Surely we're behind some curve!

Let us take a moment explicitly to place the CFE in the pro-facts camp. We are honored to work at Johns Hopkins University, the first modern research university in the U.S., founded on a hard-nosed commitment to facts and with a mission to discover facts and to teach how to deploy them constructively. Ok, got […]


Six Degrees of Separation in Practice

In a recent Financial Times article, Faust notes: [A] growing chorus of voices as diverse as Donald Trump, the Republican candidate for the presidency, and Martin Feldstein, former chief economic adviser to president Ronald Reagan, and now a professor at Harvard, are demanding that the Federal Reserve aggressively tighten monetary policy. Mr Trump’s reasoning is […]


We love a good sequel, but …

Over the last several weeks, investors faced the realizations that the Fed might take one more step on the road to normalization and that Mario Draghi’s ‘Do what it takes’ might have morphed into ‘if pushed, we could do a bit more.’ This predictably brought a jump in bond yields around the world and talk […]


Big (perhaps HUGE) Stimulus in 2017?

Amid all the political craziness at home and around the world, you may not have noticed that one bit of traditional policy wisdom is making a comeback. The biggest development for 2017 could be that ‘austerity as stimulus’ is out and ‘stimulus as stimulus’ is back in a big way.[1] Following the election in Japan, […]


Six Degrees of Separation between Jobs and Inflation

Friday’s reported increase of 160,000 in nonfarm payrolls was less than the recent average. This doesn’t mean much for the macroeconomic outlook and, therefore, shouldn’t and probably won’t mean much for the path of monetary policy. Monthly nonfarm payroll gains bounce around a good deal and are substantially revised. Moreover, weather-especially winter weather–can dramatically affect […]


Improving conventional unconventional policy

The Fed has taken the position that the distressing signals from around the world do not clearly warrant a large and definitive downward shift in the outlook for the U.S. While some folks might argue that point, let’s accept it. There is, nonetheless, a heightened probability of some sort of downturn, and policymakers and others […]


Are the Saudis Thinking Clearly? And Should We?

Given Saudi Arabia’s long-standing commitment to act as swing producer to stabilize prices, current Saudi behavior raises big questions. Why is Saudi Arabia pumping at historic rates in the face of a collapse in the oil price? And, as President Obama’s state of the union message highlights, what should be the U.S. policy response?


China's economic performance and other puzzles

Commodity price collapses tend to be a reliable signal of a broad-based global slowdown. For example, drops of 15 to 20 percent in CRB raw industrial commodities index [1] have reliably been associated with significant slowdowns in growth (Fig. 1).[2] The recent fall in commodity prices exceeds any decline since 1980 save the one registered […]


Two big questions

Simple plots of recent GDP and inflation data highlight two profoundly important questions facing monetary policymakers in the United States. GDP is at a level several percentage points below reasonable estimates of its pre-crisis trajectory (Fig. 1):[1] Will we ever regain that lost output? Inflation had run well below the Fed’s objective for the two […]


Jobs, inflation, and growth in 2015

Recent readings for the U.S. economy are filled with contradictions. Non-farm payroll gains were quite strong. Unemployment fell to 5.7% from 6.1%, last September. Nonetheless, real GDP growth was soft, up only 2.6%. And retail sales were quite weak. Reconciling robust gains for employee hours and a low jobless rate with tepid increases for real […]


Patience and prices

Consensus expectations were off regarding the November estimate for U.S. CPI inflation released yesterday. The 0.3% fall for headline inflation was a larger drop than estimated by 82 of the 84 economists who ventured forth with an opinion in Bloomberg’s survey. No-one offered up a forecast of a greater fall than 0.3%. We suspect that […]


Today's CPI release: If you just squint, you'll see …

The FOMC minutes released yesterday and today’s CPI data release underscore a remarkable shift. Over the past five years, the state of the labor market has dominated monetary policy discussions, but for the first time since the crisis inflation is now taking center stage. All through the recovery, of course, inflation hawks have warned that […]