Do not confuse economic heat with economic overheating! on February 19, 2018In my last post, I argued that economists do not know either the unemployment rate at full employment or the level of potential GDP (meaning GDP at full utilization of the economy’s human and capital inputs). This led some folks to pose the reasonable question: “Then how do you know we’re not already there?” where […]
Fellow progressives, let us shed our fiscal handcuffs! on February 12, 2018If you’re one of those people who, like myself, goes around trying to promote progressive policies that push back on poverty, inequality and joblessness (yes, even as we close in on full employment, there are still folks left behind), then you know all too well those three little words that stop the conservation: “What’s your […]
The Republicans have momentum on the tax cut. How did it come to this? on December 18, 2017According to reports, House and Senate Republicans are on track to reconcile their tax plans and get them to President Trump to sign before Christmas, if not before the last days of Hanukkah. The fact that it’s a highly unpopular piece of work that will create lasting damage to our economy, our income distribution and […]
These policies will make the next recession both more likely and worse on June 26, 2017In case you were thinking I’ve been too upbeat lately, let’s talk about recessions. Economists can’t tell you when the next downturn is coming, but we can tell you if we’re ready for it. We’re not. Moreover, at least by one standard measure, even as the current expansion enters its ninth year, which is pretty […]
Why the Federal Reserve should not raise rates in June on June 12, 2017Today’s jobs report revealed a job market that’s a bit softer than we previously thought. While expectations were for an addition of 175,000 jobs, the actual number was 138,000. The monthly data, however, are jumpy, and so you’ve got to smooth things out as I do in the figure below. It shows average monthly job […]
Head winds and tail winds: assessing the current economy on April 24, 2017The nation’s economic expansion is just about eight years old, making it the third longest on record. Unemployment is a low 4.5 percent. Payrolls have been reliably adding jobs almost every month since late 2010. And finally, in 2015, wage growth started reaching more workers, which is probably one reason consumer sentiment on the economy […]
When it comes to economic policy, be direct! on April 17, 2017I’ve recently, by which I mean for the past 35 years, been thinking a lot about economic policy, and I’ve finally achieved some clarity: indirect policies don’t work very well, if at all. Direct policies are much more reliable. The best way to explain what I mean is by example, and I’ll provide some below. […]
Health-care reform is a lot harder than tax cuts. So why are the Republicans trying to do it first? on March 26, 2017While I’ll admit my tendency to assault readers with budget minutiae, I rarely take you too far down into the weeds. But there’s something weedy going on that I want you to know about. To compensate for the pain, I promise you some fun riddles at the end. Today, the House Republicans are voting on […]
President Trump may be in for a fight with the Federal Reserve on March 20, 2017AS expected, the Federal Reserve just raised the benchmark interest rate it controls again. Prediction markets assigned a 95 percent probability of a quarter-point hike, which was exactly what the Fed just announced. Had the board not raised the rate, it would have surprised the markets, and while that can sometimes be a useful tactic, […]
The political economy of GDP in the age of Trump on February 6, 2017There’s an obscure but important bit of new economic news, and while the media is rightfully focused on President Trump’s surely illegal and absolutely un-American religious ban, I don’t want this economic point to get lost. Plus, all these moving parts connect. We don’t just have an economy; we have a political economy wherein, as […]