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Jason Furman Profile picture
@jasonfurman
Jan 7, 2022 • 6 tweets • 3 min read • Read on X
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Willie Powell and my new @PIIE blog on the latest employment numbers--and looking back at 2021 and the COVID recession and its aftermath.

Short version: very rapid progress, still not all the way there, uncertainty looking forward.

A 🧵.

piie.com/blogs/realtime…
The economy added 6.4 million jobs in 2021, a 4.5 percent increase in jobs. that makes 2021 the seventh fastest year for job creation since the aftermath of World War II.
The unemployment rose very rapidly in March & April 2020 but then it has fallen rapidly ever since. Cumulatively the unemployment rate was 6.5 point-years above it's pre-recession value. That is about typical for postwar recessions and much better than the financial crisis.
The unemployment rate is falling much faster than forecast. Now is well below what the Survey of Professional Forecasters expected in every forecast they have made since the pandemic hit. BUT, labor force participation would likely be worse than what they would have forecasted.
Employment rates are still down relative to pre-pandemic for most age-sex groups. A larger fraction of men than women have stopped working with larger employment declines for the prime-age population than for younger people (whose employment has gone up) or retirement age.
Overall employment is 2.7 million workers short of what CBO forecast prior to the pandemic while jobs (based on surveying employers) are 4.4 million short. This indicates that there is still work to do. FIN.

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More from @jasonfurman

Jason Furman Profile picture
Oct 26
The Federal minimum wage was established in 1938.

It was in effect for about 85 years.

It has now, for better or worse, been effectively abolished. Image
The last three legislated increases in the minimum wage were bipartisan:

1989: President Bush (41) and a Democratic Congress
1996: President Clinton and a Republican Congress
2007: President Bush (43) and a Democratic Congress
Prices are up about 50% since it was increased to $7.25/hr in 2009.

As a result the inflation-adjusted minimum wage is about the lowest it has ever been. The productivity-adjusted min wage is the lowest it has ever been.

Only 1% of workers nationwide are paid at or below that.
Read 9 tweets
Jason Furman Profile picture
Oct 24
The government made the reasonable decision to release CPI data because needed to calculate Social Security COLAs.

Quick summary, core CPI annual rate:
1 month: 2.8%
3 months: 3.6%
6 months: 3.0%
12 months: 3.0% Image
Here are the full set of numbers. Image
The most helpful visualization of the persistent and, to some degree, resurgence of core inflation is this. Four straight months of strong core goods inflation largely due to tariffs. Plus services inflation remains reasonably strong. Image
Read 6 tweets
Jason Furman Profile picture
Sep 25
A big upward revision for GDP, was a 3.8% annual rate (up from 3.0% in the advance estimate). For H1 GDP up at a 1.6% annual rate.

The biggest change was consumption which was 2.5% annual rate (up from 1.4% in the advance). Business fixed investment strong, residential weak. Image
Here is quarterly consumer spending. It looked like it was really slowing but with this upward revision and the July and August indications it's looking much more healthy. Image
Business fixed investment has been strong. It is unclear how much of this is pulling forward of capital equipment imports to get ahead of tariffs and how much is sustainable. (Note disaggregating structures have been falling while equipment is rising, reducing a disconnect.)
Read 5 tweets
Jason Furman Profile picture
Sep 11
The core inflation rate increased for the fourth straight month. Annual rates:

1 month: 4.2%
3 months: 3.6%
6 months: 2.7%
12 months: 3.1% Image
Here are the full set of numbers. Image
The problem recently has been in both goods and services. Core goods inflation has typically been about zero but in the run-up to this year had deflation. Now tariff-driven inflation.

And at the same time core services inflation has picked up. Image
Read 8 tweets
Jason Furman Profile picture
Sep 5
A market slowdown in the pace of job gains, with 22K added in August, bringing the three month average to 29K.

On a percentage basis have not seen job growth this slow outside of recessionary periods in more than sixty years. Image
The unemployment rate rose from 4.2% to 4.3% (unrounded was a smaller increase).

Wage growth was strong and average hours steady.
All of these are consistent with a marked slowdown in labor supply (due to immigration policy) combined with a continued slight softness in labor demand (as evidenced by the unemployment rate which has been steadily rising at about 0.03 percentage point per month for 2-1/2 years. Image
Read 7 tweets
Jason Furman Profile picture
Aug 29
The core PCE inflation rate increased for the fourth month in a row. Annual rates:

1 month: 3.3%
3 months: 3.0%
6 months: 3.0%
12 months: 2.9%

But two reasons to be less worried than headline: (1) transitory tariffs & (2) some of this is imputed from rising stock market. Image
Here are the full set of numbers I'll talk about.

Particularly notable is how much lower market core has been than overall core at every horizon. Note regular core includes imputed items, notably portfolio management fees where the price goes up when the stock market goes up. Image
Market core is both better predicted by slack and a better predictor of future inflation. It has moved sideways this year. But given that tariffs are (hopefully temporarily) pushing inflation up that suggests that underlying inflation is going down. Image
Read 8 tweets

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