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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
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
Jason Furman Profile picture
Aug 12
Inflation numbers a little better than expected. But inflation numbers also showing signs of re-inflation, both tariff and possibly otherwise.

Core annual rate:

1 month: 3.9%
3 months: 2.8%
6 months: 2.4%
12 months: 3.1% Image
Here are all the numbers. All of them highly elevated except headline--which benefited from a 2.2% decline in gasoline prices (seasonally adjusted). Image
The overall dynamic is core services inflation has stayed high (and even rose in July) while core goods have gone from deflation to inflation. Image
Read 4 tweets
Jason Furman Profile picture
Aug 1
The jobs slowdown is here with 73K jobs in July & large downward revisions to May & June bringing the average to 35K/month.

Not quite as bad as you might think because steady-state job growth is much lower in a low net immigration world but unemployment still gradually rising. Image
A small portion of the weaker jobs numbers in recent months are Federal cuts. Image
But the bigger issues is the slowdown in private job creation. Image
Read 7 tweets
Jason Furman Profile picture
Jul 31
My latest @nytopinion attempts to answer the question, "The Tariffs Kicked In. The Sky Didn’t Fall. Were the Economists Wrong?"

Part of my argument is the economy actually has slowed & inflation has picked up, as you would expect.

Plus Trump called off some tariffs and lags. Image
But there are two broader lessons here:

1. U.S. economy is mostly domestic services. Trade matters but it doesn't matter as much as some of the hype might make you think. (And I confess, I do suffer from TDS, tariff derangement syndrome.) Image
2. Much of macro is small on a percentage basis. But small things really matter a lot.

0.5% off one year's growth rate and $1,000 per household per year forever are the same. But the former sounds small and the later makes it clear it is a large unforced error. Image
Read 5 tweets

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