
US business sentiment polls are potentially distorted by partisan politics. US elections tomorrow hint at the economy’s impact on politics.
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#EconSky
US business sentiment polls are potentially distorted by partisan politics. US elections tomorrow hint at the economy’s impact on politics.
www.ubs.com/global/en/we...
#EconSky
Polls and politics
The October US ISM manufacturing sentiment poll is due. Falling survey repose rates and rising political polarisation have conspired to reduce the reliability of survey-based evidence. The risk is th...
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November 3, 2025 at 7:59 AM
Polls and politics
US business sentiment polls are potentially distorted by partisan politics. US elections tomorrow hint at the economy’s impact on politics.
www.ubs.com/global/en/we...
#EconSky
US business sentiment polls are potentially distorted by partisan politics. US elections tomorrow hint at the economy’s impact on politics.
www.ubs.com/global/en/we...
#EconSky
The Republic of Rumors
Not supplying credible economic data does not just risk policy error. It may build a negative narrative that could change economic behavior.
www.ubs.com/global/en/we...
Not supplying credible economic data does not just risk policy error. It may build a negative narrative that could change economic behavior.
www.ubs.com/global/en/we...
The Republic of Rumors
Federal Reserve Chair Powell recently suggested that policymakers were driving through a fog, trying to understand the US economy with almost no credible official data.
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October 31, 2025 at 2:43 PM
The Republic of Rumors
Not supplying credible economic data does not just risk policy error. It may build a negative narrative that could change economic behavior.
www.ubs.com/global/en/we...
Not supplying credible economic data does not just risk policy error. It may build a negative narrative that could change economic behavior.
www.ubs.com/global/en/we...
Fearing fear
The lack of US data is a nuisance, but if it allows negative rumors to take hold it might breed a fear that feeds back into the economy.
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#EconSky
The lack of US data is a nuisance, but if it allows negative rumors to take hold it might breed a fear that feeds back into the economy.
www.ubs.com/global/en/we...
#EconSky
Fearing fear
We should be getting US personal income and spending data today, but because the US lacks a properly functioning government we are getting no such thing. This matters because the resilient middle-inco...
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October 31, 2025 at 8:57 AM
Fearing fear
The lack of US data is a nuisance, but if it allows negative rumors to take hold it might breed a fear that feeds back into the economy.
www.ubs.com/global/en/we...
#EconSky
The lack of US data is a nuisance, but if it allows negative rumors to take hold it might breed a fear that feeds back into the economy.
www.ubs.com/global/en/we...
#EconSky
British style
The Federal Reserve seems to be adopting the Bank of England’s style, with a three-way vote on the latest policy decision.
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#EconSky
The Federal Reserve seems to be adopting the Bank of England’s style, with a three-way vote on the latest policy decision.
www.ubs.com/global/en/we...
#EconSky
British style
The Federal Reserve spoke with an almost British accent yesterday, cutting rates a quarter point with a Bank of England-like three-way vote split. Fed Chair Powell signaled that a December cut was not...
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October 30, 2025 at 7:47 AM
British style
The Federal Reserve seems to be adopting the Bank of England’s style, with a three-way vote on the latest policy decision.
www.ubs.com/global/en/we...
#EconSky
The Federal Reserve seems to be adopting the Bank of England’s style, with a three-way vote on the latest policy decision.
www.ubs.com/global/en/we...
#EconSky
The Italian States of America
The IMF projects US debt ratios will exceed those of Italy. Italy’s example is a reason not to panic about this.
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#EconSky
The IMF projects US debt ratios will exceed those of Italy. Italy’s example is a reason not to panic about this.
www.ubs.com/global/en/we...
#EconSky
The Italian States of America
The IMF suggested that the US government debt-to-GDP ratio will exceed that of Italy by the end of the decade. There is no reason to suppose this IMF forecast is more accurate than any other IMF forec...
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October 28, 2025 at 8:05 AM
The Italian States of America
The IMF projects US debt ratios will exceed those of Italy. Italy’s example is a reason not to panic about this.
www.ubs.com/global/en/we...
#EconSky
The IMF projects US debt ratios will exceed those of Italy. Italy’s example is a reason not to panic about this.
www.ubs.com/global/en/we...
#EconSky
Less tense?
The oscillating nature of Sino-US trade tensions has switched back to “dial down”, after talks over the weekend.
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#EconSky
The oscillating nature of Sino-US trade tensions has switched back to “dial down”, after talks over the weekend.
www.ubs.com/global/en/we...
#EconSky
Less tense?
Trade tensions between the US and China appear to have moved into a “dial down” phase after the recent escalation. While details will probably not be given until the proposed meeting between US Presid...
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October 27, 2025 at 8:25 AM
Less tense?
