My analysis of the jobs numbers, with Willie Powell. Short version: the pace of job growth picked up as signs continue to point to a tight labor market. A 🧵follows. piie.com/blogs/realtime…
850,000 was a great jobs number but we're still 9m jobs short of trend. We should be able to narrow that gap relatively rapidly for several more months in a row (assuming no dramatic worsening of the virus situation).
The unemployment rate remains elevated. And the "realistic" unemployment rate, which includes the 2.1m people who have left the labor force above and beyond what one would have expected.
One factor holding down job growth in recent months has been that only ~24 percent of unemployed workers have taken jobs per month. It should be more like 29-34 percent. In some ways that is good news, shows much more room before we hit a "speed limit". piie.com/blogs/realtime…
Overall despite the shortfalls the labor market looks like one that is more constrained by labor supply than by labor demand--which is to say, it's a tight labor market. You can see that in openings which now exceed the number of unemployed.
The tightness in most evident in the rapid pace of *nominal* wage growth. Wage growth slowed a little in June but has still been running at a 6%+ nominal rate over the last three months. That is much faster than normal. More on that in this earlier thread.
The pace of *nominal* wage growth remains very rapid, although it slowed a little in June.
Over the last 3 months the annualized nominal wage growth was:
Private: 5.9% (or 7.1% adjusted for composition)
Production and nonsupervisory: 6.6% (or 7.8% adjusted for composition)
The compositional issue is that when lower-wage workers are added in larger numbers, like leisure and hospitality, that drives down the average because you are adding some lower-wage workers.
This tries to adjust for that by holding industry shares constant.
The numbers for June are:
Private: +0.3% (or 0.4% adjusted for composition)
Production and nonsupervisory: +0.4% (or 0.5% adjusted for composition)
I wrote this quickly and missed a big point: the "definitional differences" I acknowledged were a possibility were a *much* bigger deal than I had realized--@jdlahart makes this very important point.
+850,000 jobs according to the payroll survey of employers
-12,000 employment according to surveyed workers
Most everyone is disregarding the second number. And most everyone is right. A short🧵
We studied this issue carefully at CEA and in our very last issue brief we concluded that the household survey was so noisy that it essentially provided no additional information relative on top of the payroll survey. obamawhitehouse.archives.gov/sites/default/…
While there are definitional differences between payroll jobs and employment the large gap between them is likely because one (or both) was badly mismeasured due to noise, which is especially large right now. whitehouse.gov/cea/blog/2021/…
I joined an inflation panel organized by @BudgetHawks yesterday. I'll do a short🧵summarizing my six points but watch it all for a broader set of perspectives--with various disagreements but a consensus that we should not be overconfident on this topic. dropbox.com/s/5fl91e93gzr5…
1. Before getting to inflation, the even more important issue is what is happening in the real economy. Remarkably the US is expected to be above pre-pandemic forecasts for real GDP by the end of the year--the only G7 country where this is expected. (Note, is a forecast.)
2. The United States has also had much more inflation than other countries. This says inflation is not just about reopening, supply chain issues, global commodity prices, base effects, etc., because they also have those in Germany and France.
In one sense the claim that fiscal policy is going to become less expansionary is obviously true. In another sense it fails to make a critical point: fiscal policy will still be *very* expansionary.
The largest fiscal injections are now behind us. Together with the reopenings they have contributed to the very rapid GDP growth we had in 2020-Q3 and Q4 and so far this yr. And the very rapid growth we're likely to have in the coming quarters.
Cash payments and pandemic-curtailed services have contributed to a big increase in spending on goods which in turn has contributed to higher imports, lower inventories, and higher prices.
(Note, retail sales #s are mostly but not entirely goods.)
Our Q: how much of the 3.6pp decline in EPOP was due to childcare issues. Intuition for small result:
1. Women with younger children ~10% of workforce
2. Need to look at their *differential* reduction in work, not entire reduction
3. If you include father's goes the other way.
The @nberpubs version goes through many, many, many sensitivity tests with different control groups, different concepts, but keeps getting roughly the same result. Because even if #2 on the previous were 2X that would take the result from 1% to 2%. So robustness not surprising.