Why? Q2 equipment investment as implied by GDPNow of 5\/30.<\/p>\n
Figure 1:<\/strong> Caldara et al. Trade Policy Uncertainty index (blue, left scale), and nonresidential equipment investment (black, right log scale), and implied by GDPNow of 5\/30 (gray square), both in bn.Ch.2017$ SAAR. Source: Iacoviello TPU<\/a>, BEA 2025Q1 second release, and Atlanta Fed.<\/em><\/p>\n Note the spike in trade policy uncertainty (daily data shown here<\/a>). The accompanying deceleration in equipment investment is consistent with the findings in Caldara, Iacoviello, Molligo,\u00a0 Prestipino, and Raffo \u201cThe Economic Effects of Trade Policy Uncertainty<\/a><\/u>,\u201d Journal of Monetary Economics (2020).<\/p>\n How does the Caldara et al. measure compare against the purely news based version of Baker, Bloom and Davis (the categorical component of EPU)? Here\u2019s a graph of standardized (2015-2025M05) indices:<\/p>\n Figure 2:<\/strong> TPUD (light blue), and EPU-trade (red), both standardized over 2015M01-2025M05 period. NBER defined peak-to-trough recession dates shaded gray. Light orange denotes second Trump administration. Source: Iacoviello TPU<\/a>, policyuncertainty.com, NBER, and author\u2019s calculations.\u00a0<\/em><\/p>\n Both series have shown similar increases since the election.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2025\/05\/investment_tpud.png\")
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