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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

Responding to questions re my wage oped.

2 days ago

I’ve got a piece in the NYT on the cyclical, and more importantly, structural factors, that have long suppressed real wage gains. I’ve gotten many interesting responses, some of which I’ll address here.
Inflation: As I stressed in the piece, the ups and downs in price movements have been instrumental in recent years. A lot of this is energy prices, which crashed in 2015 and have picked up of late. If energy prices pull back, especially as unemployment falls further, real working-class pay should get a boost.
But the concerns I stress in the piece, especially the collision of stronger institutional and corporate anti-worker forces with weaker pro-worker forces, are robust to a short periods of real gains. This raises another good question I got, which I’ll tackle below: what is it you’re

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Team Trump’s phony poverty argument, GDP growth v. chaos, and a little e.g. of where an FTT would come in handy.

4 days ago

First, Trump’s Council of Economic Adviser abuses data and logic to conclude that work requirements would help poor people. Over at WaPo.
Next, I will not stray from my lane and comment on what everybody’s thinking about today: the summit from Hel…sinki. I will share this Steven Colbert clip, to which I’ve nothing to add.
I do, however, find it interesting that amidst all this madness–which feels too much like an existential threat to American democracy from within–the US macroeconomy is, if anything, stronger. Obviously, I’m all about the distribution of GDP growth, which remains a serious problem. Also, quarterly GDP numbers are jumpy and it’s a far more limited measure than we generally admit. But the latest GDPnow forecast for Q2 (data out late next week) is 4.5%, which is about 2.5%

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Lynx, trade politics, a super swingin’ slice of Kelly Roll, and a bit of pop psychology re JOMO

9 days ago

Trade policy has been really interesting of late. I get into the economics of what I think is going on here and here. The first piece makes the argument that Trump is fruitlessly and fecklessly trying unscramble the globalization omelet. The second takes on–with help from a great, new Susan Houseman paper–the incorrect but pervasive notion that the increased pace of labor-saving technology is responsible for manufacturing job loss.
I don’t get into the politics of trade in these pieces because I can’t clearly figure it out. Yesterday someone asked me, “where are the Democrats on trade policy right now” and I hemmed and sputtered until he walked away. For years, a large flank of D’s have opposed trade deals they judged to be unfair to workers and consumers, warned about China’s

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Why I’m not paying too much attention to the flattening yield curve.

12 days ago

As Nick Timiraos ably describes, there’s a debate afoot about how seriously to take the flattening and possible future inversion of the yield curve. I got into this a bit last week, pointing out that the signal from the yield curve is a lot more ambiguous than usual (my conclusion was that we should worry a lot more about how we’re going to offset the next recession versus when it’s coming, which is not reliably knowable).
One reason for this ambiguity is the very low term premium on long-term bond yields (see figure). Longer-term interest rates, like the yield on the 10-year Treasury, can be broken up into the expectation of the average of future short-term rates and the term premium, or the extra yield investors require to lock up their money for the term of the loan. Since it’s thought

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More solid job gains, but no real wage growth

15 days ago

In the latest solid report on the conditions in the US labor market, payrolls grew by 213,000 in June, and labor force participation ticked up two-tenths, as more people were pulled into the improving labor market. This led to a two-tenths tick-up in the unemployment rate to 4 percent (really, 30 basis points up, from 3.75% to 4.05%). Wage growth stayed at 2.7 percent, the same pace as last month, and the average since last December. It is also worth noting that inflation is now growing at about the same rate as wages, so, in one of the less impressive aspects of the current job market recovery, real hourly pay is flat.
As the economic expansion that began in June of 2009 enters its tenth year, the enduring recovery has moved the job market closer to full employment. However, the key

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Lnyx, potential auto tariffs, yield curves and recession

17 days ago

Happy 4th.
Now, down to biz.
Over at WaPo, I reflect on how to get back to WITT (we’re-in-this-together), away from YOYO, and note how the Democratic Socialists are plowing similar ground.
Next, I see where the president is thinking about imposing 20% tariffs on imported cars and car parts. Oy. Once again, I don’t see how this helps anyone, including American car producers and especially American workers/consumers.
Apparently, his motivation was seeing too many foreign cars on our streets. Look, I’m all for gut instinct, but you then need to check out whether your gut is accurate or if that was just a gas bubble. (A hint that it might have been the latter stems from the acronym of a bill the administration is allegedly working on to take us out of the WTO called the United States Fair and

