Sunday, April 30, 2017

Closure, on schedule


CBO assumes that any gap between actual GDP and potential GDP that remains at the end of the short-term (two-year) forecast will close during the following eight years.
- CBO


On the first of March 2010, under the title The Trillion Dollar Gap, Mark Thoma showed this graph of real and potential GDP:



Here is where things stand today, some seven years later:


The trillion dollar gap has just about closed -- not by bringing real GDP up, but by bringing potential GDP down.

Friday, April 28, 2017

Issues with Figure 1 in Bezemer and Hudson's Finance Is Not the Economy


In Finance Is Not the Economy, Dirk Bezemer and Michael Hudson write:

These correlations suggest a one-on-one ratio between bank credit and the non-financial sector’s economic activity (Figure 1). Growth in credit to the real sector paralleled growth in nominal U.S. GDP from the 1950s to the mid-1980s — that is, until financialization became pervasive. Allowing for technical problems of definitions and measurement, growth of bank credit to the real sector and nominal GDP growth moved almost one on one, until financial liberalization gathered steam in the early 1980s.

Figure 1 shows how, after the mid-1980s, the real sector was borrowing structurally more than its income — a remarkable trend noted by few.

Here is their Figure 1:

Figure 1 from the Article by Bezemer and Hudson
When I presented this graph before, in If the growth of debt was one-for-one with the growth of GDP before the 1980s, the line would be flat, I was looking at the dashed line and ignoring the jiggy lines. This time, just the opposite: Look at the jiggy lines and ignore the dashed line.

According to Bezemer and Hudson, the graph "shows how, after the mid-1980s, the real sector was borrowing structurally more than its income". I don't know what "structurally more" means; I think it just means "more": The real sector was borrowing more than its income, after the mid-1980s. That's what they are saying, I think. But I find it hard to see that on the graph.

If what they are saying is true, then the bold jiggy line ("nominal credit") should run higher than the faint jiggy line ("nominal GDP") after the mid-1980s. And if the real sector was borrowing "one for one" with income before the mid-1980s, the two lines should run together. Are these conditions met?

I dunno. The lines are too jiggy to tell. The bold and faint lines seem to run more or less together until about 1985, and after that the bold is clearly higher, sometimes. But I am looking at the graph, looking for what they told me I should see in it, and I'm trying to see it. That's not objective evaluation. It's hokum.

So I did what I always do: I tried to duplicate their graph. It's a little awkward because I don't know exactly what data they are using, nor the value of their smoothing constant. I took non-financial corporate business debt and non-financial non-corporate business debt, and added them together to get a number for what they call "nominal credit to nonfinancal business". Then I found "nominal GDP" and put that on the graph too. And I showed both data sets as "YoY growth". In other words, I did my best to make my graph look like theirs (without the smoothing). Here's what I got:

Graph #2: Trying to Duplicate Bezemer and Hudson's Figure 1
Perhaps not the best of matches. The two graphs are somewhat similar. It does real harm, not knowing exactly what data they used. I can only discuss what my graph shows, not what their graph shows.

The blue line is credit growth; the red line is GDP growth. In the latter half of the graph the blue line is definitely higher than the red... sometimes. Sometimes definitely lower. And sometimes, quite the same. But these are the years for which Bezemer and Hudson say "the real sector was borrowing structurally more" than GDP. Their words put the blue line reliably above the red. My graph doesn't show it.

In the early years, where Bezemer and Hudson say we should see a "one-on-one" correspondence, the blue line runs generally higher than the red. Specifically, blue is higher for essentially all of the 1960s and the first half of the 1970s -- and for most of the 1950s as well. Credit growth was mostly higher than GDP growth in the early years, not one-for-one as Bezemer and Hudson say.

But maybe it will be easier to see if we look at the data a different way. The next graph shows the same source data. But instead of showing the "YoY growth" rates, it just shows dollars, billions of dollars. And I let the graph do the comparison for us, showing the credit number as a percent of the GDP number.

