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Economy
Jobless claims are still pointing to US expansion
The latest report on weekly claims for unemployment insurance was released today showing 221,000 new claims. That takes the 4-week average to 222,250, which compares favourably to the year ago figure of 241,250. Some comments below
I…
Service sector job growth peaked almost two years ago
Note: This post first appeared on Patreon on 30 May 2018
After I wrote the last post, Kent Willard made a really good comment about service sector jobs versus goods-producing jobs that I want to expand upon. He said "there's a growing…
Since job gains peak mid-cycle, don’t expect the jobs report to throw the Fed off course
The lower the headline unemployment rate number goes, the more likely the Fed is to guide to two rate hikes in 2018.
The US corporate tax cut debate
In December 2017 the US federal corporate tax rate on profits over $10 million was reduced from 35% to 21%. This column examines the plausibility of the Council of Economic Advisers’ estimates of how a cut in the corporate profit tax rate…
Why now is the time to start thinking about the next recession
I want to make the case for thinking about the next recession now. And I lot of this goes back to what I wrote last November about now being the most dangerous period in the business cycle. Here's the basic framing.
Adam Smith and the meaning of high profit margins at Google and Facebook
There are two ways to explain persistently high corporate profit margins. One interpretation is about inequity, and implicitly about corporatism masquerading as liberty. And the other is about network effects creating an age of winner take…
Chart of the day: Real average hourly earnings
Noah Smith notes that wages aren’t the only way Americans make money. Increasingly, income comes via nonwage compensation and government transfers.
The US has not reached full employment yet
As good as the headline unemployment rate appears to be, we should worry that wage growth for the majority of Americans remains weak. The Federal Reserve, acting on the headline rate, will likely make a significant policy error and raise…
The biggest jobs report takeaway is the growth in non-farm payrolls
Job growth has now begun a slight re-acceleration. If this trend holds, the unemployment rate will drop into the mid 3% range and the Fed will move to a fourth rate hike. The mix of continued job growth, tightening monetary policy, and late…
The procyclical forces behind the Fed’s rate hike train
At least initially, rate increases can be procyclical. Moreover, in this particular cycle, fiscal and regulatory policy are acting procyclically too. That means you need a lot of rate hikes to get a big anti-cyclical effect.