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Musical interlude: Mozart at his best

June 20, 2018

I just stumbled on this performance of what may be my favorite Mozart concerto. It’s the one for violin and viola, overflowing with amazing melodies, counterpoint, and interplay between the soloists. And this performance is as good as it gets, not just the soloists* but the orchestra, which provides perfect accompaniment–note their dynamics, going from a whisper to a roar, while never stepping on the soloists toes–without, you’ll notice, a conductor. Plus, they’re standing up the whole time (not the cellists, of course, but that’d be too much to ask of them).
Enjoy!
*Not taking anything away from the violinist, whose tone/intonation/interpretation sounded perfect to me. But you rarely hear such equally perfect viola playing in this concerto. I suspect Mozart, who played the viola himself,

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A quick note on the rise of dollar il-liquidity. Worrisome? Not worrisome??

June 20, 2018

Between the fiscal stimulus, the Fed, and the tax cuts (which are, of course, a big source of the stimulus), the global supply of dollars is getting squeezed, which is, according to various reports, pressuring some emerging market economies (EMs). How seriously should we take this and what might its impact be on the US economy? To telegraph my conclusion, I suspect these developments will lead to higher US interest rates and a stronger dollar than would otherwise occur. The stronger dollar, in tandem with the fiscal stimulus, could put upward pressure on the trade deficit, even with all the tariffs intended to push the other way. Neither derails the recovery, but they are risks.
There’s been a number of recent articles worrying about the impact of “dollar il-liquidity” in EMs. We’ve got

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A few lynx

June 18, 2018

Over at WaPo, I provide the anatomy of a revealing moment from Federal Reserve Chair Jay Powell’s press conference last week. A tough question landed him in the cul-de-sac one finds oneself in when one tries to defend a specific unemployment rate as the “natural rate.” In fact, the question asked of Powell was, “how is the Fed going to get from 3.5% to 4.5% unemployment?” To which I add: “and why would they want to?!”
In terms of estimating the “natural rate,” I’m still touting this figure from Obama’s CEA of their estimate of the rate with exploding confidence intervals (from my paper on the importance of strong labor demand for the Hamilton Project). In the context of my WaPo piece, the relevant takeaway from the figure is: “I guarantee you that neither the Fed’s very smart staff nor any

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Q&A on that crazy G7 meeitng: Trump, Trade, Tariffs, and Trouble

June 10, 2018

Trump at the G7 meeting? What could go wrong?
Apparently, his Orangeness gave the leaders of the free world a heavy dose of peak Trump this Saturday at the G7 meeting.
Basically, nothing newsworthy is supposed to happen at these meetings. The leaders spend a day or two together discussing mutual interests, and at the end of the summit, they release an anodyne statement renewing their vows to work together to promote cooperation and trade.
Not this time. The summit was quickly tagged the G-6 plus 1 and you can guess the identity of the (very) odd guy out. Perhaps the NY Times headline can give you a flavor of how this played out: Trump Refuses to Sign G-7 Statement and Calls Trudeau ‘Weak;’ Tells Abe “Sushi Sucks!” [OK, I made up that last bit, but the rest is there in black and white.]
I

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Catching up with the lynx

June 4, 2018

Over a WaPo today: As you’d expect, I’m not at all happy to see the rollbacks in financial market regulations. But, given our ability to willfully forget the last financial meltdown, they’re far from unexpected. One of my key points here is that the powerful, rich finance lobby faces little in terms of countervailing pushback. That is, this isn’t good D’s outnumbered by bad R’s. Note also recommendation for a small tax on financial transactions. I plan to amp that up in coming weeks.
The strong jobs report at the end of last week confirmed that the job market remains on track. There was even a pop in middle-wage workers’ paychecks. Here’s some noodling on three things that could throw the recovery off track: Fed mistake, trade war, and supply constraints. I think the last one poses the

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May Jobs: Another solid month; Lowest black unemployment rate on record; Wage growth ticks up for mid-wage workers.

