There are lots of topics potentially of interest of course. I created my normal batch of charts during very different, happier economic times.
So for the moment, I thought I'd cull down the list and focus on just a handful that are relevant. Suggestions for others welcome. /1
First off, 40 million Americans have seen a major work disruption since February: either losing/leaving their jobs, being put on furlough, or having their hours cut involuntarily.
*Less than half* of these disruptions are accounted for by the rise in the unemployed. /2
I've tried to account for all these extended margins of disruption in a measure I call "NPOP". NPOP is the share of the US population not at work in either a full- or voluntary part-time job. It rose 12.5 percentage points in April alone. /3
The fact that the single largest category of disruption is unemployed on temporary layoff has been a source of comfort for some observers, since ostensibly this is a category with very high labor market attachment: around 50% of layoffs go back into work the next month. But... /4
...unsurprisingly, this time looks like it will be different. Transition rates from layoff back to employment plunged to almost 30% in April alone. /5
It bears reminding that "temporary layoff" is entirely in the eye of the respondent. They may think their layoff will be temporary, but it's not clear that in the current situation they have a material information advantage. /6
On wages, we saw a huge spike in average hourly earnings in the April jobs report due to compositional effects: since the pandemic is disproportionately hitting low wage workers, the rump average wage soared. /7
The CPS allows us to overcome compositional effect by looking at median wage growth among same-workers employed 12 months apart.
April was a bit soggy when looking at hourly wages, but this is a noisy series and there wasn't an obvious break in the data /8
To account for the possibility that firms are cutting labor costs through fewer hours, I also looked at median *weekly* wage growth. But the qualitative story is not dramatically different. /9
When you compare the hourly and weekly median wage series, it's not obvious the typical firm is resorting to cuts in hours among *existing* employees yet. /10
I won't break down wages by industry/occupation, as those are particularly noisy & applying an e.g. 12M moving average is not likely to tell us much meaningful about April alone.
I will note though that the non-raise rate continued to rise, which it's been doing for a few months
That's all for now, but more to come in the days and weeks ahead. Let me know your thoughts. /FIN
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Assuming that the US raised the "reciprocal" tariff rate on the EU from 10% to 50%, what would be the economic effect?
The 1st table takes current tariffs & illustratively raises the EU reciprocal rate to 50% total. For comparison, the 2nd shows w/o the extra EU tariff. 1/7
* The pre-substitution average effective US tariff rate rises from 15.4% now to 19.5%
* Post-substitution, the average rate rises from 14.0% to 18.3%
* Short-run PCE price-level pressures rise by another 0.5pp, from 1.7% to 2.2%.
2/7
* Short-run purchasing power loss rises to $3,600 per household in 2024$ from $2,800 now.
* Conventional 10Y revenue rises by $130 billion, to $2.8T, but the 10Y dynamic revenue hit increases by $150bn, to -$549bn.
3/7
New tariff update today from @The_Budget_Lab incorporating
1. Today's announcement of lower US-China tariffs (10% instead of 125% reciprocal tariffs); 2. The May 8 US-UK trade deal; and, 3. The April 29 auto tariff rebate announcement.
Some high level takeaways:
1/13
@The_Budget_Lab • In broad strokes, the lower China tariffs announced today have 2 main effects, assuming they stay in place:
1. They reduce the economic damage of 2025 tariffs by 40% (judged by price & GDP);
2. They raise $300bn *more* over 10Y, showing how suboptimal 145% was.
2/13
@The_Budget_Lab • The current US average effective tariff rate is now 17.8% pre-substitution, highest since 1934. Post-substitution, it's 16.4%, the highest since 1937. Virtually all of the fall since our April 15 report is due to the lower China tariffs; the US-UK deal has little effect.
3/13
@jasonfurman & @ZLiscow have responded to the piece on real infrastructure investment @vannostrand & I wrote in @Briefing_Book. We always learn a ton from J&Z, & this is no exception. They engage w/ thoughtful, data-driven pts. You should read their threads & then come back here (links at end).
1/23
Our bottom line: the official BEA deflator & the NHCCI that J&Z defend tell different stories. But most measures say infra investment has risen. Each real validator we could find (# of h’way contracts, h’way employment, change in lane-miles of h’ways from 2 sources) all grew under Biden.
2/23
@jasonfurman @ZLiscow @vannostrand @Briefing_Book Let me start by stating 4 points we all agree on: 1. Nominal highway spending rose under Biden. 2. Highway costs also rose under Biden. 3. Inflation erodes the real value of infrastructure spending. 4. There is uncertainty about how #1 & #2 net out.
3/23
Hot off the presses, @The_Budget_Lab just published a preliminary estimate of the economic & fiscal effects of the Trump Admin's 25/25/10 Mexico/Canada/China tariff proposal, with a special lower 10% rate on Canadian crude oil imports. Some high-level conclusions follow... 1/4
1. The proposal raises PCE prices by 0.76% pre-substitution (full retaliation & no Fed offset). That's the equivalent of a $1,250 per household loss in purchasing power on average in 2024$.
2. The proposal raises $1.4-1.5T over 2026-35 conventionally scored, & ~$150B less dynamically scored.
2/4
3. US real GDP is 0.2% smaller in the medium-run.
4. The effective tariff rate rises ~6 perc pts to the highest since 1946.
5. We map average price effect across different commodities. For many goods, domestic prices rise too. Natural gas prices are 8.4% higher, autos 4%, produce ~2%.
3/4
This is a treading water jobs report at 114K, which is almost exactly the number of jobs we mechanically need to add to keep up with the labor force.
But it's probably weaker than that since there will likely be future downward benchmark revisions. /1
First the good news. We should never focus on a single month. The 3MMA is +170K/month, which is solid and nonrecesssionary. And an unemployment rate at 4.3% is consistent with estimates of medium-and-long-run trend. An economy that landed here would be fine. /2
Today, I have a short @The_Budget_Lab piece on the "No Tax on Tips Act" that puts the bill in the context of today's labor market and tax system. There are three important takeaways. /1 budgetlab.yale.edu/news/240624/no…
First, tipped work is not very common, even among low wage workers. There were 4 million workers in tipped occupations in 2023. That's 2 1/2 % of all employment, 4% of workers in the bottom half of hourly wages, and 5% of workers in the bottom quartile. /2
Second, tipped workers skew young: 1/3 of tipped workers are under 25, compared to only 12% of non-tipped workers. 13% of tipped workers are teenagers (versus only 3% for non-tipped). /3