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Jared Bernstein

Jared Bernstein

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

Articles by Jared Bernstein

There’s heightened nervousness about the next recession and there are signs pointing in both directions.

7 days ago

I can’t turn around without seeing or hearing people worrying more about the next recession.
Google Trends: Web search for “next recession”
Source: Google Trends
My peeps at the Indicator have a nice podcast on the topic. The WSJ points out that more than half of economists they surveyed expect a downturn by 2020, which, in case you live under a rock, the article helpfully notes is an election year.
The reasons for the heightened anxiety are:–Slower global growth, particularly in China (also Europe and Japan). Remember how Apple’s market cap fell 10 percent in one day a couple of weeks ago. That was on the news that their China sales were down. We’re all connected, man…also, trade war.
–Higher interest rates and the flat yield curve. Interest rates are up, which acts like a brake on growth

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Blanchard on public debt and interest rates; also: thanks, MMTers!

8 days ago

There’s a deservedly nice bit of buzz about a new paper by tony economist Olivier Blanchard. My WaPo piece today takes you through the argument, along with a heavy dose of my own interpretation, one familiar to OTE readers.
“The key points are disarmingly simple, and they’re ones I have written about before in this column. Part one is this: When a country’s growth rate is higher than the interest rate on its debt, the fiscal costs of sustaining its debt levels are somewhere between zero and low. The reason is that even if the government does not raise taxes to offset its higher debt, the ratio of debt to gross domestic product will decrease rather than explode over time. Part two: For most of the period covered by Blanchard’s research (1950-now in the United States), g>r, i.e., the GDP

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Links referenced in a recent talk

12 days ago

I recently spoke to members of Congress and referenced a number of pieces. Here are the links to those pieces.
What are some ideas for lowering the growth of health costs? See the section starting on pg. 11 of this testimony.
On our lack of investment in quality, affordable pre-K, and how we’re an international outlier in that regard. Look carefully at the 2nd figure–it tells this story well.
On some ideas for progressively raising revenues. Also, see this on a financial transaction tax.
On the need for fiscal stimulus in the next recession, even at “high” levels of the debt/GDP ratio.
On lowering the black/white unemployment gap.

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Payrolls up big as a strong jobs report caps a strong year for the US labor market

14 days ago

Well, it appears that the US jobs market didn’t get the memo that a recession is just around the corner.
Payrolls rose a very strong 312,000 in December, bringing the full count of jobs added for 2018 up to 2.6 million, the strongest year for job gains since 2015. Unemployment ticked up to 3.9 percent, but largely because more people were drawn into the labor market, as the participation rate ticked up two-tenths to 63.1 percent, its highest level since early 2014, and yet another reminder that the job market has more capacity to expand than many observers heretofore believed. Nominal wage growth accelerated slightly and, at 3.2 percent for all private sector workers and 3.3 percent for mid-level earners, both measures tied cyclical highs. Weekly hours edged up slightly, jobs gains for the

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Testify! Diving into the weeds on debt, the spending vs. revenue problem, and “revealed preferences.”

29 days ago

I testified today before the House Financial Services Committee at a hearing the Republicans called “The perils of ignoring the national debt.” As I tweeted earlier today, the hearing was delayed a hour because the R’s went off to vote on a tax cut adding another $100 billion to the 10-year debt. That bill is unlikely to get very far in the Senate, but it does raise a somewhat existential question about the urgency of all this hand-wringing about the debt.
Here’s my testimony; see the intro for a summary and bullet points. There are two points I’ll highlight here. First, see the discussion of “revealed preferences.” I hear a lot of chin music from all sides about how much they really want to cut spending, yet they rarely do so, and, to the contrary, are often quick to raise spending on

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Blog repair…and a request for questions.

December 16, 2018

I’ve been remiss in keeping up with this blog. While I still post here–especially stuff that’s too technical to go elsewhere and my write-up of the monthly jobs numbers–I’ve taken to posting most weekly takes on this or that to my PostEverything WaPo column.
In the old days, however, I used to post a link here to those posts, often with an extra comment or two. Here’s a brief attempt to update:
—This one’s more political than usual: I pushback on Frank Bruni’s NYT oped arguing that my former boss VP Biden shouldn’t run in 2020. To be clear, I don’t know who should run, but neither does anybody else.
—Here’s some noodling about what I judge to be a highly interesting moment in macro-dynamics: the job market is fueling strong consumer spending, which is almost 70 percent of US GDP. But the

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Nick Hanauer’s Progressive Labor Standards: A bold idea to do more than just repair the damage.