June 1, 2018

Payrolls rose 223,000 last month, beating expectations of 190,000, and the unemployment rate ticked down to 3.8 percent, its lowest level since April 2000, and before that, a level much more commonly seen in the 1960s. (At 3.75 percent, the jobless rate just missed falling two-tenths).
[Before the release, President Trump tweeted that he was looking forward to the jobs numbers. Since certain top officials, including the president, see the report on Thursday night, his tweet telegraphed the positive report, a highly unusual occurrence.]
The unemployment rate for African-Americans fell to 5.9 percent, an historical low point by a wide margin. Typically, the black unemployment rate is twice the white rate. But persistently tight labor markets are especially helpful for minority workers, as

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The question of full employment and music from room 608

May 25, 2018

Over at WaPo, I revisit the argument that a) since economists can’t tell if we’re truly at full capacity in the job market, b) there’s not much in the way and price and wage pressures, and c) the prime-age employment rate is not apparently topping out, we should assume there’s still economic room-to-run.
I’m on the road and in room 608, which is why I can’t get this old, uptempo jam by Horace Silver out of my head. If you let it run on YouTube, next thing you know, you’ll be hanging out with Sister Sadie, who is, ftr, great company.

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The challenges raised by the future of work look a lot like the same ones we’ve always wrestled with.

May 21, 2018

Over at WaPo.
There’s a consensus of sorts that the future of work will be uniquely shaped by the gig economy and labor-displacing technology. At the risk of putting a damper on millions of conference sessions on this topic, I think we should be much less confident in our ability to predict the structure of work or the possibility of technological unemployment.
As new work from Larry Mishel reveals, the gig economy is a tiny share of the whole. We also do not see accelerated labor displacement in the productivity numbers (to the contrary).
But as I stress in the piece, that doesn’t mean we shouldn’t think about ways to improve the quality of future (and present!) jobs. In fact, there’s a robust policy agenda that should be brought to bear, some of which is highly responsive to the increase

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A Multitude of Lynx

May 18, 2018

Various posts at WaPo for those interested:
Trump’s creating all sorts of waves in the oceans of international trade, and that’s led some analysts to worry that the reserve status of the US dollar could be under threat (63% of global reserve holdings are in dollars). While this isn’t the path I’d take to get there, of course–I’m solidly against Trumpian chaos–at this point, the costs of printing the premier reserve currency outweigh the benefits.
This one generated a fair bit of interest. It’s a local story with national implications about a head-tax on large businesses that the Seattle city council just passed to help them deal with their increasing homelessness problem. There are many levels to the story, including the basic revenue story, but also the costs engendered when large firms

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Republicans’ “Jobs Gap” is a misleading measure that means nothing.

May 8, 2018

The Republicans’ “Jobs Gap” is a meaningless measure that reveals nothing about the job market. It can, and is, easily manipulated to show any outcome you like.
On the other hand, the facts about the current labor market are as follows.
–The long-term trend of job growth remains solid, unemployment is low, and, contrary to claims related to the “jobs gap,” employment among working-age people is growing relative to their population.
–Anecdotes suggest that some particularly hot labor markets are helping workers overcome steep labor market barriers, like criminal records. Conversely, some groups of workers face skill or health deficits, the absence of necessary work supports, or live in places that have not yet been reached by strong labor demand.
–Even as the job market continues to

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Three musical interludes to start the weekend on the good foot: Soul/funk edition

May 4, 2018

I’ve once again been remiss in sharing what I’m listening to, but here are three jams that will make you smile. The second two will also make you get up and dance, whether you want to or not.
First, I loved this carpool karaoke with Stevie Wonder. Even when he’s screwing around, his genius can’t help but flow out. And it’s a reminder of the so many masterpieces he’s penned!
Second, I was walking by a store the other day and they were blaring this great, old Curtis Mayfield hit–put me in a great mode for the rest of the day, if not the week. What a voice!
Finally, if this doesn’t immediately make you stand up and shake that thang, head to the ER, cuz you probably dead!

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April Jobs: More moderate than strong, with no wage acceleration.

