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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

It takes two to tango: The complementarity of the derigging project and expanded tax credits.

7 days ago

In a hearing last week, an exchange between Rep. Katie Porter (D-CA) and JPMorgan’s CEO Jamie Dimon caught my eye. Dimon was touting the bank’s new minimum wage of $16.50, increasing to $18 in high-cost areas, for entry level workers. That’s a decent minimum wage, above the $15 that most progressive plans call for (and those proposals typically include a phase-in of numerous years). According to recent EPI analysis, $16.50 is well north of the national 40th percentile wage of just under $15.
To be clear, I’m not suggesting the highly profitable bank—market cap about $380 billion; Dimon made over $30 million last year—is fairly compensating its entry-level workers (Dimon says such workers tend to just out of high school). My point is an empirical one: given the nation’s wage structure, its

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Ch-ch-ch-changes! (Both personal and fiscal impulse)

11 days ago

Good changes: I continue to recover from the brain hemorrhage I sustained on March 23. Today’s my first meds-free day and I’ve been blessedly headache free. Thanks again for the outpouring of support–it’s been really uplifting.
Neutral Changes: As I slowly rev up Ye Olde Analysis Shoppe, I found the figure below (by GS fiscal analyst Alec Phillips) to be worth a close look. It underscores a point that even seasoned budget analysts sometimes miss: the role of fiscal impulse. 
One of the more important policy-driven determinants of near-term US growth is under debate right now: setting discretionary spending levels for 2020/21. Because of 2011 legislation that set caps for such spending, avoiding a sharp drop requires Congress to pass a bill approving spending above the caps. They’ve done so

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An update on my condition

17 days ago

Friends and followers —
As some of you know, on March 23 I had a brain hemorrhage, technically known as a subarachnoid hemorrhage.  This is a very serious condition, often fatal or disabling.

But I appear to have been very lucky.  After spending nine days in the ICU at Fairfax Hospital, I was discharged and am now recovering at home.  The recovery period is likely to take quite a while, with good days and bad days.  It could be a matter of months before I’m back to some version of my pre-hemorrhage self.

I’ve benefited immensely from a tremendous outpouring of love and support from family, friends and colleagues, for which I am enormously grateful.  I’ve also benefited from excellent medical care.

I’m not sure when I’ll be posting or writing about the economy, but I plan to do so as

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A personal update

25 days ago

I won’t be posting for a couple of weeks due to a medical emergency. However, the prognosis is good and I look forward to returning to my blog soon.

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The loss of a great economist and a great man

March 18, 2019

Like everyone else who knew him, I’m in shock and despair over news of the death of the economist Alan Krueger. Alan was the best kind of colleague: always inquisitive, incredibly rigorous about what constituted facts and evidence in economics, and willing and able to talk about his work in ways that made sense to anyone who would listen.
I admired everything about Alan, but a few things stand out. He taught us a lot about creativity. Like the rest of us, he crunched numbers that were available from the usual sources. But he didn’t stop there. He believed that if you want to know the answer to something, sometimes you have to go out and get the data yourself, something very few economists do.
I can’t be the only one who’s been in meetings with Alan, scratching our heads about some policy

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Jobs report, Feb 2019 [truncated]: Outliers happen, and faster real wage growth!

March 8, 2019

Got a late start this AM, so just highlights for now, with more analysis to come.
Outliers happen!
Payrolls rose a mere 20K last month, a huge downside outlier given the recent trends as shown below in our monthly smoother. The average over the past 3-months of 186K is a much more reliable take on the current underlying pace of job growth. Consider, for example, that payroll jobs were up 311K last month, a value well above trend. So, at least for now, consider this downside miss payback for last month’s huge upside.

Of course, the 20K could be harbinger of a downshifting in the pace of payroll job growth. Such a downshift–though not of that magnitude–is not unexpected given a number of facts: job growth slows as we close in on full capacity in the labor market; US GDP is slowing as fiscal

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There’s a new financial transaction tax proposal in town. Here’s why that’s good news.

