Monday , August 21 2017
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Jared Bernstein: On the economy

Quick note on inflation, exchange rates, and wages

A few weeks back, I did some simple modelling of the impact of the weakening dollar on US inflation, suggesting it would boost price growth a bit, but was nothing to get wound up about. And, of course, a little more inflation would be welcomed. Researchers at Goldman Sachs took an interesting, deeper dive into this question (no link). They came up with the same qualitative answer—a modest bump, not a big increase. In fact, they show that the actual impact on inflation of the dollar’s...

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Remember Tax “Reform” (i.e. cuts)?

“Really?! You’re complaining about regressive tax plans, now? Like that’s America’s biggest problem?!?” Yes, I’m writing about ongoing plans for even-more-regressive-than-I-thought tax plans, based on some interesting, new analysis from the Tax Policy Center. And no, that’s not America’s biggest problem. That would be the presidency in crisis. It is wasn’t clear to some from the start, it is becoming increasing clear to many more, including the CEOs who signed up to advise the new president...

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Are trade deficits good or bad? It depends!

In light of this silliness in the WaPo today (which Dean Baker already jumped on), I’m compelled to repost this piece from a little while back, explaining why and when trade deficits are problematic and when they’re not. Summarizing, it’s just as wrong to claim trade deficits of any magnitude are always a negative as that they’re always a positive. Like Neil Irwin said, motivating my earlier piece, “they’re not scorecards.” When are they problematic? In two situations: first, when we’re not...

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An important fact check on manufacturing value-added and employment

So, I’m driving around doing errands this past weekend when I hear former Secretary of Commerce Carlos Gutierrez (in GW Bush’s cabinet) interviewed about renegotiating NAFTA. He’s a big booster of the trade deal and wanted to make the point that any job loss in manufacturing was a result of faster productivity growth, not imbalanced trade. His evidence was as follows (my bold): One of the things I go back to very often is our manufacturing as a percent of GDP. Our manufacturing output is...

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A few words on Charlottesville

I very rarely stray from my political econo-lane here at OTE, of which I’m duly proud. As some famous philosopher said, “That of which we do not know, we must not speak.” Clearly, he wasn’t a DC pundit. But I live in Virginia, a few hours away from Charlottesville. I had dinner last night with a mom and her brilliant daughter, the latter of whom is headed down to UVA this week. I’m also Jewish. So the evil that took place there over the weekend is personal and I cannot in good conscience not...

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Corp tax cuts and the middle class: they’re not that into each other

Over at WaPo, but here are some extra goodies for the privileged OTE’ers (that’s you!). First, going right down into the weeds, the piece notes that the CBO assumes that the incidence off the corporate tax falls 75% on capital income and the rest on labor income. That’s about standard now, as Huang and DeBot show here, though you can find estimates that assign a much larger share to labor (which would make cutting the tax less regressive than my piece suggests, and I firmly believe, it is)....

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The usually great Catherine Rampell unconvincingly objects to two improved labor standards

I’ve long been a big admirer of Catherine Rampell, but her piece today on “unintended consequences” of pro-worker policies was uncharacteristically unconvincing. She goes after two specific upgrades to existing labor standards: the increase in the federal minimum wage from its current $7.25 to $15 per hour, and the increase in the salary threshold below which workers have to be paid time-and-a-half for overtime. Rampell, a data nerd (that’s a big compliment, to be clear), does the same thing...

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A taxing moment

I wrote a bit on what real tax reform would look like for yesterday’s WaPo, and the NYT editorial board followed up w/ a similar piece today. Both pieces make an important distinction between tax cuts and tax reform. The definition of the former is obvious, and in R’s hands, tends to be regressive cuts that hemorrhage much-needed revenues. Real reform, OTOH, avoids exacerbating market-driven income and wealth inequalities, while raising the revenues needed to meet the challenges we face. That...

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The robots aren’t coming. They’re here. And some are helpful.

In a public service to spare you from reading thousands of pages of both anecdote and analyses, here is a quick summary of the debate over whether automation is really killing jobs. Pro: Automation is killing jobs! The robots are coming! Anti: Nuh-uh. If it were, productivity growth, or output per hour of work, would be climbing. Instead, it’s been slowing down…a lot. Pro: Then we must be mis-measuring productivity growth. Anti: Sorry, but solid evidence shows that’s not the case. Not to...

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Jobs day! More solid jobs gains…but wage growth still not responding

The nation’s employment rolls went up 209,000 last month, and the unemployment rate ticked down slightly to 4.3%. The underlying pace of job gains, shown below, suggests a solid, healthy labor market characterized by strong employer demand for workers. That said, wage growth remains remarkably subdued. Taken together, these two facts imply that while we’re closing in on full employment, we’re not there yet. To get at the underlying trend just mentioned, our jobs-day smoother takes some of the...

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