The oscillating nature of Sino-US trade tensions has switched back to “dial down”, after talks over the weekend.
www.ubs.com/global/en/we...
#EconSky
The oscillating nature of Sino-US trade tensions has switched back to “dial down”, after talks over the weekend.
www.ubs.com/global/en/we...
#EconSky
A slave to the passions?
Asset prices should not be driven by passion. Some wealth values are driven by passion, and they need different consideration
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#EconSky
Asset prices should not be driven by passion. Some wealth values are driven by passion, and they need different consideration
www.ubs.com/global/en/we...
#EconSky
A slave to the passions?
Asset prices should not be driven by passion. Some wealth values are driven by passion, and they need different consideration
www.ubs.com
October 24, 2025 at 11:17 AM
A slave to the passions?
Asset prices should not be driven by passion. Some wealth values are driven by passion, and they need different consideration
www.ubs.com/global/en/we...
#EconSky
Asset prices should not be driven by passion. Some wealth values are driven by passion, and they need different consideration
www.ubs.com/global/en/we...
#EconSky
Trade talk turmoil
US President Trump broke off trade talks with Canada. This only impacts a small part of trade, but might raise risks around Sino-US talks.
www.ubs.com/global/en/we...
#EconSky
US President Trump broke off trade talks with Canada. This only impacts a small part of trade, but might raise risks around Sino-US talks.
www.ubs.com/global/en/we...
#EconSky
Trade talk turmoil
US President Trump announced trade negotiations with Canada would end. Trump is unhappy with the Province of Ontario’s adverts, directly quoting US President Reagan arguing against tariffs on economic...
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October 24, 2025 at 7:32 AM
Trade talk turmoil
US President Trump broke off trade talks with Canada. This only impacts a small part of trade, but might raise risks around Sino-US talks.
www.ubs.com/global/en/we...
#EconSky
US President Trump broke off trade talks with Canada. This only impacts a small part of trade, but might raise risks around Sino-US talks.
www.ubs.com/global/en/we...
#EconSky
Blips
There was a small blip in the oil price after US sanctions against Russian companies. Economically this is too small to matter.
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#EconSky
There was a small blip in the oil price after US sanctions against Russian companies. Economically this is too small to matter.
www.ubs.com/global/en/we...
#EconSky
Blips
There has been a small blip in the oil price following the US announcement that two Russian energy companies would be blacklisted. US President Trump intends to raise the issue of China’s Russian oil ...
www.ubs.com
October 23, 2025 at 6:58 AM
Blips
There was a small blip in the oil price after US sanctions against Russian companies. Economically this is too small to matter.
www.ubs.com/global/en/we...
#EconSky
There was a small blip in the oil price after US sanctions against Russian companies. Economically this is too small to matter.
www.ubs.com/global/en/we...
#EconSky
Choppy markets, in choppy waters
Gold’s sell-off has, so far, limited economic impact. The uncertainty of international politics may risk more financial market volatility.
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#EconSky
Gold’s sell-off has, so far, limited economic impact. The uncertainty of international politics may risk more financial market volatility.
www.ubs.com/global/en/we...
#EconSky
Choppy markets, in choppy waters
UK September consumer price inflation was lower than expected. Air fares and fuel prices added, but food prices seem to have been subject to more general discounting. Previously, food prices mainly ex...
www.ubs.com
October 22, 2025 at 8:58 AM
Choppy markets, in choppy waters
Gold’s sell-off has, so far, limited economic impact. The uncertainty of international politics may risk more financial market volatility.
www.ubs.com/global/en/we...
#EconSky
Gold’s sell-off has, so far, limited economic impact. The uncertainty of international politics may risk more financial market volatility.
www.ubs.com/global/en/we...
#EconSky
Trading patterns offer few surprises
Early trade data from South Korea showed strength in semiconductor exports, and reasonable trade away from the US
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#EconSky
Early trade data from South Korea showed strength in semiconductor exports, and reasonable trade away from the US
www.ubs.com/global/en/we...
#EconSky
Trading patterns offer few surprises
South Korea’s early October export data showed strength when adjusted for differences in working days. As is now standard, semiconductor exports led this export surge. Auto exports were weakened by US...
www.ubs.com
October 21, 2025 at 7:08 AM
Trading patterns offer few surprises
Early trade data from South Korea showed strength in semiconductor exports, and reasonable trade away from the US
www.ubs.com/global/en/we...
#EconSky
Early trade data from South Korea showed strength in semiconductor exports, and reasonable trade away from the US
www.ubs.com/global/en/we...
#EconSky
Back and forth on trade
The US seems to be moving away from its more antagonistic tone towards China, again.
www.ubs.com/global/en/we...
#EconSky
The US seems to be moving away from its more antagonistic tone towards China, again.
www.ubs.com/global/en/we...