So for example, when credit is growing one-on-one with GDP, the blue line will run flat. (If the graph starts out with credit at 30% of GDP, the line will stay close to 30% as long as the "one-on-one" holds good.) And when credit is growing faster than GDP, the blue line will go up. Here is the graph:

Graph #3: Non-Financial Business Debt as a Percent of GDP
Non-financial business debt starts out at around 30% of GDP, and climbs 20 percentage points to around 50% by the mid-1970s. It is pretty much a straight-line increase all the while. After the mid-1970s it runs in fits and starts -- still with a trend of increase, but slower than before, and with a lot more variation in the path of the data.

The increase in debt, relative to GDP, is more rapid and more persistent before the mid-1970s than after. There is a 20 percentage point increase in about 25 years early on (1951-1975), and a bit less than a 20 percentage point increase in the 40 years thereafter.

The trends indicate that non-financial business debt was growing faster than GDP for the whole period shown on the graph, but more rapidly before 1975 than after. And you know, maybe that's what we should expect to see if the economy slowed in the mid-1970s and never fully recovered.

Bezemer and Hudson claim that non-financial business debt grew no more rapidly than GDP during the 1950-1985 period, and much more rapidly thereafter. I don't see it.

Thursday, April 27, 2017

Simple answers


Lookin up somethin in Bezemer & Hudson's Finance Is Not the Economy, I get as far as the opening sentence:

Why have economies polarized so sharply since the 1980s, and especially since the 2008 crisis?

Why are they focusing on the years since the 2008 crisis? or more remotely, on the years since the 1980s? It was the years before 2008 that led to 2008. It was the time before the 1980s that led to the 1980s. People like to look at consequences of economic problems, and attempt to fix consequences. No wonder we reliably fail.

Moving on, then, I get as far as their next sentence:

How did we get so indebted without real wage and living standards rising, while cities, states, and entire nations are falling into default?

How did we get so indebted? That's easy: We think we need credit for growth. So economic policy does many things to encourage the use of credit. But when we use credit, we increase our debt.

Economic policy makes our debt increase. That's our debt I mean, not the government debt.

Economic policy encourages us to use credit, and does nothing about the resulting debt. Therefore, our debt accumulates.

That is how we got so indebted.

Wednesday, April 26, 2017

Looking for answers in all the wrong places



Supply-side economics is a macroeconomic theory that argues economic growth can be most effectively created by investing in capital and by lowering barriers on the production of goods and services.


Noah considers the mystery of "labor's falling share of GDP":

Economists are very worried about the decline in labor’s share of U.S. national income.

He finds

four main potential explanations for the mysterious slide in labor's share. These are: 1) China, 2) robots, 3) monopolies and 4) landlords.

He goes thru the list, finding some merit and some problem with each of those explanations. Then he juggles them a bit and comes up with this:

So monopoly power, robots and globalization might all be part of one unified phenomenon -- new technologies that disproportionately help big, capital-intensive multinational companies...

That theory still doesn’t explain how landlords might fit into the picture. But it provides a possible way to unify at least some of the competing explanations for this disturbing economic trend.

Interesting. Noah is seeking a Unified Theory to explain the decline of labor share.

Here's one: Supply-side economics.

Monday, April 24, 2017

Milanovic reviews Bas van Bavel’s theory of rise and fall


In the sidebar at Economist's View, A theory of the rise and fall of economic leadership - Branko Milanovic. How could I resist?

The link is a review of the

recently published “The invisible hand?: How market economies have emerged and declined since AD 500” (Oxford University Press, 2016, 330 pages) by Bas van Bavel

Milanovic:

Van Bavel’s key idea is as follows. In societies where non-market constraints are dominant (say, in feudal societies), liberating factor markets is a truly revolutionary change. Ability of peasants to own some land or to lease it, of workers to work for wages rather than to be subjected to various types of corvĂ©es, or of the merchants to borrow at a more or less competitive market rather than to depend on usurious rates, is liberating at an individual level (gives person much greater freedom), secures property, and unleashes the forces of economic growth.

I recently noted the reintroduction of money to the West in the time of Charlemagne and Offa, three or four centuries later England's move from feudal service obligations to cash payments and, three or four centuries after that, England's "An Act Against Usurie" of 1545.

In my conclusion I pointed out "Step four: Debt and interest cause the fall of civilization."

Milanovic:

But the process, Bavel argues, contains the seeds of its destruction. Gradually factor markets cover more and more of the population...

