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Jan 4, 2017
Op-Ed
“We are 9 million jobs below full employment. We are nowhere near full employment, if we were, two things, wages would be rising quickly and people wouldn’t be hurting. The heartland wouldn’t be hurting. So I don’t buy that we are anywhere near full employment. And that is the fundamental difference between the elite and the people.”
Jan 4, 2017
Op-Ed
Fed officials also said it was too early to judge the effects of President-elect Donald Trump’s proposed fiscal stimulus, but that it carried “upside risks” for stronger economic growth and inflation. The 4.6% jobless rate is already at the long-run rate the Fed had projected. That’s expected to force employers to bid up wages to attract a smaller pool of available workers, potentially spurring inflation that eventually exceeds the Fed’s annual 2% target. Annual wage gains have picked up recently but, at 2.5%, remain measured.
Jan 4, 2017
Op-Ed
Unfortunately, the return to a full employment economy—one where additional demand in the economy will not create more employment—has been slower than necessary, as it faces an uphill battle against the relentless pursuit of austerity at all levels of government. But if the economy continues growing anywhere near its current rate of about 175,000 to 200,000 additional jobs per month, the labor market in 2017 will absorb new and returning workers and the unemployment rate could easily get below 4.5% for the year.
Jan 2, 2017
Op-Ed
“We expect that the Fed will need to tighten financial conditions meaningfully with three hikes in 2017 to prevent the unemployment rate from falling to levels that much of the Federal Open Market Committee appears to view as unsustainable and undesirably low.”
Jan 1, 2017
Op-Ed
“In early December the Federal Reserve Board moved to slow down the economy by raising interest rates. While this rate hike was widely expected, its impact will be to slow the rate of economic growth, thereby reducing the rate of job creation. With Carrier in Indiana, Trump was seen as going to bat for U.S. workers, something we’ve rarely seen from U.S. presidents in recent years.”
Dec 19, 2016
Op-Ed
U* is the lowest unemployment rate that Fed economists believe to be consistent with stable inflation. In other words, it’s the unemployment rate at full employment. The Fed thinks that over the long run, u* is 4.8 percent. That is, as the economy moves toward full resource utilization and the labor market closes in on full employment, the unemployment rate will settle in at this level. There’s a very big problem with this reasoning: Nobody knows what u* is.
Nov 15, 2016
Op-Ed
The key fiscal policy challenge is too often presented as reducing the federal budget deficit, period. Defining it this way in the present economic environment, however, is simply bad economic analysis. Instead, the most pressing economic task should be viewed as finally securing a durable return to genuine full employment. This means the first fiscal challenge is precisely to avoid too-rapid policy moves toward smaller budget deficits.
Nov 4, 2016
Op-Ed
The Fed’s Federal Open Market Committee (FOMC) will debate again this week whether or not they should raise interest rates to slow the economic recovery in an effort to forestall potential inflation. Fed Chair Yellen indicated in September that the economy may still have “room to run”— meaning room to continue soaking up resources idled by insufficient demand in the economy.
Nov 4, 2016
Op-Ed
The economy added 161,000 new jobs in October—enough to bring in players off the bench. Perhaps most significantly, nominal wage growth increased 2.8 percent over the year, another step-up over the pace of growth in recent years and a sign of a tightening labor market, where workers may be starting to gain some leverage.