Claudia Sahm
@Claudia_Sahm
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macro, Fed, fiscal, inequality. founder of Sahm Consulting. former Fed economist. creator of the Sahm rule, a recession indicator.
Joined June 2014
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Last Seen Profiles
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Hey, hey. Sahm Consulting has a website! So happy with it and fully open for business.
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It's official. The American Rescue Plan was the best economic policy in forty years (and more)!
The U.S. has added 4.9 million jobs since February 2020.
At this point in the recovery from the Dot-Com recession, we had just broken even.
And at this point post-GFC, we were still 5.8 million jobs short of pre-recession employment levels.
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Most Americans are better off financially now than before the pandemic. Full stop.
Jobs, paychecks, spending, wealth, and financial security have made big gains, offsetting the burden of higher inflation. That's true for most families. The good news goes far beyond the rich.
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The Fed will not pivot
The Fed will hike another 25 basis points this week, and Powell will signal that's likely the last rate hike this year, and the Fed will not cut rates this year. Believe him. 🧵
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I never thought we would have to defend a full employment economy from the left. Here we are.
Hot take:
Wages are growing substantially faster than prices, and that's a very good thing.
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in my world of econ, never asked/don't see analysis on how deaths from Covid are affecting us. some of those five million 'missing' workers are literally gone. ain't here to apply for jobs. some grandparents ain't here to watch the kids when parents go to work. 3/4 million died.
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The American Rescue Plan was the best economic policy in forty years.
The U.S. economy has drastically outperformed Europe's since the pandemic. The most plausible explanation is that America implemented a larger -- and in some respects, more progressive -- fiscal stimulus
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morning chart.
worried about inflation? build more housing. decades-long issue neglected by elites.
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First, let me say
@besttrousers
is doing god's work in this entire thread.
Second, the Survey of Consumer Finances is the *gold* standard on household finances.
Third beyond his handle, I find, these replies to Matt troubling.
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“Larry has gone unchallenged for decades. It’s time for other people to lead. The old models are out of place,” said Claudia Sahm, “You could say Larry Summers suffers from a skills gap in the current environment.”
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I am an economist and there is no tradeoff between the economy and Covid.
If we do not end the global pandemic, the economy will never heal, AND we will kill many more people.
@AliHMokdad
speaks to
@NPR
@MorningEdition
about an optimistic outlook on Omicron wave.
"I think we should change our approach to Omicron and return to our new normal. Skies are not falling, this is going to go away, & we need to focus on our lives & the economy," said Mokdad.
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No, it’s not on the verge.
The rise in US unemployment to 3.9% last month means joblessness is on the verge of triggering the so-called Sahm Rule, which has proven to be reliable predictor of recessions in the past
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Work incentives as the ‘cure’ for poverty is one of the worst policies that establishment economists have helped push and keep alive.
26 years ago Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) which instituted work requirements for welfare. He trotted out Lillie Harden as an example of a reformed “welfare queen”.
She died in poverty in 2014.
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I will be the first Director of Macroeconomic Policy at
@equitablegrowth
, starting November 25: ... excited about my next adventure and grateful to my many colleagues at the Board
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"We, as experts, have a responsibility to policymakers and everyday people to match the strength of our recommendations to the strength of our data. When I read Oster, I see a tone and conviction that far exceeds the many limitations of her data."
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EVERY SINGLE job market paper I read makes the SAME mistake: telling us that they "contribute to a literature"
NO! NO! NO! research contributes to our understanding of something about the economy or behavior.
literature exist to teach us. not just to exist.
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morning chart: be wary of economists who tell you the U.S. economy will overheat if we do more relief. even a decade ago, we were told we could achieve so so much more.
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The new Child Tax Credit was a successful and popular program in Rescue Plan; then came the inflation hawks and it's gone.
Newsflash: Inflation is not the only urgent problem in this country. Children eating breakfast is a good thing, not a bad thing.
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2023 WAS NOT SUPPOSED TO HAPPEN. WE WERE TOLD RECESSION IS COMING OVER AND OVER.
2023 WAS AWESOME. HUGE GDP GAINS.
INFLATION CAME DOWN TOO!
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I don’t think many Americans understand how serious the economic situation in Europe is. Add to that Asia. Reminder, we are not an island.
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Larry Summers’ interview is like getting gaslit by a blowtorch.
“So I think that, ironically, if team transitory proves to be vindicated, it will only be because their policy advice was not taken.”
Keep digging.
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Here are the facts:
- Millions more good jobs.
- Bigger paychecks, even after inflation.