December 11, 2018

According to Wikipedia, Nick Hanauer is “an American entrepreneur and venture capitalist.” True, but very incomplete. Hanauer is also a prominent progressive thinker, advocate, funder, and writer. I’ll get to the purpose of this post in a moment (to amplify a new piece out today in the journal Democracy) but I’ve long appreciated Hanauer’s ability to frame economic problems and solutions in ways that both make common sense and point the way forward toward bolder policies than many of us tend to come up with.
Probably the most prominent example of his work—no less than President Obama used to reference it all the time—is Hanauer and Eric Liu’s “middle-out economics,” a concept that puts the middle class, not the wealthy, at the center of the economy:
“It is time to kill the myth of

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Another solid jobs report, even with a slightly slower trend in payrolls

December 7, 2018

Payrolls were up 155,000 last month, and the unemployment rate held steady at 3.7 percent, close to a 50-year low. Hourly wages were up by 3.1 percent over the past year, the same rate as last month and tied for a cyclical high. Though another in a string of solid job reports, the pace of job gains downshifted a bit compared to last month’s report, average weekly hours ticked down slightly, and both the job and wage numbers came in below market expectations. That said, monthly noise, weather and other one-off effects (winter storms, fires) can influence monthly data, and the underlying trend remains that of a labor market closing in on full employment.
To better glean the underlying trend of job growth, our monthly smoother looks at 3, 6, and 12-month averages of monthly job growth. The

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Energy prices and real wage trends

November 12, 2018

I’ve got a piece up in today’s WaPo on some of the economic and social implications of the recent tanking in oil prices. Obviously, such prices jump around, and OPEC is talking about reigning in supplies, so the negative trend could reverse. But the points of my piece are a) low oil may be a boon for consumers at the pump, but it’s inconsistent with sustainable growth, and b) especially post-midterms, it’s time to start talking about taxing carbon. I suggest raising the gas tax as a good start, which, as I show, is more bipartisan than you thought.
The piece also has a figure showing the impact of changes in energy prices on the growth of real wages of middle-wage workers. I point out that the correlation between those two variables is much higher now than in the past.
The “energy effect”

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Does faster wage growth imply passthrough to faster price growth? Not necessarily. (Though see update at the end.)

November 6, 2018

As long as we’re sitting here on pins and needles re the midterms, let’s distract ourselves with some analysis of the state of the wage/price passthrough. Though not quite at the level of flipping the House, this is important information regarding inflation, interest rates, and Fed policy.
As the job market has improved, wage growth has picked up. Last week, two closely watched hourly wage series—the Employment Cost Index and the Establishment Survey wage—hit 3 percent growth on a yr/yr, nominal basis, about double their growth rate from five or six years ago.
Though it’s the highest growth rate of the expansion so far, 3 percent is a lower nominal growth rate than earlier periods when unemployment was as low as it is today (3.7 percent). That’s partly of function of slack

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Another strong jobs report yields critical insights

November 2, 2018

The nation’s payrolls added 250,000 jobs last month, the unemployment rate held steady at a 49-year low, the closely watched labor force participation rate increased, and year-over-year wage growth broke 3 percent for the first time since 2009. Given that inflation has been running a bit short of 2.5 percent, this means workers are finally seeing real gains in the buying power of their paychecks.
Wages were up 3.1 percent for all private sector workers and 3.2 percent for middle-wage workers, suggesting that the tight labor market is generating broad gains, not just helping those at the top of the earnings scale.
One slight caveat re wage growth is that in the previous October (2017), hourly pay in this series fell four cents in nominal terms, a rare event. Thus, the base off to which this

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Wage roundup: Amplifying new work on an important topic.

October 23, 2018

There’s been some interesting wage analysis in recent days and the findings are worth collecting and amplifying. Some of what follows is technical, but the punchlines are straightforward:
–As I’ve always stressed up in these parts, tight labor markets are especially beneficial to lower-paid workers.
–Even so, wage inequality remains alive, well, and connected to the recent boom in corporate profitability.
–In earlier periods, unemployment rates as low today’s would have generated faster wage growth. The reasons for today’s under-performance are likely slack, slow productivity growth, and weak worker bargaining clout.
This first figure, from my great pal Larry Mishel and Julia Wolfe, uses high quality administrative data to reveal key aspects of the real annual earnings’ story over the past

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An important correction: The U.S. does have a carbon tax. But it needs some serious attention.

