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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

An “anchored expectations” model for wage stagnation?

22 hours ago

I found this Bloomberg View piece by Conor Sen to stimulate the old noodle re why wage growth has generally been lagging. That is, given the persistent tautness in the job market, I’d expect a bit more wage acceleration than we’ve seen.
Before I get to Sen’s points, however, a few facts to consider. One, based on still-recovering employment rates for prime-age workers, the job market is still not as tight as the unemployment rate suggests. Two, some series do show faster wage growth. The figure below show solid recent growth in the real earnings of low-wage, African-American workers (25th percentile). The data are very jumpy so I added a trend, with a trend-based forecast at the end of the series. Still, most other series are not this positive. Third, productivity growth, though it has

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Links, and some warm music for these chilly times

4 days ago

–Ask not for whom the shutdown tolls. It tolls for thee. IE, it does if you’re someone who recognizes the need for functional gov’t. Over at WaPo.
To be clear, this is not a critique of the D senators that are blocking the deal. As a friend puts it, “They are forcing governance in the face of total bad faith and incompetence from the other side, and shouldn’t be shy in saying that.”
Or doing it. Trump and much of the R caucus have put every partisan priority before DACA and CHIP, programs that have bipartisan support (despite McConnell’s nonsense  claim that DACA is preference of the D’s “far-left base.” As the minority, they’re using the tools at their disposal to fight for permanent solutions to problems that both sides claim to want to address.
Still, here’s my bottom line:

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A few thoughts on the political economy of a gov’t shutdown

5 days ago

I’d put the odds of a government shutdown at a little below half at this point, say 45%. To be clear, what we’re really talking about is a partial shutdown; less than half of federal workers are considered non-essential, so most (~60%) stay on the job; those furloughed typically get paid retroactively.
You can read about the latest details here, including a curve-ball tweet this AM from the president that seems to mess a bit with the R’s strategy: get D’s on board for a short-term budget patch by extending the CHIP program as part of the stopgap package (Trump’s tweet suggested he wants to resolve CHIP outside of the short-term deal; I doubt this changes much, as Congress will and should ignore him; his position has probably flipped n times by now). D’s in the Senate are under pressure to

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Links; more on heating vs. overheating.

11 days ago

Medicaid is a highly efficient program (see figure below), delivering health coverage to 70 million low-income persons while conveying many ancillary benefits on its beneficiaries, as Hannah Katch and I point out in the NYT oped.
So, of course, Republicans want to lay waste to it. They were blocked from doing so through their ACA repeal, they did a bit of it in their tax plan, and now they’re going after Medicaid through the waiver process (which skirts Congress), by adding a work requirement. As Hannah and I stress, you can’t feed or house your family on health coverage, so the incentive to work is already built into the program, which is why most able-bodied beneficiaries already work.
At any rate, it’s going to take action at the state level to block this latest attack.

Turning to

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Is it getting a little warm around here?

12 days ago

The front page of my WSJ this AM, above the fold, screams: “Treasury Yields Ripple Through Markets.” The 10-year yield was up for five days straight as of yesterday, approach a 52-week high at 2.609%.
The 10-year “breakeven rate,” a market-based measure of inflation expectations (it’s the difference between the 10-year rate on inflation-protected bonds (TIPS) and the 10-year Treasury yield; thus, a measure of expected inflation, 10-years out), rose sharply in recent days, and has cracked 2% for the first time since last spring.
The stock market continues to climb.
The unemployment rate remains below most measures of the “natural rate,” i.e., the rate thought to be consistent with stable inflation. FTR, we cannot measure the natural rate with any degree of precision, so I wouldn’t make much

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Questions for the MMTers

16 days ago

As their adherents readily, and fairly, remind me, there’s a lot I don’t understand about modern monetary theory (MMT). So, let me ask about some aspects of the theory and see if I might get me some education.
First, I’ve stressed that, as I understand it, there’s no distance between my views and a core principle of MMT: the need for deficit spending when the economy is below full employment. This, of course, as Dean Baker points out, is as much Keynesian as anything else, but as the Chinese saying goes: black cat, white cat; as long as it catches the mouse.
The sad, underappreciated, fact is that for much of the last 35 years (about 70% of quarters, using unemployment minus CBO’s NAIRU; (u-u*)>0 70% of the time since 1980), the US economy has operated below its potential. This is the

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December jobs report: tight labor market sends black unemployment to historical lows

