Jason Furman

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The lowest unemployment rate of any month Joe Biden has been in the White House was... October 2021. The 4.6% unemployment rate last month was lower than the 4.7% rate when Biden walked out the door as VP in January 2017. (I should have realized this earlier.)
Applied microeconomists who like high-impact policy work: OMB is hiring; posting at aeaweb.org/joe/listing.ph… (especially in credit and insurance programs or environmental economics but also all fields). OMB=Office of Management and Budget/Exec. Office of the President.
Retweeted by Jason Furman
POTUS 44: “So?” Me: “It’s zero” POTUS: “What do you mean zero?” Me: “It’s precisely zero.” POTUS: “You mean if I look at the paper you are holding, I will just see a 0?” Me: “Yes.” Not my best day. If only @jasonfurman had told me to say “But it might be revised to 126K!” twitter.com/jasonfurman/st…
Retweeted by Jason Furman
What is it with Mayors and bitcoin?
Are professional forecasters irrational? Our new paper, argues ‘No’. Bayesian forecasters learning about how the world works generate all the most prominent forecasting “anomalies” in the literature: eml.berkeley.edu/~jsteinsson/pa… (with Emi Nakamura and Leland Farmer) 1/6
Retweeted by Jason Furman
My favorite data revision ever (although @genebsperling may feel differently about it): August 2011. Jobs originally reported as zero. Was almost worse than if we had lost jobs. President Zero. Has since been revised up to 126,000 for that month.
Does anyone have a good estimate (and ideally a cite) for the cost of not being vaccinated? I'm interested in the own cost (i.e., chance of higher medical bills, death, etc) & the external cost (i.e., the chance of spreading to others and their costs). I'll also take your guess.
One has to do the best one can with imperfect information. That means one will often be wrong. But best to be more uncertain up front and more willing to revise later on. And please let me know when I'm failing at this.
None of those interpretations was particularly well supported by a single data point, let alone a single data point that in retrospect turns out to have been wrong.
It might have been tempting to argue that the August jobs numbers proved Biden's plans had failed, the Fed needed to hold off tapering, the delta variant was having a huge impact on the economy, or that this was evidence that UI expirations in some states hadn't boosted jobs.
I try (but sometimes fail) to follow my own admonition. Eg, Willie & my blog on the Aug jobs # put the disappointing headline number (which has since been revised up) in the context of other numbers that told a stronger story (like the unemployment rate). piie.com/blogs/realtime…
Every data blog I did while CEA Chair included the disclaimer that the data "can be volatile... and subject to substantial revision." That means don't update your views too much on one data point, look over longer periods, and incorporate a lot of data. obamawhitehouse.archives.gov/blog/2016/12/0…
The revisions to the August jobs number (originally a disappointing 235K, now a reasonable 483K) are a good time to remind ourselves that anytime you are processing economic data don't read too much into it because the data itself might be revised later on. Yet another 🧵
What's going to happen next? If I had predicted the continued weakness in LFPR then you should place more weight on my speculations going forward. I have a strong bias towards thinking it's temporary factors around COVID and economic policies that will fade. But who knows.
We also have a breakdown of the 1.2 percentage point decline in participation that is not accounted for by demographics. That too is spread all over: prime age workers and older workers, men and women, basically everyone but younger workers.
The biggest labor market issue is participation. Is still down 1.7 percentage points since before the pandemic. About a quarter of that is simply the population aging. About a quarter is continued economic weakness. The rest is, well, labelled "other" in our graph for a reason.
Employers really want workers. You see it in record openings (likely around 11 million). In the fact that there are many more openings than unemployed. And in the continued rapid nominal wage gains (which were probably even higher than the headline due to composition issues).
Here is where we are on employment. A big collapse last year, some rapid progress, and since then it's been a whole lot slower but relatively steady. At this pace will take more than a year to close to the gap, not terrible compared to past recessions but not stellar either.
Willie Powell & my new @PIIE blog post on the latest jobs numbers is up. The biggest story: solid gains in October but jobs still 6 million short, mostly due to labor supply shortages not lack of demand as openings are at record levels. A 🧵 piie.com/blogs/realtime…8
Note, likely that EPOP will continue to improve in November and December so EPOP will for Q4 will end up above CBO's forecast. But still, if you had told me that the UR would be half point below what CBO thought then I would have said LFPR even better than their 62.1% forecast.
To marvel at just how surprising the combo of rapidly falling unemployment but stagnant labor force participation is just look at the Feb-2021 CBO forecast for Q4 compared to where we are in October: Forecast/actual UR: 5.3% / 4.8% LFPR: 62.1% / 61.6% EPOP: 58.8% / 58.8%
JUST IN from @jasonfurman: Decomposing the decline in the labor force participation rate finds that roughly half of it is consistent with the aging of the population & continued economic weakness. As for the other half, as he says... ¯\_(ツ)_/¯
Retweeted by Jason Furman
We also look at the sources of the 1.2 percentage point decline in LFPR after accounting for aging. No single story jumps out: is roughly evenly divided between men and women and between 25-54 and 55+.