March 1, 2019

The 2017 Trump tax cut committed at least two fiscal sins. By delivering most of its cuts to those at the top of the wealth scale, it worsened our already high-levels of pretax inequalities. And in so doing, it robs the Treasury of much needed revenues; based on our aging population, we’re going to need more, not less, revenues for the next few years.
Now, along comes an idea that pushes back against both of these problems (and one other one!): a small tax on financial transactions (FTT). Sen. Schatz (D-HI) and Cong. DeFazio (D-OR) are planning to introduce a tax of one-tenth-of-one-percent, or 10 basis points (100 basis points, or bps, equals 1 percentage point), on securities trades, including stocks, bonds, and derivatives, one that would raise $777 billion over 10 years (0.3 percent of

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What does it mean when both stock and bond prices are falling?

February 25, 2019

Just a quick comment on this recent NYT piece that scratches its head about an ongoing, simultaneous rally in both stock and bond prices. “Stock and bond prices are not supposed to rise and fall in tandem,” claims the writer.
Consider the grid below. I don’t have the relative frequencies for each box but I’ve seen them, and while the boxes on the diagonal get fewer hits than the others, my recollection is that periods with price movements in those boxes isn’t that unusual (bond yields move inversely to their prices). But correct me if I’m wrong about that.

Stock Prices


Bond Prices
B+, S+
B+, S-

B-, S+
B-, S-
The Times piece focuses on the upper left box. In the near term, being there is largely a function of the Fed deciding to pause, mixed with an argument between stock and

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Real wage gains and energy prices

February 14, 2019

Readers know I’m a huge booster of the impact of low unemployment rates on wage gains, especially for middle and low-wage workers. This dynamic is alive and well in current data and those of us on team Full Employment should elevate and tout it!
But, when it comes to real wage gains in “high frequency data,” which have been notable of late–as in, beating productivity growth–it’s important to also parse out the role of low energy prices.
The most recent CPI report showed a low topline inflation rate of 1.6 percent over the past 12 months (core CPI inflation rose 2.2 percent). The main factor pushing down on price growth was energy, down 5 percent, with gas prices (a sub-category of energy), down 10 percent.
In my recent write-ups of the jobs and other reports with wage info, I’ve mentioned

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Foreign holdings of US debt have been coming down a bit. Is that a problem?

February 7, 2019

I remember when foreign ownership of U.S. government debt amounted to very little, as shown on the left end of the figure below (the share of total publicly held debt owned by foreigners).
Source: US Treasury
I next remember that this share was growing rapidly, closing in on half about a decade ago. What I didn’t know was that the share has been falling back a bit. In fact, it’s about 10 percentage points off of its peak.
I discovered this because I went to look at the data as part of the broader conversation I’ve been engaged in regarding the lack of attention to and concern about our growing fiscal imbalances, an unusual dynamic what with the economy closing in on full employment.
In the course of that conversation, some have raised the concern that because a significant share of our

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January Jobs: Another upside surprise shows the benefits of closing in on full employment.

February 1, 2019

The US labor market just keeps on rolling along, turning in one good jobs report after another. Payroll gains continue to outpace expectations, wages are handily beating inflation while not pushing it up much, participation continues to suggest more room-to-run than most economists expected, and even the slight uptick in the unemployment rate last month, to 4 percent, was likely a temporary blip caused by the government shutdown (more detail on that below). The underemployment rate, which also spiked last month, was another temporary victim of the shutdown, causing a sharp, temporary increase in involuntary part-timers (those working part-time who want to work full-time). These measures of increased slack should fully reverse in coming months, assuming the government remains open, of

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No correlation between top tax rates and growth rates

January 28, 2019

In a piece in WaPo today, I note in passing that there’s no persistent correlation between top tax rates and growth rates across the US time series, nor in oft-cited international data from Saez et al. This is widely understood among empirical public finance folks, but just in case, here are a few figures.
As Krugman did the other day, I’m using top marginal income tax rates and 10-year, annualized growth rates of real GDP per capita.
First, as Paul’s figure suggests, here’s a scatterplot that looks pretty random. One can, of course, plunk a regression line in there, and it has the “wrong” slope (higher rates associated with faster growth). To be clear, I neither think nor claim that higher top rates lead to faster growth (though such a case is sometimes made). These are just correlations.

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

January 11, 2019

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!

January 10, 2019

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

January 6, 2019

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

January 4, 2019

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.”

December 20, 2018

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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