18 days ago

Payrolls rose by 148,000 last month and the unemployment rate held steady at 4.1 percent. While the headline payroll number was below consensus, this is another solid report. Persistently strong job markets are most beneficial to the least advantaged—privileged types do well even in weaker markets—and the December unemployment rate for African-Americans fell to 6.8%, its lowest on record going back to the 1970s. The black-white gap (black minus white unemployment), at 3.1 percentage points, is also the lowest on record.
Especially given weather issues in recent months, it’s essential to look at my monthly smoother, which shows payrolls adding a very solid 204,000, on average, over the past three months (2017q4), a slight acceleration over the longer-term trend. So, while the 148,000

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For those seeking my smiling face on MSNBC…

20 days ago

For those looking for me on cable news…
You’ll see less of me on MSNBC as, after a bunch of years, they decided not to renew my contract. Not sure why (feel free to complain to them!), but change happens, and I’m still a CNBC contributor, so you can see my talking head over there.
I’ll miss mixing it with some great folks over at MS, and to those who enjoyed hearing my analysis, fear not. I’ve various other print venues, including this blog, of course, and the WaPo column.
I will say this: I’ve been doing TV economic commentary for literally decades. I started on CNBC when it was a closet over at the WSJ’s offices. I recall hits back then when I brought my toddlers along, who crawled over and pulled at my pants leg to see a picture they just drew while I was on air, much to the camera

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A few links, including a great, old, timely Pat Moynihan speech

24 days ago

Over at WaPo:
–I weigh in on the “will-the-tax-plan-help-or-hurt-the-R’s” debate. Lots of unknowables that will be known soon enough, but I suspect the plan’s largely negative first impression will persist.
–Please, let’s avoid obfuscation. When politicians want to cut a program, do not let them get away with their favorite euphemisms, like “reform,” “fix,” “overhaul,” and so on.
I share this aversion with the great LA Times columnist Michael Hiltzik, who sent this 1985 speech from the great statesman, Sen. Pat Moynihan. Along with tapping his great, historical perspective, Moynihan touches on all the issues we’re still arguing about, including fiscal rectitude, eliminating the SALT deduction, federalism, and, as per my anti-obfuscation campaign, “semantic infiltration.” “If the other

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Once again, remember the mensch rule re comments

December 23, 2017

Comments that in my judgment get the balance of criticism and snark wrong–they overweight the snark–get zapped by he-who-must-be-obeyed (that’s me!).

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A primal scream on taxes. And why the plan will likely send more, not less, jobs/investment abroad

December 20, 2017

First, I give a primal scream over at WaPo re the tax plan that may well be law by the time you read this.
Next, there’s been a lot of writing, including my own, on the question of whether the plan further incentivizes or discourages offshoring of investment and jobs. I’ve thought so, for a number of reasons, and I’m increasingly convinced that’s the case.
However, the writing on this is often quite technical and dense. So I was glad to see this WaPo piece break it down quite simply. Here are some of the main factors that I expect to juice the incentive of to offshore production, with my bold added.
First, a corporation would pay that global minimum tax only on profit above a “routine” rate of return on the tangible assets — such as factories — it has overseas. So the more equipment a

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Links, and a musical gift

December 18, 2017

I contributed to this symposium on productivity growth in the The International Economy. I look forward to reading all the entries–they’re mercifully short–but I enjoyed mine!
Boy, this tax debate has really been terrible. There’s been endless exaggerations and lies about trickle-down, growth effects, while evidence, facts, and the historical record has been kicked aside to facilitate evermore upward redistribution. My take, over at WaPo.
Now, here’s you holiday gift from OTE:
Listen to this, starting at 24:48. That’s when the third movement starts, which is the part I want you to check out. Yes, the first two movements are breathtakingly beautiful–the first: majestic, sweeping; the second: soulful, soothing, gorgeous–but we’re not talking about those. In fact, I worry they crowd out the

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Catching up on links

December 12, 2017

A number of pieces you might want to check out:
–I use the Illinois gubernatorial election, dominated by candidates with $ to burn, to raise concerns about money in politics: are these elections or auctions?
–The Trump admin is stealthily taking down the guardrails intended to regulate against the shampoo economy: bubble, bust, repeat. Over at the NYT.
–Riffing off of last weeks employment report, which showed solid job growth but weak wage growth, I use a simple model to show nominal wage growth should be faster given our low unemployment rate.
Source: BLS, my analysis
In my brevity re the above post, I left out a key factor right now that’s partially holding back nominal wage growth: slow productivity growth. That shaves about half-a-percent off the forecast, but it doesn’t fully explain

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Jobs report: Another strong month as payrolls settle into solid trend, but wage growth still underwhelms

December 8, 2017

The US labor market continues to add jobs at a strong clip, as robust consumer demand is generating a virtuous cycle of job growth, increased weekly hours, wage growth (though see ongoing caveats below), and hiring. Payrolls were up by 228,000 last month, above expectations for about 190,000. The unemployment rate held steady at 4.1 percent, a 17-year low.
Our official monthly jobs smoother filters out some of the noise in the payroll data by taking monthly averages over the last 3, 6, and 12 months. The fact that the bars are all about the same height reveals the underlying trend in job growth to be around 170,000 per month, a healthy pace for this stage of the recovery. As labor markets close in on full employment, job growth slows a bit as workers become more scarce.