- Consumer spending back on strong pre-Covid trend.
- Historic increases in wealth, including at the bottom.
- Lowest debt burdens on record.
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We have seen this movie before. It's bad.
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I have pondered this question for well over a decade. My 'gateway drug' to econ social media was Marginal Revolution. I liked the posts a lot and thought, gee, maybe I am a libertarian ...
then I wandered into the comment section.
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“A Harvard-trained economist shares his top 21 money rules: ‘Own your home’ and ‘try to buy in cash’”
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OMG 3 PERCENT INFLATION, save us from ourselves, Larry.
The TIPS market is suggesting inflation in 3 percent range over 5 years and more next year. Breakeven inflation over 5 years is up 40 bps in the last month. Expectations data are even more disturbing.
This is part of why my alarm is increasing and Treasury should be as well.
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We are leaving 2023 in a MUCH better place than the Fed thought we would in March (left) and today (right).
GDP: 0.4% --> 2.6% (!!!!)
Unemployment 4.5% --> 3.8% (!!!!)
PCE inflation 3.3% --> 2.8%
The impossible is not only possible; it's happening!
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Americans will never judge our government's efforts to escape the Covid crisis against our peers.
But the US rebound is remarkable and unsurprising. No one else had the Rescue Plan (and then three big investment packages). This is a win for Big Fiscal and for Americans.
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I’m thrilled to lead the new Macroeconomic Research project at the
@jainfamilyinst
and contribute to a critical shift in economic policy.
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hey hey hey! look who got to talk with Jon Stewart!!!
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Some say people are afraid that spending will end soon. With better family finances, it’s hard to see how there's more economic insecurity now.
But recession fears have been shoved down our throats for almost 2 years. I've been pushing back the entire time, and I've been right.
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I did.
Breaking News: U.S. retail sales tumbled in November. Economists had not anticipated such a steep decline ahead of holiday shopping.
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"Total nonfarm payroll employment rose by 353,000 in January, and the unemployment rate remained at 3.7 percent."
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The Sahm rule is down to 0.30 percentage point.
WE ARE NOT IN A RECESSION.
The Sahm rule: step by step.
Tomorrow is Job's Day, and we will learn what the unemployment rate was in November. So, it'll also be time to update the Sahm rule, my recession indicator.
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Comment:
"Why don’t economists ever talk about the fact that more and more workers at the lower end of the payscale have to work at more than one job to make a living? ... It seems to me that is a big reason why many don’t feel the economy is good right now."
Facts:
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yelling in my car as
@mattyglesias
said he had talked with top Dem economic advisers in Obama (they will likely be in Biden) Admin who said steady-as-she-goes recovery and not too much deficit spending would be good plan. NO NO NO. as fast as possible!!!
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do you even FRED? oh, yeah!
my t-shirt for Sahm Rule being added to FRED ... very soon
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If you look broadly at the U.S. economy—inflation-adjusted consumer spending, jobs, business investment, and household balance sheets—it’s clear AMERICANS ARE WINNING. That was not the case after the Great Recession when some of today’s hawks led policy."
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Build more housing, please.
I am proposing a tax cut to provide $400 a month for the next two years for those seeking to buy their first home or trade up for a little more space.
Every family deserves a place to call home.
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The United States has $142,000,000,000,000.00 in household wealth.
Here is $1 Trillion visualized in $100 bills.
Household wealth = is 142 X this. (4X National debt.)
A problem? No.
The United States is $34,000,000,000,000.00 in debt.
Here is $1 Trillion visualized in $100 bills.
The National debt is 34X this.
When does this actually start to become a massive problem? Will it be next year? Five years from now? 10 years from now? 20 years from now? Why…
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There’s MANY MILLIONS more paychecks. This is the first job-full recovery we have had in a very long time. Good!
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if Manchin adds work requirements. VOTE IT DOWN. enough is enough.
NEW: Sen. Manchin has told the White House the child tax credit must include a firm work requirement and family income cap in the $60k range, Axios has learned.
These demands would dramatically weaken one of Biden's signature programs.
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firm disagree.
econ is about people. people have emotions, beliefs, and dreams. to understand people and to help craft policies to support them, you can't deny emotions play a role when people decide on how to use their scarce. resources (and how could reduce the scarcity).
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"I am decidedly un-woke. As a professor of economics, I strongly favor a market-oriented approach."
@tylercowen
I am so confused about what Tyler thinks "woke" is. I too think markets can do immense good AND I am firmly committed an inclusive economy AND human dignity.