October 22, 2018

I’m am avid listener to the NY Times podcast, The Daily, and I much enjoyed, if that’s the right word given the difficult topic, last Friday’s show on the urgency of pushing back on climate change. The show included an insightful discussion with recent Nobel laureate William Nordhaus on the importance of taxing carbon.
But somewhere in there (not in the Nordhaus section), it was asserted that the U.S. federal government does not tax carbon. In fact, such a tax exists: it’s the federal gas tax. Given that this is the carbon-tax-that-time-forgot, I can understand the mistake (the reporter was probably thinking about more sweeping, new taxes on carbon emissions). But there are two strong reasons for raising it. One, to more accurately price the social cost of carbon consumption, and two, to

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What’s wrong with upside-down Keynesianism?

October 17, 2018

I’ve got a piece in today’s WaPo focusing on how the tax cuts have broken an important, fiscal linkage between budget deficits and the strength of the economy.
“When we close on full economic capacity, as is currently the case, tax revenues as a share of the economy should significantly rise, and deficits should fall. Instead, revenues have come way down, and deficits have climbed.
Why is the deficit 17 percent higher than last year, especially when the economy is growing faster, and unemployment is lower?
It’s primarily because the tax cuts have significantly reduced the amount of federal tax revenue the economy will spin off for any given growth rate. Increased spending also played a role but not as large a one as the tax cuts…
Consider these numbers. Using data back to

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What does “full employment” mean in the era of anchored inflation expectations?

October 15, 2018

There’s a new analysis out by a group of economists from the Goldman Sachs economic research team that raises the question of what the concept of full employment means in an era when the central bank expends significant and successful efforts to anchor inflationary expectations.
The paper (which lives behind a paywall) uses four distinct techniques to to derive different estimates of the natural rate of unemployment, aka u*, aka the lowest unemployment rate consistent with stable inflation. The results range from 4 to 4.8 percent, which, as their figure below shows, fit well within other commonly sourced versions, including CBO (4.6 percent) and the Fed (4.5 percent). Note also their forecast for the jobless rate to get to 3 percent (!) by the end of next year. As they say in the old

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Unemployment hits a 49 year low as jobs/wages stay on solid, hot-but-not-too-hot, trend.

October 5, 2018

The nation’s payrolls grew by 134,000 jobs last month and the unemployment rate fell to a 49-year low of 3.7 percent. While the jobs number came in well below expectations, that should not be considered bad news. First, Hurricane Florence may have slightly dampened monthly payrolls (see below discussion of the impact of hurricanes on the jobs data). But more importantly, upward revisions for the prior two months’ data reveal a trend over the past three months of 190,000 jobs per month, a solid pace of job gains for this stage of the labor market recovery. Hourly pay was up 2.8 percent, just slightly off last month’s cyclical high of 2.9 percent.
The decline in unemployment is “real,” meaning it occurred through fewer unemployed persons as opposed to people leaving the labor market. The

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The USMCA is not a free trade deal. That’s because there are no free trade deals.

October 1, 2018

I’m doing my best to work through the text of the new NAFTA, now called YMCA, I mean CAMUS, no…wait…USMCA!
Trade agreements make for a dense read…here’s a snippet from the Ag chapter, one of the 34 chapters, followed by “annexes” and “side letters”:
“Parties recognize that under Article XI:2(a) of the GATT 1994, a Party may temporarily apply an export prohibition or restriction that is otherwise prohibited under Article XI:1 of the GATT 1994 on foodstuffs to prevent or relieve a critical shortage of foodstuffs, subject to meeting the conditions set out…”
It’s just saying that in a food emergency, a party to the agreement can restrict food exports and remain in compliance, but I print that little example to make a larger point: There is no such thing as “free trade” and there are no “free

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Min wg panel model

September 27, 2018

I’ve got a piece in the WaPo today that presents findings from the model described in more detail here.
The model is a panel of the 50 states plus DC from 1979 to 2017 of wage, labor market, and minimum wage data. The results derive from fixed effects, panel regressions of the change in the log of the state real, 10th percentile wage on state unemployment and the change in the minimum wage variable. For this variable, I used the ratio of the state minimum wage in state i, year t, divided by the federal minimum wage in year t. Standard errors are clustered at the state level (results below).
The article mostly focuses on the first two rows of results below: outcomes for the log change in the real 10th percentile wage. But I also include the same regression for the 90th percentile wage, as a

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Nerd Alert. This is not a test. New BLS data on employer costs by percentiles!