However, given the

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What’s up with productivity growth and what does it mean?

December 6, 2017

I’ll be brief, because first and foremost, the recent uptick in productivity growth that I’m about to show you may be statistical noise. These are jumpy data. But in case this sticks, I did want to lay down a marker and tout some potential implications.
This morning’s revised productivity report has output per hour up a rousing 3 percent in Q3. That’s an annualized, quarterly rate, and OTE’ers know I like to filter out some of the noise by looking at year-over-year changes.
So, the table below shows the recent acceleration in year-over-year changes in the key variables.

Since productivity growth equals output minus hours growth, we can decompose the increase. It’s all about faster output growth; hours of work have slowed a touch.
Now, there could be a bit of the hurricane season in there,

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The return of the musical interlude

December 5, 2017

Since the On the Economy blog is on hold for the moment, I need to revert back to the old music feature I used to post regularly here.
First, I was just walking down the street and it seemed like every other person had a big hello for me, which put me in mind of this great, old classic from Duke Ellington and Louis Armstrong.
But my main feature today is an amazing performance that I strongly suspect you’ve never heard. It’s the classical guitar master (and my old pal) Ben Verdery playing Jimi Hendrix’s Purple Haze (with bits of other Hendrix tunes slipped in; I thought I heard references to Little Wing, Voodoo Child) with, not a stack of Marshall amps, but just a little old guitar. To my ears, he totally captures the energy and innovation of this amazing music I first heard 50 years ago.

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A quick note on CHIP, block grants, and the tax cut

December 5, 2017

This piece from the WaPo makes an important point, which I’d like to embellish a bit.
A few months ago, Congressional authorization for the CHIP program expired, and they still haven’t reauthorized the funding, which is a block grant to states in support of this health coverage program for 9 million low-income kids and pregnant women.
On Friday, Utah posted a notice online saying it probably will run out of CHIP funding by the end of January. Earlier in the week, Colorado notified families that their coverage might end early next year. Arizona, California, Ohio, Minnesota and the District are also nearing the end of their funding, as is Oregon, whose Democratic governor, Kate Brown, has directed the state’s health authority to continue financing CHIP through April out of its reserves.

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Yet more on the terrible tax plan…

December 4, 2017

Similar pieces wherein I’m trying to work out some of the longer term implications of what’s happening with tax policy, the debt, and the forthcoming attack on spending programs that, you know, actually help some people.
Over at WaPo and TAP.
I’ve not forgotten that there’s much else going on. I’ve got forthcoming pieces on the attack on financial market regulation, which, unless you’re following this, goes deeper than you thought, and current economic conditions as a baseline against which to evaluate a bunch of silly claims that will soon be made about the impact of the tax plan on growth.

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If you disapprove of this mess of a tax plan, you’re a) not alone, and b) not a House/Senate Republican

December 1, 2017

Over at WaPo.
Most of the numbers on showing whose taxes go up under this plan focus on years from now, when it’s fully phased in. For example, by 2027, 70% of households with incomes below $200K (that’s about 150 million) either face tax increases or not much change at all.
But as I show in the piece, referencing some useful analysis by the WSJ, some families that lose deductions (state/local, medical expenses) get dinged right away.

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Danica Roem points the way forward

November 28, 2017

I don’t think I’ve ever written a post about a tweet storm, but the series of tweets pasted in below struck me as so resonant and important that I wanted to elevate it.
They’re from of Danica Roem, a Prince William County (PWC) Democrat who was recently elected to the Virginia House of Representatives. The 33-year-old Roem is one of the first openly transgender persons elected in the nation. She unseated Robert Marshall, a 13-term incumbent who proudly called himself Virginia’s “chief homophobe.” While Roem campaigned on the issues confronting the county, most around transportation, the Marshall campaign consistently went negative. He refused to debate her, referred to her as “him,” attacked her transgenderism, and even went after a five-year-old video she’d made with her heavy metal band

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How the R tax plan goes after health care

November 27, 2017

Over at WaPo. Who knows what comes out or stays in if they get to the next stage of reconciling the House and Senate bills. But my sources tell me the mandate-repeal likely to stay in final package. Which makes a really bad plan even worse.