One factor market, though, that of capital and finance, gradually begins to dominate. Private and public debt become most attractive investments, big fortunes are made in finance, and those who originally asked for the level playing field and removal of feudal-like constraints, now use their wealth to conquer the political power and impose a 'serrata', thus making the rules destined to keep them forever on the top.

Bavel is dismissive of a unilinear view that regards the ever widening role of factor markets, including the financial, as leading to ever higher incomes and greater political freedom. His view, although not fully cyclical (on which I will say a bit more at the very end of the review) is “endogenously curvilinear”: things which were good originally, when they hypertrophy, become a hindrance to further growth. It is thus a story of the rise and fall where, like in Greek tragedies, the very same factors that brought the protagonists grandeur, eventually hurl them into the abyss.

Exactly so. At the start, finance boosts economic growth. But long before the end, finance already hinders growth more than it helps.

Milanovic:

It is not only the plausibility of the mechanism of decline that gives strength to Bavel’s thesis; it is also that he lists the manifestation of the decline, observable in all six cases. Financial investments yield much more than investments in the real sector, the economy begins to resemble a casino, the political power of the financiers becomes enormous...
What the ancient writers describe as “decadence” clearly sets it, but, as Bavel is at pains to note, it is not caused by moral defects of the ruling class but by the type of economy that is being created. Extravagant bidding for assets whose quantity is fixed (land and art) is a further manifestation of such an economy: the bidding for fixed assets reflects lack of alternative profitable investments...

The readers will not be remiss in seeing clear analogies to today’s West.

I agree absolutely: The mechanism of decline is finance... Finance provides a better return than the productive ("real") sector... The decadence that sets in is an outgrowth of the economy that has been created.

And also the analogy to the West. But Milanovic's summary neglects to explain the "lack of alternative profitable investments". The reason is that those (real sector) investments bear the cost, the perpetually increasing cost of finance.

The summary also neglects to note the reason finance provides a better return than the 'real' sector. The reason of course is those same financial costs of the 'real' sector, which are income to the financial sector. And the growth of finance only makes the problem worse.

Recommended reading.

Tuesday, April 11, 2017

Net Money Added by Borrowing


How does it look when we compare
money added to the economy by increases in credit market debt
to
money drained out of the economy as interest payments
?

Money added relative to money drained:

Graph #1: Annual Change in Total Debt, relative to Annual Interest Payments
In the early years it's a wash, about one-for-one. After the mid-1970s it drops some: Less money is added than drained. Then there is a last-gasp peak between 2000 and the crisis, followed by sharp drop and the crisis. And now it is back in the normal range, as if nothing happened. Funny how that works.

A horizontal line at 1.0 would mean our new borrowing is equal to the amount we turn over to finance as interest payments every year. No effect on the money supply. Above 1.0 would mean we are borrowing more than we are paying as interest (increasing the money supply). And below 1.0 would mean we are borrowing less than we are paying as interest (decreasing the money supply).

What I want to see with this graph is how much of a boost borrowing gives the economy, and how much is only a boost to the financial sector. The graph is not a perfect indicator, because some portion of interest paid is withdrawn by the recipients and spent back into the economy. I don't know how much of it is withdrawn and spent, but it has to be somewhere between the zero line and the blue line.


Total debt is a "stock" but the change in total debt is a "flow". Interest paid is also a flow. The flow-to-flow ratio is ... dunno, a ratio, I guess, as "billions per year" cancels "billions per year". Whatever. I want to look at the accumulation of differences over the years.

By "accumulation of differences" I mean the number shown on the graph, minus 1, and the sum of those values over time. Why "minus 1"? Because the graph shows the change in debt per dollar of interest paid. I want to subtract the dollar of interest. If the blue line is at 1.1, it means we borrowed $1.10 for every dollar of interest paid. I subtract the dollar of interest paid to see how much economic boost we got from the borrowing: ten cents.

But if the blue line is at 0.8, it means that for every dollar of interest paid, we borrowed 80 cents. Subtract the dollar, and it turns out we're 20 cents short. The net effect of these financial changes was to create a drag on economic activity, rather than a boost.

(These examples assume that no money is ever spent out of savings, which is unrealistic. But the graph gives us a feel for what's happening, and a way to think about it.)

