Sunday , April 21 2019
Home / Jared Bernstein: On the economy (page 10)

Jared Bernstein: On the economy

The new asymmetric risk

For years, economists, including no less than former Fed chair Janet Yellen, talked about the concept of “asymmetric risk,” or AR. In this earlier context, which related to monetary policy, AR maintained that the risk of weak demand was greater than that of faster inflation. Therefore, the full-employment side of the Fed’s mandate should get more weight in interest rate decisions than the stable-prices part. With some important caveats I’ll get to below, there’s a new AR in town, this time as...

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Links and a musical interlude from the Professor

First, here’s a post at WaPo wherein I point out that as long as new tax revenues remain off the table, then we’re implicitly agreeing to ever-higher deficits and debt. Here’s another one on how we shouldn’t let the prevailing fiscal dynamics tie us up in knots. And, far better than the above, here’s Professor Longhair telling the fabled tale of poor old Junco Partner, a dude who drank a bit too much and ended “wobblin’ all over the street.” Share the post "Links and a musical interlude...

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This moment in deficit spending

There’s an interesting argument in play right now as to whether current deficit spending is welcomed or problematic, and what its impact might be. The motivation for the argument is the deficit financing of the tax cut and the new budget deal (which adds at least $300-$400 billion to the debt over the next decade), particularly at a time when the economy is closing in on full employment. As I recently pointed out, deficits of around 4-6% of GDP, which is what we’re probably looking at over...

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Will wage growth boost price growth? Sure, but how much depends on whether the near past or the distant past is prologue.

As the stock market works out its manic episode of the past few days, let’s get into a question of great importance: if wage growth is really accelerating, what will that mean for price growth? This relationship is at the heart of the market selloff that’s got everyone pretty freaked right about now. As I wrote in the WaPo this AM: The wage pop [last Friday’s 2.9% growth in hourly wages] spooked the markets because investors, already skittish as valuations were a bit steep (though not as bad...

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Links, High vs. Low Wages

The stock market opened way down, continuing last Friday’s selloff, though it has climbed back since the open–implying the return of volatility–as skittish investors continue to fear the sequence I describe in this AM’s WaPo: tight labor market, wage pressures, higher interest rates, inflation, lower profit margins. Underneath these swings is an unsustainable, inequitable economic model with serious political implications. BTW, in discussing last Friday’s 2.9% wage pop–which I tried to put in...

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A nice wage pop in January should be welcomed, not feared!

Payrolls rose 200,000 last month, the unemployment rate held steady at 4.1% and wage growth popped up to 2.9%, it’s the fastest year-over-year growth rate since mid-2009. In other words, here’s yet another strong jobs report. Our jobs-day smoother averages out some of the monthly noise in the payroll data by taking averages over 3, 6, and 12-month periods. As shown below, payrolls are up a strong 192,000, on average, over the past three months, a very nice job-growth pace at this point in the...

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Trump’s Department of Labor suppresses an inconvenient fact re their tip-retention proposal.

[These are the comments I made on a press call just now about the revelations from this article by Ben Penn. He tells of how the Labor Dept. is denying the public access to its estimates regarding the costs to tipped workers of the Trump admin’s proposed rule to let employers take the tips of minimum wage workers. Heidi Shierholz was also on the call–I recently interviewed her on this issue I’ve developed an awfully high outrage bar over the past year, but this Dept. of Labor suppression of...

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Real-time estimates of potential GDP: An important, new paper from the Full Employment Project

You ask me, the important DC event of the moment wasn’t last night’s State of the Union address. It’s the far less scrutinized meeting going on at the other end of town, over at the Federal Reserve. Later this afternoon, the Fed’s interest-rate-setting committee will release their monetary policy statement. They are widely expected to pause this month in their “normalization” campaign, i.e., not further raise the interest rate they control.  But their statement will likely reinforce their...

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Links from JB, LLC

Obviously, you want catch up on the latest from JB, LLC (in which I’m a passive investor…bring on that tax cut!…JK!!), so here are some links: –From WaPo, why Mnuchin’s comment on the weak dollar making US exports more competitive was, of course, correct; and why Treasury secretaries should be neutral on currencies, not go around pretending they always prefer a strong dollar. Because they don’t. EG, we hit a recession and the dollar falls as part of a natural corrective. Trust me, they’re...

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Populism, Globalization, Trump at Davos, Tariffs, the Dollar…

As my title betrays, I’m trying to organize my thoughts around all of the above. There’s a unifying theme to all this, and maybe if I noodle on about it here for a bit, I’ll trip over it. But let me stipulate from the outset that I’m pretty sure the underlying theme of the moment will link up to the extremely important and deeply insightful recent work of the economist Dani Rodrik. –Trump and a bunch of his staff are at the World Economic Forum in Davos, Switzerland. This feels like one of...

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