Teaser for Willie Powell and my @PIIE blog coming shortly: a decomposition of the decline in the labor force participation rate. Roughly half of it is consistent with the aging of the population and continued economic weakness. As for the other half, 🤷.u
Solid jobs report with 531,000 jobs added in October & the unemployment rate falling to 4.6 percent. Economy still 6 million jobs short of what was predicted. Two dominant features of labor markets still true in October: participation rate flat and rapid nominal wage growth.
Not only is this a bad economic strategy for NYC and a bad investment decision, it also seems like a conflict of interest. Like a Mayor announcing “I’m buying a lot of Amazon stock and then going to put in places policies to benefit Amazon.” politico.com/news/2021/11/0…
Just the value of this 7.5K increase to the original $72.5K cap is larger than the entire child tax credit expansion for a middle-class family with two children. And this increase alone will go almost exclusively to households making over $1 million. Why are they doing this? twitter.com/aduehren/statu…
Between the availability of vaccinations for children age 5-11, the additional impetus to vaccination that this will contribute to, I'm increasingly hopeful about a greater return to economic normality and a dramatically reduced death toll. Now, expand rapid testing too!
More importantly, I expect this to add to employment over time by making workplaces more attractive to the millions of workers still nervous about COVID. And will contribute to tackling the virus nationwide with further benefits for supporting economic activity and jobs.
So far the number of people quitting over these types of mandates appears to be very low, well below the sometimes sensationalistic headlines.
The policy also solves a "tragedy of the commons" issue (or the "up-down game" if you're an Ec10 student). Many employers wanted to have vaccination or vaccination/test mandates but didn't want to be the only ones to do it. This solves that by "making" them all do it.
Being unvaccinated & untested poses a risk to others, a classic negative externality. The case for this policy is even stronger & more obvious morally and economically than the case for requiring seatbelts (and I'm all for seatbelt mandates). Is more like banning drunk driving.
The proposal mandates either vaccination or testing. The former is much cheaper and easier so I hope/expect it is the option most people/employers choose. (And there is a role for both, my employer has both a vaccination mandate and at least weekly testing.)
The Biden Administration's employer vaccination policy is an extremely important economic policy. It is good microeconomics (being unvaccinated and untested is a negative externality) and also good macroeconomics (contributing to economic & job growth). whitehouse.gov/briefing-room/…
Revising slides from a class I taught last year. I discovered this note I left for myself. Is it binding?
Some nice tax policies buried in the House Rules draft, including a nicotine tax increase (which would do a lot of good) and limits on the size of IRAs (to keep them closer to their originally intended purpose). But I haven't read all 2,135 pages yet! rules.house.gov/sites/democrat…
There are Senators talking about further changes. Two ideas for them: put an income cap on it to limit the elimination to middle-class families defined very broadly and also lower the deductible amount even further. twitter.com/SenatorBennet/…
(I know some think it is a budget gimmick because of baselines etc. But probabilistically if this passed I expect the State and local deduction to be more limited in 2028 than it otherwise would have been if nothing passed because credible legislative defaults matter.)
One important improvement in the House bill is that it lasts ten years (permanent would be even better). Under current law the full deduction comes back after 2025. The latest House bill would continue to limit SALT in a manner that seems sustainable and not gimmicky.
The House bill raises the cap on the State & local deduction from $10K to $72.5K. For very high-income households that is worth $23,125 (37%*62.5K). Much less bad than full repeal which was worth hundreds of thousands. But still more than low- or middle-income getting from BBB.
Is the paucity of hot takes about the Cambridge City Council election because it will take several more months for them to sort through the ranked choice ballots for the dozens of candidates?
Longer line for my Cambridge City Council vote than I’ve seen in a long time. The data not all in yet but suggestive of the importance of Dems passing BBB but without full SALT repeal.
I should add, there are many, many ways to mitigate this problem and I hope that it does indeed get mitigated as they finalize the legislation. twitter.com/jasonfurman/st…
(Note all of the above is about individual income taxes, billionaires would still get a net tax increase including the incidence of corporate taxes--this tweet is educational although the first in this thread is more polemical.)
There are people with a net worth of $1b with annual incomes less than $40m. If they're living in California then chances are BBB + SALT repeal will give them a net tax cut.
If your wealth is $200m then your income is likely to be below about $10m. Under the SALT provision + the rest of the bill households making up to about $40m annually will get a net tax cut.
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