I determine the amount of boost or drag by subtracting the interest number from the change-in-debt number. Then I add up the results to see the cumulative boost or drag. It's an interesting detail, an interesting indicator.


I took the FRED data from Graph #1 and did the subtraction and accumulation in Excel.

Graph #2: At 100% accumulation of Interest Received
If no interest income is ever spent out of savings (100% accumulation), there is still some benefit to the economy from borrowing in the 1960s. But it goes negative in the 1970s, meaning there is more benefit to the financial sector than to the economy as a whole. And it goes negative rapidly, beginning in the late 1970s.

By the last year shown (2015), at 100% accumulation, the accumulated reduction of circulating money comes to ten dollars for every dollar of interest paid. I think that's an unrealistic number. I think it must be true that less than 100% of interest received is retained as savings, and that some portion of interest received is spent back into circulation.

Here is how the graph looks with a 50% accumulation rate:

Graph #3
Now we see about $5 negative effect instead of $10. $5 still strikes me as unrealistic. But the more interesting thing about this graph is that the shape of the line is the same as before. The line still goes negative in 1970, and the downtrend still accelerates in the late 1970s.

If we cut the rate of accumulation in half again, the shape of the line remains unchanged:

Graph #4
It's just more difficult to see. And if we reduce the rate to just 10%, meaning 90% if interest income is withdrawn from savings and spent back into the economy, the blue line is more compressed but again its essential shape remains unchanged:

Graph #5
Can't see it now, but the benefit to the economy goes negative (becoming a drag on the economy) in 1970, and the downtrend accelerates in the late 1970s.

On this graph, the accumulated reduction of circulating money as of 2015 comes to about a dollar for every dollar of interest paid. Just a gut feel, that number is unrealistically low.

More on this tomorrow eventually.

Monday, April 10, 2017

Since 1834


I don't accept their explanation, but I do like their graph:

Source: BAWERK.NET
The path of GDP growth is a pretty good mirror-opposite of the path of total debt, for 180 years. To me, that's an impressive picture. You, I know, you will say the data is suspect. Or you will argue that the trend lines don't fit the circumstances -- that they don't properly show the Great Depression maybe. To me it's an impressive picture, not so easily dismissed.


One of the things you can do with total debt is break it into its public and private components. Guess what we're doing today.

I went back to Steve Keen's estimate for US debt that extends back to 1834, converted his monthly data to annual, and compared the public to private:

Graph #2: Public 9blue) and Private (red) Debt relative to GDP, 1834-2011
Here again we see opposing tendencies. Private debt falls and public rises until they meet. Then private rises and public falls. Then for a while they both rise. And then private debt falls and public rises until they meet, and the whole sequence repeats.

This time around, though, the trend line doesn't yet show private debt falling. Maybe if I added in the years after 2011 we would see it. But even if that's true there's a long way to go, if the plan is for private to fall and public to rise until they meet.

In the meanwhile, consider what these two graphs tell us. At the end of the scale where we are not reading much into the graphs, we can say

1. There is an inverse relation between "total debt to GDP" and GDP growth, and
2. There is a repeating pattern in the relation between the public and private components of total debt,

I'm gonna go now and think about that for a while.

//

The Excel file

//

EDIT 18 May 2017

Keen and Bawerk both hint at the source of data for the early years' debt. Another hint may be found below Figure 7 in Thomas Philippon's Has the U.S. Finance Industry Become Less Efficient? Philippon writes:

Fitted Series uses assets on balance sheets of financial firms to predict total debt. Sources are Historical Statistics of the United States and Flow of Funds.

"Fitted series" is a reference to the data which extends his debt-to-GDP numbers before 1929, back to the 1870s.

For Figure 7 see my Finding Philippon's FinEff.pdf or the PDF.

Sunday, April 9, 2017

Not quite anything


In 1981, when President Reagan said "only by reducing the growth of government can we increase the growth of the economy," the Federal debt was less than one trillion dollars. After Reagan, and Bush, and Clinton the Balancer, and another Bush, and the Great Recession and the not-so-great recovery, we have managed to increase the Federal debt from one trillion dollars to twenty.

At this point, people are so angry they can't think straight. We'll do anything to reduce the debt.