September 21, 2018

You go, BLS!
The Bureau of Labor Statistics just released a new data series derived from the Employer Costs for Employee Compensation series. These ECEC data have been around for awhile–they’re the basis for the more commonly cited Employer Cost Index data*–but only for averages (see Technical Note here if you want more info). Now we have compensation, wages, and benefits for the 10th, 50th (median), and 90th percentile. I consider these to be high quality data that, relative to other series, provide a more fulsome look at the full compensation package.
At this point, the data only go back to 2009, with first quarter data through this year (i.e., all the data that follow are for the first quarter of the year in question).
And now, without further ado, here’s my initial analysis of these

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Some greatest hits of the 10-year lookback pieces on the crisis.

September 17, 2018

I’ve read probably 100 of those “lessons learned (or not)” pieces about the crisis on the 10-year anniversary of Lehman’s collapse.
Here are some that stood out to me, though one inevitably leaves out some worthy of your attention, so feel free to add others. (My own piece is out today on WaPo.)
–I found this Steve Pearlstein piece interesting on a couple of levels. It’s a solid take of the shampoo economy dynamics (bubble, bust, repeat) that I’ve long bemoaned, citing the insights of Minsky’s analysis (by putting financial cycles and regulatory amnesia at the heart of his model, Minsky explains a reality that conventional economics, which assigns finance a benign, intermediary role, assumes away).
But on a deeper level, as someone who’s read Pearlstein’s work over the years–he’s long been

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New Census data show that low-income people are responding as they always do to tight labor markets…by working!

September 12, 2018

One of the particularly frustrating, fact-free aspects of the conservative push to add (or ramp up) work requirements in anti-poverty programs like Medicaid or SNAP is that low-income people who can do so are already working hard. Moreover, as the job market tightens, they respond to tightening conditions.
Using the new Census data, Kathleen Bryant and I, with help from Raheem Chaudhry, used the 2017 microdata (the data on which the poverty and income numbers are based) to compare the employment rates of low-income single mothers (with incomes below twice the poverty threshold) with prime-age (25-54), non-poor adults. We found that between 2010 and 2017, the employment rates of the low-income single moms increased by 5.4 percentage points (67.7% to 73.2%), while those of non-poor adults

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Poverty and middle-class income data out tomorrow morning

September 11, 2018

It’s that time of year again, when the Census Bureau releases its poverty, income, and health-insurance coverage data for 2017. I’ll get a write-up out as soon as I can after the 10am data release, but be forewarned: these data are more complicated and a lot less standardized than, say, the BLS jobs data. So, it will take a few hours to chew through them.
For what it’s worth, which isn’t much, as recent survey changes make these data tough to accurately forecast, my predictions are that poverty fell half a point last year (from 12.7% to 12.2%) and real median household income grew about 1.7%. If so, both changes would be statistically significant gains.
But they would be smaller gains than the prior two years, and one reason for that, if I’m in the ballpark, will be that inflation was a

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A couple of economists respectfully disagree on the politics of policy in the age of Trump and the new socialists

September 10, 2018

Belle Sawhill is an economist I greatly admire, so I carefully read her Twitter-thread critique of a piece I recently posted in the WaPo.
My piece makes the case that technocratic policy wonks, like Belle and me, should not be overly critical of ambitious, even unrealistic, policy proposals by the new socialists. True, they often eschew the path dependency by which many of us are constrained. But they signal to key constituencies that, relative to establishment or centrist Democrats, they’re going to bring a new, aggressive fight to the powerful, well-endowed forces that have long been aligned against the progressive agenda.
I argue that:
“What Trump should have taught us by now is that if people believe you’ve got their backs, you can do things never imagined by the status quo. In this

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Jobs Report: A long-awaited wage pop that’s hopefully part of an emerging trend

