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Justin Bloesch Profile picture
Justin Bloesch
@JustinBloesch
Postdoc at @Columbia_Biz & @Rooseveltinst. Next: @CornellEcon & @cornellilr, '23. Macro, labor, inequality. "Bloesch" rhymes with "mesh".
Feb 1, 2023 • 12 tweets • 4 min read
A thread about why I think the soft landing has been achievable:

Wages are downwardly sticky in nominal terms, but not in real terms.

Also wage *growth* is not sticky downwards.

This matters for both a low-cost cooling of the labor market and lack of a wage-price spiral. At this point, downward nominal rigidity of wages is pretty well established.

Perhaps the most common explanation is that nominal wage cuts are bad for morale (Bewley, 2002). Firms that want to downsize may do layoffs but still even raise wages for remaining employees.
Oct 24, 2022 • 12 tweets • 4 min read
New blog post at @rooseveltinst:

In 2019, the unemployment rate was 3.5%, and inflation was low and stable.

Now at the end of 2022, there's little reason to think that a rate of 3.5% is intrinsically more inflationary than it was in 2019. A thread:

rooseveltinstitute.org/2022/10/21/why… The strongest argument that the "natural" unemployment rate (or u*, or NAIRU) would go up is structural unemployment: some sectors decline, and workers with sector-specific skills have a hard time finding jobs.

But the job recovery has been very even across sectors: Image
Sep 29, 2022 • 7 tweets • 3 min read
The honey badger labor market, and why it just doesn't care: (h/t @jstalnaker1)

1. Fewer people work in interest sensitive sectors (housing, manufacturing).

2. Those sectors were constrained anyway: still a backlog cars and homes. Fewer people work in interest-sensitive sectors. Image
Apr 28, 2022 • 14 tweets • 3 min read
The Employment cost index (ECI) comes out tomorrow morning! I think the ECI will be important for determining if and how the Fed can get inflation to fall without increasing unemployment.

Main reason: ECI appears to move quite tightly with inflation in services. Most likely reason: firms pass wage costs into services prices.

Heise, @yfatihkarahan, and Sahin (2021) find that passthrough of wages to prices in services is .5 (for industries with a 100% labor share). For goods, this fell from ~.5 to 0 after 2003.