But no, that's not true. We won't do just anything. Almost anything, yes, but not anything. We won't, for example, change our strategy. The higher the debt goes, the more tenaciously we cling to the view that Federal spending cuts are necessary. And it's not only conservatives who cling. This image is from the overtly liberal Huffington Post:

Source: HuffPo
Yeah, I know: By the time you read all those examples, you're ready to cut Federal spending. Me, too.

See? We cling fiercely to the belief that Federal spending cuts will solve the problem. They won't. But no matter: The higher the debt, the more we cling.

We have added $19 trillion to the debt since President Reagan said we need to reduce the growth of government. I can't imagine how much we would have added if reducing government wasn't the heart and soul of our strategy.

How long will it take us, I wonder, to realize that our strategy -- reducing the growth of government to increase the growth of the economy -- has failed. How long will it take, before we are ready to try a different strategy.

Saturday, April 8, 2017

Contradicting Richard Duncan


Looking for something on credit and economic growth, I found Credit Growth Drives Economic Growth, Until It Doesn’t by Richard Duncan, from 2011.

The title is perfect.

The article is pretty good. But I have to look at his opening paragraph. I have problems with his opening paragraph. Here's the whole of it:

The single most important thing to understand about economics in the age of paper money is that credit growth drives economic growth. Before the breakdown of the Bretton Woods international monetary system in 1971, there was a difference between money and credit. There no longer is. Paper dollars and US treasury bonds denominated in paper dollars are just different types of government IOUs. When gold was money, the increase in the Money Supply (M1 and M2) had an extraordinary impact on the economy. Today, what matters is the increase in the total supply of credit.
I'll take it a piece at a time.

//

The single most important thing to understand about economics in the age of paper money is that credit growth drives economic growth.

It is important to understand that credit growth drives economic growth. Not to quibble, but "The single most important thing"?? You can get into trouble if you understand credit growth without understanding the accumulation of debt. For example, Duncan writes

The total amount of debt is equal to the total amount of credit.

which is certainly correct. Immediately following, he writes

Debt and credit are two sides of the same coin.

which is a meaningless generalization.

The "same coin" metaphor is good. But not good enough. When you borrow a dollar, two dollars are created: a dollar of new money, and a dollar of new debt. The dollar of new money looks and acts just like a dollar of money. The dollar of new debt has a minus sign before the "$1", and you cannot spend it.

You can spend the dollar of new money. It goes into circulation, and no one ever has to know that it was a dollar you borrowed. But you know, because you still have the negative-money that you cannot spend: You still have the debt.

//

Before the breakdown of the Bretton Woods international monetary system in 1971, there was a difference between money and credit. There no longer is.

That is incorrect. There is a difference between money and credit. Money is issued by the government now, instead of by the people who find gold. Credit is issued by private sector banks, as always.

Come to think of it, the people who find gold never issued money, not for centuries anyway. People who found gold would turn it in to the government, to the mint or something, and get coined money in exchange. It was the government that issued the money, even then.

//

Paper dollars and US treasury bonds denominated in paper dollars are just different types of government IOUs.

Whenever I see the word "just" used like that, in place of facts, I have a problem.

Paper dollars and Treasury bonds are not "just" different types of government IOUs. The people who have Treasuries collect interest on them. The people who use paper dollars pay interest on them.

More accurately, unless I seriously misunderstand something, the U.S Treasury collects interest on Federal Reserve Notes from the Fed, the Fed gets it from the people (private banks, mostly) they deal with, and private banks get it from the people who bank with them, which is us.

The US Treasury pays interest on bonds, and receives interest on notes. Bonds and notes are nothing like each other, far as I can see.

//

When gold was money, the increase in the Money Supply (M1 and M2) had an extraordinary impact on the economy. Today, what matters is the increase in the total supply of credit.

No. Duncan has two puzzle pieces in hand that don't go together, and he is forcing them together by putting the one sentence after the other.

When gold was money, the increase in M1 and M2 money had an extraordinary impact on the economy because in those days there was much less credit per dollar of money. It is true that what matters today is the total supply of credit. But it was not going off gold that made it true. The growing use of credit relative to money made it true.

It was also the growing use of credit relative to money that forced the dollar off gold.