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Data note for figure in tweet

November 26, 2017

Tweet here. Both series indexed to 100 in Jan, 2010, so lines show percent change relative to that date.
S&P 500 index is adjusted for inflation and dividend yields.
“Paycheck” is the real weekly earnings of the 80% of the workforce that are blue-collar workers in manufacturing and non-managers in services.
Thanks to the tight job market and low inflation, the latter has been growing of late (see fig below) which you don’t really see given the scale on the figure. That’s not chicanery, ftr; it underscores my point re relative growth rates.
Source: BLS

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Wages, productivity, progressive policies, and serial correlation: I weigh in on an important, interesting debate.

November 20, 2017

There’s an interesting sort of argument going on between Stansbury/Summers (SS) and Mishel/Bivens (MB). My name has been invoked as well, so I’ll weigh in. It’s a “sort-of” argument because there’s less disagreement than first appears.
It all revolves around this chart, which plots to the real compensation of mid-wage workers against the growth in productivity. For years they grew together, then they grow apart. The levels of both variables almost double, 1948-73, but since then, productivity has outpaced the real comp of blue-collar, non-managerial workers (mid-wage workers) by a factor of 6.

That wedge between productivity and middle-class wage growth has become one of the more important developments in political economy, representing the rise of inequality and the disconnect of

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No, progressive policies don’t hurt growth

November 14, 2017

Neat new study out of CA, where they’ve created a virtual conservative, anti-interventionist’s nightmare of progressive policies. According to theory, the state should be tanking re growth and jobs, and yet…well, see for yourself.
Ben S and I did some of this sort of analysis awhile back re the ACA and jobs in the states.
We’ve got the facts; they’ve got the power. This must change, OTE’ers!!

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The case for direct job creation

November 9, 2017

Over at WaPo, and notice the support for the idea from all kinds of different bedfellows, from progressives like myself, Darity et al, to centrists like former Clinton Treas sec’y Rubin, to Trump’s chief economist!

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The unknowable motives of mass murderers

November 7, 2017

As you see from the title, I’m once again veering out of my econolane, but only briefly, and only to see if others share this sentiment.
My morning paper blares the banner headline “Texas Shooter Was In Domestic Dispute.” I understand that after these horrific events people want to understand what could motivate the killer. But here’s the thing: these motivations never come anywhere close to explaining the outcome.
And what possible could? What reported motivation would ever make you say, “Oh, I get it?” That’s partly because what the killer did was unimaginable to most people, and because there are always lots of people going through the same thing the killer was going through who didn’t do what he did.
We’re particularly interested in terrorist motivations, but here again, the above

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The big, bad tax cut plan: Stuff you might have missed

November 6, 2017

[Two great, new updates.]
There is and will continue to be much digital ink spilled in analysis of the House Republican tax plan, and while OTE readers are, by definition, invariably well-informed, here are some links to worthy pieces you might have missed.
–Catherine Rampell at WaPo and Ben Casselman/Jim Tankersley at the NYT both dig in the weeds this AM. Rampell highlights the fact that the new pass-through loophole introduced by the bill is particular generous to what she calls the “lazy/idle” rich, as it lavishes its goodies especially on passive investors (those who do less actual work for the S corp, partnership, etc.). The Times piece reveals that the R talking point on how no middle-class families taxes will go up under the plan to be false. In fact, millions of such households

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October jobs report: Nice bounce back on payrolls, but labor force down and wage growth stalled.

November 3, 2017

Payrolls bounced back strongly from last month, up 261,000, while the unemployment rate ticked down to 4.1%, its lowest rate since 2000. However, the jobless rate fell for the “wrong” reason: a sharp decline in labor force participation. Other labor market indicators suggest a mixed report, with a tightening job market, a solid trend in payroll gains, but stagnant wage growth. Though convention wisdom is that the US labor market is at full employment, I’d say that’s wrong (see last figure). We’re getting there, for sure, but based on wage and inflation trends, we’re not there yet.
Revisions to the prior two months added 90,000 to the payroll count; September’s hurricane-induced loss of 33,000 was revised up to an 18,000 gain. Still, October’s spike is partially a rebound from the low

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This GDP report is whispering some really important messages to us

October 27, 2017

A bunch of notable points from this morning’s advanced GDP report for 2017Q3. The economy’s growing a good clip (though not at the 3% headline number), with no price pressures in sight. Consumer spending is solid, boosted by job and earnings growth as well as, I suspect, a wealth effect from the stock market (stock market gains are not in GDP, but if people feel wealthier, they spend a little bit more). The hurricanes didn’t faze the data flow (note: Puerto Rico is not counted in national GDP), and a few noisy factors, especially an inventory bump, helped boost the number (I smooth out the noise below).
Yes, the White House is going to brag on this report, as pretty much any White House would. But what they should see here is yet another great reason to not screw around with the Fed chair.

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