A few quick and dirty #CPSMicrodataDay charts, as I ponder other ones.
According to the household survey, broad labor market disruption fell by 8 million people in May, but there are still 32 million people who have left jobs or had their hours involuntarily cut since February. /1
We need to be very cautious about CPS data right now, but one interesting result: median same-worker wage growth hasn't slowed significantly yet, either on an hourly or weekly basis.
That's not what we would expect in such a sharp downturn, though perhaps this takes time. /2
That said, non-raise rates are rising, though note this series is noisy and the 12-month moving average I use will necessarily only change slowly. /3
But--and this is why we need to be more cautious these days--response rates are plunging, widening the uncertainty bands around the data. /4
Moreover, in-person interviews are plunging too (for utterly defensible reasons!), but in-person interviews consistently yield higher unemployment rates for some reason, so this shift may be having a compositional effect on the CPS, though I'm sure BLS has tried to adjust. /FIN
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New @The_Budget_Lab tariff analysis incorporating 1) the 50% copper tariff, and 2) the July 7 & 9 letters to 22 countries with new "reciprocal" tariff rates. Both go into effect August 1. In brief...
1/10
• Consumers face an overall average effective tariff rate of 18.0%, a 15.6pp increase from 2024 & the highest since 1934. After consumers & businesses shift spending in reaction to the tariffs, the average tariff rate will be 16.9%, a 14.5pp increase & the highest since 1935
2/10
@The_Budget_Lab • The price level from all 2025 tariffs rises by 1.8% in the short-run, the equivalent of an average per household income loss of $2,400 in 2025$, assuming no Federal Reserve reaction. The post-substitution price increase settles at 1.5%, a $2,000 loss per household.
3/10
New @The_Budget_Lab tariff analysis incorporating 1) the US-Vietnam framework announced July 2, and 2) the July 7 letters to 14 countries with new "reciprocal" tariff rates, which go into effect August 1.
In brief...
1/10
• Consumers face an overall average effective tariff rate of 17.6%, a 15.2pp increase from 2024 & the highest since 1934. After consumers & businesses shift spending in reaction to the tariffs, the average tariff rate will be 16.5%, a 14.1pp increase & the highest since 1936
2/10
@The_Budget_Lab • The price level from all 2025 tariffs rises by 1.7% in the short-run, the equivalent of an average per household income loss of $2,300 in 2025$, assuming no Federal Reserve reaction. The post-substitution price increase settles at 1.5%, a $1,900 loss per household.
3/10
Yesterday's US Court of International Trade decision invalidates the recent tariffs imposed under IEEPA, including the "reciprocal" tariffs & most tariffs on China, Canada, & Mexico, leaving only the Section 232 commodity tariffs in place. What are the economic implications?
1/8
• The average effective US tariff rate falls to 6.9% pre-substitution without the IEEPA tariffs, the highest since 1969, down from 17.8% prior. Even after consumption shifts, the average tariff rate will be 7.0%, also the highest since 1969. 2/8
• The price level from all non-IEEPA 2025 tariffs rises by 0.6% in the short-run, the equivalent of an average per household consumer loss of $950 in 2024$.
• The 2025 tariffs raise $686 billion over 2026-35, with $101 billion in negative dynamic revenue effects. 3/8
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