//

Nick Rowe says:

Gold mines were the central banks of the past. Central banks are today's gold mines.

I agree with Nick. It was not going off gold that changed things. And just as the expansion of private credit beyond what gold could support created problems for gold-based money, it is the expansion of private credit beyond what central banks can support that creates problems for central-bank-based money today.

Friday, April 7, 2017

Which came first?


"Credit Growth Drives Economic Growth," Richard Duncan writes, "Until It Doesn’t":
The single most important thing to understand about economics in the age of paper money is that credit growth drives economic growth. Before the breakdown of the Bretton Woods international monetary system in 1971, there was a difference between money and credit. There no longer is. Paper dollars and US treasury bonds denominated in paper dollars are just different types of government IOUs. When gold was money, the increase in the Money Supply (M1 and M2) had an extraordinary impact on the economy. Today, what matters is the increase in the total supply of credit.
 
But I have to ask: Which of these came first?

    A. Taking the dollar off gold allowed a vast increase in credit.

    B. The increase of credit forced the dollar off gold.

It's not chicken-or-the-egg. There is a clear answer.

Wednesday, April 5, 2017

It would, indeed, be more sensible to build houses and the like; but…


Graph #1, from Robert Schroeder at MarketWatch
How did we end up with so much Federal debt? People answer that question in different ways. But a graph full of excuses is not a macroeconomic explanation.

As a rule, nobody borrows money to not spend it. If there is Xteen dollars of debt, we can reasonably assume that about Xteen dollars of borrowed money were spent one way or another. We can assume that the money was spent. A detailed list of the things it was spent on accounts for nothing, particularly if the purpose of the spending was to increase the real income of the community.

The wars, tax cuts, and stimulus packages on Schroeder's graph were all supposed to be good for the economy. If the spending didn't work as intended, then we have bigger problems than what the money was spent on.


From Chapter 10:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
 

Sunday, April 2, 2017

Assumptions and the Progress of Economic Growth


From Potential Output and Recessions: Are We Fooling Ourselves? (November 2014) by Robert F. Martin, Teyanna Munyan, and Beth Anne Wilson:

First, output typically does not return to pre-crisis trend following recessions, especially deep ones. Second, in response, forecasters repeatedly revise down measures of trend.

On average, GDP remains well below its previous trend, even for short and shallow recessions. Deep and long recessions, of course, lead to the largest cumulative output loss.

If actual growth returned to pre-crisis trend then growth immediately following recessions would be higher than average to make up the gap. In fact, the average growth in the four years after the recession trough is generally lower than prior to the pre-recession peak.

Economic models usually assume that recession-induced gaps will close over time, typically via a period of above trend growth. In our results, growth is not faster after the recession than before, implying that the recession-induced gap is closed primarily by revising estimates of trend output growth lower.
I thought that was pretty interesting.

They say

Economic models usually assume that recession-induced gaps will close over time...

Reminds me of an old CBO paper that says

CBO uses potential output to set the level of real GDP in its medium-term (10-year) projections. In doing so, CBO assumes that any gap between actual GDP and potential GDP that remains at the end of the short-term (two-year) forecast will close during the following eight years.
So, yeah.

Saturday, April 1, 2017

...grumbling...


TCMDO is discontinued, again, for a while now. It comes and goes. Anyway, the replacement for TCMDO is to take

All Sectors; Total Debt Securities; Liability  (ASTDSL)

and

All Sectors; Total Loans; Liability  (ASTLL),

add them together, and divide by 1000 to convert millions to billions. I have to write it down or I won't remember.


When I figure "Debt other than Federal" I take TCMDO (or the replacement noted above) and subtract FGTCMDODNS. But that's a problem too, because FGTCMDODNS hasn't been updated since 2015. So since this problem has finally resurfaced, I took the time to look for a more current measure of Federal debt.

I'm going with

Federal Government; Credit Market Instruments; Liability, Level  (FGSDODNS)

which is seasonally adjusted, and

Federal government; debt securities; liability, Level  (FGDSLAQ027S)

which is not. The latter is given in millions. Both are quarterly and run thru the last quarter of 2016, just now. FGTCMDODNS is quarterly but ends at Q2 2015. And FGDSLAA027N ends with 2016 but is annual.

So there you are.