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Build more housing. Break the iron-clad grip of NIMBY Boomers who've enjoyed massive house appreciation by restricting supply.
No, that can't be done quickly, and the we-need-a-recession crew is likely to win. But the lesson going forward should be more housing, not fewer jobs.
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"
@MazzucatoM
,
@KateRaworth
,
@StephanieKelton
and Claudia Sahm ... are among the rather small number of economists advancing fresh approaches in economics which focus on the real needs of real human beings, rather than the unhelpful abstractions. 🔥🔥🔥🔥
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In closing.
Some gloom is understandable today; we lived through the unimaginable with the pandemic. We must also live in the real world, where most Americans are financially better off.
It’s a huge accomplishment—we should celebrate and build on it.
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PSA:
- The Sahm rule did *not* trigger.
- We are NOT in a recession.
- Three-month averages are your friend.
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teen back from college and
out with a friend this morning.
friend talked about her presentation for a business class … cited the Sahm rule.
asked my daughter, “do you know Claudia Sahm?” 😂
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“since 1985 almost 70% of the leadership of the AEA have been doctoral graduates of Harvard, MIT, Chicago, or Stanford a staggering overrepresentation, given that around 150 American universities grant doctorates in economics.”
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no, Larry has not. hundreds of millions Americans are winning right now because finally policymakers ignored him. praise the lord.
It's astonishing, but Larry Summers actually *won* the debate over inflation.
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1) Millions more good jobs.
It's hard to choose among all the good news. Let's start with the unemployment rate. As of Oct 2023, it has been below 4% for 21 months--the longest stretch since the 1960s. That is very good. Inflation is a hardship; no paycheck is a disaster.
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Stunningly, it’s become a controversial view that most (not all) Americans are better off.
Here's a recent poll—another in an army of surveys—in which people tell us they are not doing better. Note these are Democrats being dismal.
Only 24% of *Democrats* say they are better off financially under Biden, per new FT poll
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It's a disease of the elite. Pessimism is considered to be a sign of intelligence. It's how 'serious people' who want to look like the 'adult in the room' act. 🤮
The peddling of cynicism and pessimism seems like a big problem across the partisan spectrum. And even so in mainstream media outlets. Maybe especially so
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ugh. it's whack a mole with this targeting argument:
1) federal government DOES NOT KNOW how much your income in 2020. 44% of US households with income $75-$150k in 2019 LOST INCOME during Covid crisis.
NEW: Stimulus checks to Americans earning over $75,000 don't benefit the economy, new data suggests
What happened with $600 stimulus?
Households under ~$50k mostly spent it ASAP
Households over ~$75k mostly save it
data via
@OppInsights
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Lefty arguing with me that true unemployment rate is 23%. Good morning, y’all.
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Women exist.
Hey libertarians, what is your best explanation for why the world is not far more libertarian now? I'll do a poll with the four best options.
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Nice try,
@MattBruenig
. I ran the Survey of Household of Economics and Decisionmaking at the Fed, which popularized the 'what would you do?' questions ...
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2) Bigger paychecks, even after inflation.
Wages have caught up with inflation for most; with the biggest gains at the bottom. That positive turn in real wages hinges on this year, in which inflation decreased and wages grew steadily.
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dammit, please, use facts!! consumer prices rose 0.4%, NOT 5.4%, from August 2021 to September 2021.
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Stephanie is right.
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Amen. Yellen was also one of two women at Harvard econ when she joined as an assistant professor. she did not get tenure. onward and upward.
she's now the first person to be Chair of Council of Economic Advisers, Chair of the Federal Reserve, and Secretary of the Treasury.
@Claudia_Sahm
Re: my tweet a couple days ago about late-1960s Yale grad economics being virtually all white-male (faculty and students), what an accomplishment for Janet Yellen to rise out of that environment to now be the most prominent and powerful economist in the world.
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I turned down an interview for a Deputy Assistant Secretary job at Treasury after White House tried to destroy my reputation for criticizing Larry Summers publicly. ❤️
@Claudia_Sahm
Has become the most important progressive economist in the United States. Why she isn't working for Joe Biden in the White House is a mystery. Don't think it's gender; I think she's just too outspoken. Sad.
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My writing of and research for my coming post lead me to the simple conclusion:
Biden should invoke the 14th Amendment and nuke the debt ceiling forever. Do it.
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Off here for the rest of this week.
Economics is a disgrace. And it always will be.
I tried to be a peacemaker and help the next gen. y’all don’t want that. I get attacked.
my sole mission now is to get a private-sector job. I am done with macro policy and academic macro.