May 4, 2018

Today’s employment report revealed labor market gains that were more moderate than strong. The unemployment rate fell to 3.9%, an 18-year low, but this was mostly due to a tick down in the labor force. Employment gains, at 164,000, came in slightly below expectations for 190,000, though the prior two months’ gains were revised up by a cumulative 30,000. Wages grew 2.6% for the third month in a row; this continued lack of acceleration is one indicator that some labor market slack remains.
That said, the labor market is still clearly closing in on full employment with sizable, steady month gains. To boost the signal-to-noise ratio in these noisy monthly data, our smoother shows average monthly gains over 3, 6, and 12-month periods. These are all clocking in at around 200,000, which should be

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Four lessons about contemporary monetary policy.

May 3, 2018

Yes, we live in chaotic, uncertain times, with nationalism, populism, and protectionism on the rise. Also, hush money to porn stars.
But amidst the noise, the Federal Reserve is quietly going about its business, hitting its dual mandate of full employment at stable prices. That is, the job market is close to full employment, with caveats, and inflation is at their 2% target, also with caveats.
Like almost every economist who’s not at the Fed (and some inside), I’ve got issues with some of their actions. But it’s worth pausing at the moment and recognizing that among our many failing institutions, like…um…I dunno…Congress?–the presidency?!–the Fed is one national institution that’s working well.
A key factor to their success is their political independence which insulates them, to a

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Deficit, schmeficit…[try saying that 3 times fast]

April 22, 2018

In my not-at-all-humble opinion, we need many more articles like this one by the WaPo’s Jeff Stein on the so-called deficit owls. They’re the opposite of deficit hawks, the first to ask “so what?” when the typical DC pundit bemoans the trillion dollar deficits we’re now looking at in coming years. (Why that makes them deficit ‘owls,’ as opposed to deficit ‘doves,’ I don’t know, and no, I’m not going to Google it.)
“So what?” is, in fact, a very useful, important question in this space. While I do not dwell in the same fiscal what-me-worry zone as the owls, the evidence has long been on their side. Moreover, they’re trying to prevent one ongoing and highly damaging policy error, and one nasty political tactic.
The policy error is the tendency toward budget austerity. That may sound

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Employment Breakeven Levels: They’re higher than most of us thought

April 16, 2018

Recent writings underscore an important hole in economists’ knowledge base: we know neither the natural rate of unemployment nor the potential level of GDP. I mean, we’ve got estimates for days, but an honest confidence interval around them renders them useless as policy guidelines.
As Alan Blinder recently put it:
“For [the natural rate] to be useful you have to have at least a little confidence you know the number. You don’t need to know it to two decimal places, but within a reasonable range. If your range is 2.5 to 7, that doesn’t tell you anything.”
This post is about a related number that we don’t quite have right, either, one I wrote about a couple of years back: the jobs breakeven level (BL), or the monthly, net change in payroll employment that’s consistent with a stable

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Three pieces on why work requirements won’t work

April 16, 2018

The Trump admin and their allies in Congress are trying to add work requirements to anti-poverty programs. A number of excellent sources explain why this won’t work, where “work” means help poor adults move closer to self-sufficiency. Of course, if the goal is to simply kick people of the rolls, which for some legislators, I’m certain is the case…well, then I guess it could work.
First, this efficient WaPo editorial gives you the facts and the numbers behind why this pursuit of work requirements is folly, either in terms of budgetary savings or improving the poor’s living standards.
Next, for a deep dive into the issue, this testimony by the Urban Institute’s Heather Hahn is one-stop-shopping for granular evidence, down to the level of caseworkers, as to why work requirements are so

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Real wages for mid-wage workers actually haven’t grown much over the past couple of years.

April 12, 2018

We always talk a lot about wage growth on jobs day because, you know, it’s jobs day. But later in the month, when the inflation numbers for the previous month are released, we should really say something about real, as in inflation-adjusted, wage growth. After all, what matters most to people is the buying power of their paychecks, right?
When the BLS real earnings report came out yesterday, I saw that Trump’s economic advisers tweeted out this pat-on-the-back:

But their claims should not be taken seriously. First, these are jumpy, monthly numbers, so you want to look at the longer-term trend, and second, the bit about prices falling is particularly weird. Deflation is clearly not upon the land—that’s a monthly blip.
The figure below plots the real, hourly wages for middle-wage workers:

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Some lynx: Unions, CBO’s new baseline, the Bernstein Rule…

April 9, 2018

The teachers provide us with a teaching moment, over at WaPo. Their actions pose a stark reminder of the essential need for a strong, organized movement to push back on the forces promoting inequality, non-representative government, trickle down tax policy, and more.
CBO released their updated “baseline,” or estimate of the US gov’t’s fiscal outlook. If you like red ink, you’re in biz. Instead of deficits between 3 and 4% of GDP over the next few years, we’re looking at deficits of 4-5%.
As I’ve written in many places, when you’re closing in on full employment, you want your deficit/GDP to come down and your debt/GDP to stabilize and then fall. It’s not that I worry about “crowd out” so much–public borrowing hasn’t crowded out private borrowing for a long time, as evidenced by low, stable

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March jobs: Topline miss but solid trend, plus a deeper dive into the current wage story

April 6, 2018

Payrolls were up 103,000 last month, well below expectations for about 180,000, but this miss should not be taken to mean that the job market is in trouble. To the contrary, the trend of job growth remains strong and unemployment is at a 17-year low. Remember, these monthly data are noisy and you must average over numerous months to extract a meaningful trend—see “smoother” figure below. Consider, for an example of the monthly swings in these data, February’s gain, revised up now to 326,000 (the larger downward revision to January led to a decline of 50,000 from the combined previous reports of job gains in those months).
Wages, before inflation–a closely watched gauge of the extent to which the tightening job market is boosting workers’ bargaining clout–rose 0.3% in March, and 2.7%

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Enough already with GDP growth…

April 2, 2018

Readers know I’ve long been noodling over measurement issues, whether it’s accurately measuring the economy’s capacity–and admitting we don’t have reliable, policy relevant gauges of potential GDP or a “natural rate” of unemployment–or maybe most importantly, measuring well-being versus growth. See this in today’s WaPo.
Like David Pilling, whose book The Growth Delusion I highly recommend in this space, the idea is not to toss GDP growth rates and other aggregate measures. It’s to put them in perspective, and critically: be aware of what they leave out. In that regard, I think one of the most important points in the WaPo piece is the need to net out environmental degradation (which, as I point out, includes adding back in some positive developments, like less use of coal, more use of

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Musical interlude: Steve Winwood can’t find his way home.

April 1, 2018

I haven’t posted one of these for awhile, but I stumbled on this gem on YouTube the other day and had to share it. It’s the grown-up child prodigy Steve Winwood just sitting there, letting loose with some pure music. I recall the song from my younger days from the rock-star-studded band Blind Faith.
These days, I’m finding musical respites like this one increasingly essential.

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NYT oped: When it comes to trade-induced job loss, “don’t worry, be happy!”

March 29, 2018

I’ve long hoped, probably naïvely, that one of the benefits of team Trump’s promotion of generally ineffective (or worse) solutions to the downsides of trade could engender a debate about better ideas. Of course, the debate will also generate some really bad arguments, like this one from economist David Boudreaux in this AM’s NYT.
Boudreaux argues that trade (and, implicitly, anything else) can’t be a problem for jobs because the US economy creates and destroys tons of jobs all the time. The nub of his case comes down to:
“…estimates of jobs destroyed by trade sound big, but they’re actually tiny. Relative to overall routine job destruction and creation — “job churn” — the number of American jobs destroyed by trade is minuscule.
In January alone, the number of American workers who were

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Newsflash: The Libor’s outpacing the Fed funds rate. Whussup with that?

March 28, 2018

Financial markers are on shpilkes. Stocks, after crushing it Monday, with the Dow up almost 3%, gave back about half those gains the next day, dragged down by a tech sector spooked by potentially forthcoming regulation around data privacy.
Readers know I don’t try to explain daily ups and downs in equity markets. My mantra remains: the stock market ain’t the economy, and the latter, which matters a lot more important for many more people, remains pretty solid. But is there anything to be learned from this latest bout of market volatility?
Clearly jitters about a trade war are in the mix, as are higher interest rates. It’s that last bit that interests [sic] me, as for years, the cost of borrowing was uniquely low, both here and abroad. As that changes–and we’d certainly expect rates to be

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