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 […]


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 […]


A Trump Tantrum?

The pre-election views that a Trump victory would mean a market route proved way off the mark. Instead, as of early December, the stock market and bond yields have jumped and credit spreads have tightened. The market moves, according to a popular storyline, reflect bets on a rosy Trump scenario in which Trumpist policies—whatever their […]


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 […]


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?


Still Crazy After All These Years

For the past several years, the Congressional Budget Office has been offering frightening forecasts about government debt growing out of control unless strong action is taken. While these forecasts have played a prominent role in policy debates, the CFE’s Jonathan Wright and Bob Barbera have for several years been arguing that those forecasts are, well, […]


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 […]


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 […]


Capital controls for Russia?

“The main lesson from international experience is that controls on capital outflows can work—but only if they are associated with a credible policy plan addressing the underlying cause of the confidence crisis.” Olivier Jeanne, of the Center and Peterson Institute, has an interesting op-ed in the Dec. 23 Financial Times arguing that capital controls may […]


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 […]