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seeing breathless coverage that new child tax credit is a mess -- some people who need it won't get it and some who don't will. FOCUS PEOPLE!! THIS BENEFIT IS A BIG FUCKING DEAL.
why? first time in forever we are not making parents work to get money to help their kids. GOOD!!
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I feel bad blocking lefties and I give most second or third chances but I have limits.
Telling me I don’t care about people cuts deep given all I have given up, professionally and personally, for people.
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Yes, a disappointment. But:
1) It does not erase 6 months of clear progress.
2) January has been hot the past few years (turn of year + seasonal effects. That should reverse later.
3) PCE, not CPI, is the Fed's 2% target. 2/3 of today was shelter. The wedge will grow.
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omg. in print ❤️❤️❤️
hey, look who's in the news! note: "big" in the headline is about no more multi-million payrolls. striking how much crisis has warped our adjectives.
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Sahm here,
@LHSummers
.
The Sahm rule is an empirical regularity, not a proposition.
It says that when the 3-month moving average of the unemployment rate is 0.5 percentage point above its low over prior 12 months, we are in a recession. Since 1970, hits every one of them.
The proposition known as the Sahm Rule holds that the economy never experienced an increase in unemployment of more than several tenths of a point without a recession and a two percentage point increase.
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hmmm 🤔
Fears of a recession are fading fast,
@tylercowen
says, but the debate over the flaws of economic forecasting is just beginning
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"Workers did not cause inflation, and they should not pay for bringing it down." my new Substack post on the Fed's vote and press conference this week.
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I should write a piece on why some economists got it right about no recession. We are a small minority, but some big deals like Goldman nailed it. Jay Powell, too! And some smart forecasters I know. I understand we aren't the elites in macro, but why apologies for the wrong ones?
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4) Historic gains in wealth, including at the bottom.
The gains in wealth are stunning. Median family wealth, adjusted for inflation, jumped 37% from 2019 to 2022. The largest increase since the survey began in 1989, double the next-largest increase. And not just the rich!
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❤️ economics is a framework for understanding the world. its most powerful concepts and best applications do not require a PhD. ❤️
I'm really glad Claudia Sahm made that one post recently about not needing a PhD to be in economics and make a difference because I was super hesitant about even going near econ twitter with just a BA. But I was like I paid good money for this degree 😂 I belong
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Gotta save this chart.
"All the new jobs are government jobs," which was one of the 'top' 5 tropes in my replies on Jobs Day.
Wow. The share of workers employed by the government, relative to the total labor force, has really dropped a ton. The private sector is really doing all the heavy lifting when it comes to job creation
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There’s no way the average American knows what monetary policy is and how it works. Most econ PhDs don’t either.
In mid-2023, average Americans very sensibly expected inflation to moderate as monetary policy tightened with a lag and supply chain problems improved. Contributions from both factors are clear in both the data and everyday life
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I am not lazy,
@MattBruenig
.
Is social media exacerbating negative views of the economy? Or are voters just upset about their real conditions? And are you tired of this debate?
@TaylorLorenz
& I took a look, w/ help from
@JustinWolfers
@whstancil
@MattBruenig
@JordanUhl
& more
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Go back and ask the hard-working person on Christmas Eve -- who made your kale salad -- if they could buy their kids more presents this year. Low-wage workers FINALLY got the wage raises. They deserve it, and you can afford it.
#Christmas2023
I ordered a $19 kale caesar salad at LAX; this is the $19 kale caesar salad
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I agree with Larry it’s problematic. it’s time to cancel student loans.
Judged purely in terms of economic impacts, the Administration’s decision to extend student loan moratorium is highly problematic.
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morning chart.
remember when we had to let the new Child Tax Credit expire because it was causing inflation?
no, it did not, and we have bigger problems.
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Who in their right mind says they pay too little in taxes?
Most Americans feel they pay too much in taxes, AP-NORC poll finds
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The Sahm rule: step by step.
Tomorrow is Job's Day, and we will learn what the unemployment rate was in November. So, it'll also be time to update the Sahm rule, my recession indicator.
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Hi, nobody here. 👋
Kudlow: I was wrong about the slowdown and the recession. Everyone was wrong
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hey hey that’s me 👇👇 thrilled to be working with
@jainfamilyinst
they’ve got a super team and great research!
We’re pleased to welcome
@claudia_sahm
as Senior Fellow in Guaranteed Income. An expert on macroeconomics and author of the “Sahm Rule,” she has worked at the Federal Reserve and Council of Economic Advisors, and currently contributes to Bloomberg and the New York Times.
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