Five percent was the magic number. For years after the Great Recession officially ended in 2009, the recovery seemed to be proceeding at a snail’s pace. Even as the unemployment rate fell, it appeared that millions of Americans who had lost work during the recession had given up on looking for jobs. There were worried […]
Author: Robert Barbera
What did We Learn from Recent Monetary Policy Performance?
A growing chorus of commentators are now issuing warnings about additional Fed tightening in light of the flattening Treasury yield curve. Despite clear evidence that job growth in the U.S. is running well ahead of a sustainable pace, low wage and price inflation, for many suggest no need to firm overnight interest rates. Exhibits A […]
The slope of the yield curve and lessons from recent history
A downward sloping yield curve is widely seen as a harbinger of recessions, and indeed has an impressive track record. The yield curve inverted before the last two recessions and is likely to invert again within less than a year, which naturally raises fear of another recession. Much commentary of late has noted that yield […]
A higher loyalty
After over a decade of first-rate stewardship, Jon Faust is resigning from his post as CFE Director to become senior special advisor to the newly appointed Federal Reserve Board Chair, Jerome Powell. Ordinarily one protests the exit of an esteemed colleague. However, in his new role, Jon will be immersed in debates of the utmost […]
A Chat with Floyd Norris
At the CFE, we try to pair the teaching of textbook tools with a large dose of the wisdom and common sense it takes to apply those tools astutely in real situations. We are, therefore, particularly excited about the fact that Floyd Norris has joined us, and will be teaching undergraduate classes, attending Economics Department […]
Lord make me pure, but not until 2020
In a recent post, we complained that Congress had muzzled the CBO, forbidding them from reporting budget projections until the forecasts could “reflect the tax legislation and any major decisions about spending that the Congress makes in the next few weeks.”[1] We conjectured that the spending cuts offered up would be slated for the out […]
CBO: The dog that didn’t bark, for now
Each January the Congressional Budget Office provides a 10-year budget forecast, driven by the interplay of tax laws, spending commitments, and a 10-year economic projection. Not so in 2018. CBO received a directive from the Senate and House Budget Committee Chairs, instructing them to hold off on supplying a report until they can produce a […]
Jobs and Inflation, Dec. 2017
Eighteen months ago, in “Six Degrees of Separation between jobs and inflation,” we argued that job gains of 200,000 per month could easily continue for the next 18 to 24 months without providing significant upward pressure on inflation. Eighteen months are up, and as of today’s job report we’ve seen solid job growth of 187,00 […]
Mid-Summer Review: Mr. Phillips and Mr. Trump both Shooting Blanks
There are two parts to forecasting monetary policy: forecasting what picture the economy will present to the Fed, and forming a judgment about how the Fed will react to that picture. The first of these is pure forecasting—what will happen tomorrow? Given a macro forecast, the second mainly requires a view about the Fed’s ongoing […]
How about we settle for a well-run government?
Classroom duties this Spring were spiced up a bit by the steady flow of teachable moments coming from Washington. For economists, one juicy tidbit came when we read that Jared Kushner had been put in charge of an effort to make government run like a business. A final exam question practically writes itself: What does […]
The Saudis: Thinking clearly and trolling for chumps?
When the news about a possible ARAMCO sale hit about a year and a half ago, we posed a question: What if the Saudis have finally gotten the joke? The real return to holding oil in the ground has been negative over the last 44 years, as a succession of peak oil predictions were met […]
Populist policies cause immediate misery. Or not.
As a professional economist, I am quite certain that most readers of this blog could cancel their insurance policies and spend the savings on a pleasant party. And with any luck, the good times could go on for, as the Fed would say, a considerable period. The Wall Street Journal, a few weeks back, described […]