#EconSky
Back and forth on trade
Financial markets have been pushed around by trade, again. This time the reaction has been positive, as the US seems to have moved away from its more antagonistic position towards China. While the ba...
www.ubs.com
October 20, 2025 at 9:28 AM
Back and forth on trade
The US seems to be moving away from its more antagonistic tone towards China, again.
www.ubs.com/global/en/we...
#EconSky
The US seems to be moving away from its more antagonistic tone towards China, again.
www.ubs.com/global/en/we...
#EconSky
A possible productivity problem?
Better corporate productivity does not necessarily translate into better economic productivity. This matters for fiscal policy.
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#EconSky
Better corporate productivity does not necessarily translate into better economic productivity. This matters for fiscal policy.
www.ubs.com/global/en/we...
#EconSky
A possible productivity problem?
Politicians love productivity. Productivity is the magic fairy dust that makes fiscal problems disappear when sprinkled over economic growth while muttering the magic words “this time it’s different.”...
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October 17, 2025 at 10:38 AM
A possible productivity problem?
Better corporate productivity does not necessarily translate into better economic productivity. This matters for fiscal policy.
www.ubs.com/global/en/we...
#EconSky
Better corporate productivity does not necessarily translate into better economic productivity. This matters for fiscal policy.
www.ubs.com/global/en/we...
#EconSky
More changes to policy
There are reports that US auto companies have successfully lobbied for changes to auto-parts tariffs.
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#EconSky
There are reports that US auto companies have successfully lobbied for changes to auto-parts tariffs.
www.ubs.com/global/en/we...
#EconSky
More changes to policy
There are reports that the US administration will extend the delay in implementing tariffs on car part imports from two years to five years. This is a reaction to intensive domestic lobbying, and shou...
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October 17, 2025 at 8:34 AM
More changes to policy
There are reports that US auto companies have successfully lobbied for changes to auto-parts tariffs.
www.ubs.com/global/en/we...
#EconSky
There are reports that US auto companies have successfully lobbied for changes to auto-parts tariffs.
www.ubs.com/global/en/we...
#EconSky
Labor weakness still beats inflation increases
Federal Reserve Chair Powell has again emphasized the primacy of the weak labor market in influencing Fed policy thinking.
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#EconSky
Federal Reserve Chair Powell has again emphasized the primacy of the weak labor market in influencing Fed policy thinking.
secure.ubs.com/global/en/we...
#EconSky
Labor weakness still beats inflation increases
Federal Reserve Chair Powell reiterated that labor market concerns dominate inflation concerns in current policy. The lack of a functioning US federal government means this economic analysis depends o...
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October 15, 2025 at 9:54 AM
Labor weakness still beats inflation increases
Federal Reserve Chair Powell has again emphasized the primacy of the weak labor market in influencing Fed policy thinking.
secure.ubs.com/global/en/we...
#EconSky
Federal Reserve Chair Powell has again emphasized the primacy of the weak labor market in influencing Fed policy thinking.
secure.ubs.com/global/en/we...
#EconSky
Where to start?
Political noise dominates - with a seeming shift of tone is YS trade policy, more of the same in France, and political divorce in Japan
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#EconSky
Political noise dominates - with a seeming shift of tone is YS trade policy, more of the same in France, and political divorce in Japan
www.ubs.com/global/en/we...
#EconSky
Where to start?
After US President Trump’s threat to impose additional significant tariffs on US buyers of goods from China, there has been a more conciliatory tone from both Trump and US Vice President Vance over th...
www.ubs.com
October 13, 2025 at 7:09 AM
Where to start?
Political noise dominates - with a seeming shift of tone is YS trade policy, more of the same in France, and political divorce in Japan
www.ubs.com/global/en/we...
#EconSky
Political noise dominates - with a seeming shift of tone is YS trade policy, more of the same in France, and political divorce in Japan
www.ubs.com/global/en/we...
#EconSky
Is AI hurting growth?
AI is mainly adding to current growth by generating investment (rather than creating valuable output). It may also weaken growth.
www.ubs.com/global/en/we...
#EconSky
AI is mainly adding to current growth by generating investment (rather than creating valuable output). It may also weaken growth.
www.ubs.com/global/en/we...
#EconSky
Is AI hurting growth?
The exuberance around artificial intelligence should be based on an expectation that investing today will generate higher economic output in the future. In that sense, AI is good for growth long term....
www.ubs.com
October 10, 2025 at 12:40 PM
Is AI hurting growth?
AI is mainly adding to current growth by generating investment (rather than creating valuable output). It may also weaken growth.
www.ubs.com/global/en/we...
#EconSky
AI is mainly adding to current growth by generating investment (rather than creating valuable output). It may also weaken growth.
www.ubs.com/global/en/we...
#EconSky