September 7, 2018

Payrolls grew 201,000 last month, and the unemployment rate held steady at 3.9 percent in yet another in a long series of strong job reports (at 3.853 percent, the rate just missed a tick down). Though there are still some people and places who’ve been left behind, the U.S. labor market remain solidly in the midst of one of its longest expansions on record, with no signs of strained capacity or overheating.
Hourly pay for private-sector workers is a standout in today’s report, up 2.9% over last year, its strongest posting since 2009. Though we don’t yet know August inflation, my guess is that it comes in lower than that, perhaps ~2.6 percent, implying a much-needed gain in real hourly wage growth. For middle-wage workers (the 82 percent of the private workforce covered by the Bureau’s

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Thumb on the scale: correcting the CEA’s corrections re real wage growth.

September 6, 2018

By Jared Bernstein and Larry Mishel
President Trump’s Council of Economic Advisers has a new piece out claiming to show that real wages are growing faster than has been widely reported. Their conclusion stems from numerous adjustments to Bureau of Labor Statistics wage data that otherwise show flat real earnings for most workers.
However, most of CEA’s adjustments, applied accurately, do not change the inconvenient fact that even amidst strong macroeconomic results and a tight labor market, real wage growth for middle-wage workers has been weak over the past two years. That may change, if falling unemployment triggers faster wage growth, but at this point, measurement tweaks make little difference to the conventional wisdom, at least over the short period covered by the CEA report. As

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ISDS and the US

August 28, 2018

I’ve been touting the fact, i.e., as I understand it, that this new US/Mex NAFTA agreement just struck yesterday largely gets rid of investor dispute rules (investor state dispute settlement, or ISDS) that many progressive have long complained about. (To be clear, whether this deal is going anywhere is a whole other story; I’m skeptical.)
I’m working on a piece about how the new deal looks a lot better for workers on both sides of the border than prior agreements, but re ISDS, the very knowledgeable Lori Wallach tell me it “ends the possibility of any future U.S.-Canada ISDS cases. This is huge given major US-Canada cross investment.” For Mexico, where domestic courts are less reliable, investors who want to bring a case must first exhaust domestic court and administrative remedies, before

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Links; some wage thoughts

August 23, 2018

A few WaPo entries for your entertainment:
—A deeper dive into similarities shared by Trump and Erdogan. And yet, despite their…um…sub-optimal leadership, our economy booms and Turkey’s tanks. I focus on what that has to do with a) dollars, and b) Fed independence.
—My old pal Kudlow is sounding off on how the US economy is just “crushing it!” under Trump. Yeah…not so much. Co-written with Cong. Ro Khanna, who has some highly worthy legislative proposals in the mix which we link to in the piece.
Turning to other econ news, from the minutes of the latest Fed meeting, here’s their thoughts on wages:
Many participants commented on the fact that measures of aggregate nominal wage growth had so far picked up only modestly. Among the factors cited as containing the pickup in wage growth were low

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Lynx; Trump/Erdogan: compare and contrast

August 14, 2018

Recent links to WaPo pieces:
Productivity and wages: They’re connected, of course, but the extent of the connection requires nuanced analysis of wages at different percentiles and movements in labor’s share of national income.
There’s an interesting dichotomy here in how economists and people think about productivity and wages. For many economists, it’s the determinant of wage growth. For many people, it’s irrelevant, in that powerful forces divert productivity growth from paychecks to profits. The truth, especially once you get away from averages, lies in-between. Productivity matters a great deal, but it is not by itself sufficient to drive broadly shared prosperity.
Employment rates also matter a lot: They take the elevator down in recessions and the stairs up in recoveries. They also

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Trump 2020 game plan: Fake Laffer, Go Keynes.

August 5, 2018

I’m genuinely sorry to intrude on your Sunday like this, but this new forecast (no link) from the highly-skilled Goldman Sachs economic research team (GS) has me completely on shpilkes. I’ll make it brief, but not painless.
Back when the tax cut passed, this figure, also from GS, previewed an important fiscal fact about to unfold: outside of wartime, the Republican tax cuts and other deficit spending would add more fiscal juice to an economy already closing in on full employment than we’d ever tried before outside of wartime (note that the right-side scale is inverted; the point is low unemployment is usually associated much smaller deficits than we have now).

Here’s what I wrote at the time:
How unusual is [the divergence at the end of the above figure]? Well, looking at data back to

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