Jason Furman
@jasonfurman
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Professor at Harvard. Teaches Ec 10, some posts might be educational. Also Senior Fellow @PIIE & contributor @nytopinion. Was Chair of President Obama's CEA.
Joined April 2011
Pouring roughly half trillion dollars of gasoline on the inflationary fire that is already burning is reckless. Doing it while going well beyond one campaign promise ($10K of student loan relief) and breaking another (all proposals paid for) is even worse.
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What policy will provide relief to:. a. A waiter who is losing most of his tips.b. A Lyft driver who is losing many of her trips.c. A person who self quarantines without pay.d. Someone who was going to re-enter the job market but can't now.e. Everyone else. Only one: CASH.
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President Biden will have an economic dream team. I am thrilled for him, for them, and most importantly, for the country. One tweet for each member, starting with the most important economic agency (that I ever ran):.
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My guess is the majority of Americans with a net worth of $50 to $300 million would get a tax cut under the Build Back Better plan with a full repeal of SALT. The bill would do more for the super-rich than it does for climate change, childcare or preschool. That's obscene.
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This is now much worse than a Liz Truss moment. After Truss unleashed chaos in UK markets she pulled back part of her proposal then fired her Chancellor & then pulled back the rest of it. None of that was enough for markets--until she resigned. How can we get out of this?.
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I have yet to find a blemish in this jobs report. I've never before seen such a wonderful set of economic data:. --Job gains in most sectors. --Big decline in unemployment rate, even bigger for Black & Hispanic/Latino. --Redn in long-term unemp. --Solid (nominal) wage gains.
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The Biden plan is the most impressive and ambitious child poverty plan ever in the United States. This would not just help in the short run but have long-run mobility benefits as well. Perhaps the 2nd most important part, the most important being combatting the virus.
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I don't think people realize that in important respects tariffs are now higher & more inflationary than what was announced on last Wednesday. Since then we've gone from 54% to 125% on China, our 3rd largest trading partner. That outweighs delaying the increases on 70+ others.
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Craziest (and most infuriating) chart I saw this past week: Germany's monthly exports of goods purportedly to Kyrgyzstan. From @robin_j_brooks.
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If you are implementing a credible plan that entails short-term pain for long-term gain the stock market will go up not down.
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The idea that Harvard switch to online classes seemed like an overreaction 5 days ago. Today we made the obviously right decision to ask our undergraduates not to return after spring break. I don’t think anyone in the US will be sitting in a university classroom 2 wks from now.
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Today's class wasn't intended to be this timely. I'll try to do a thread with the slides later today or this week.
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Genuine question: How did people think that FTX was funding the 8% interest it was paying on Bitcoin deposits if it was not using its customers funds for something? What was the benign explanation for this while the assets were fully/safely available for redemption?.
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Watching this brought a tear to my eyes. This should be our closest, best relationship in the world. Instead we're blowing it up in pursuit of higher priced cars and fewer, worse jobs.
PM Mark Carney of Canada: "The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over." @atrupar .
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You can 100% discount the possibility that Trump got to the BLS. Not 98% discount, not 99.9% discount, but 100% discount. BLS has 2,400 career staff of enormous integrity and one political appointee with no scope to change this number.
This being the Trump era, you can't completely discount the possibility that they've gotten to the BLS, but it's much more likely that the models used to produce these numbers — they aren't really raw data — have gone haywire in a time of pandemic 3/.
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Notably President Trump walked away from a deal where three of these four countries would have gotten rid of virtually all of their US tariffs and trade barriers. It was called TPP and they went ahead without us.
NEW: Why are Vietnam, India, South Korea and Japan going 1st in negotiations?. Trump is prioritizing countries strategic to countering China, two sources told me & a WH official confirmed the strategy. w/ @drdesrochers @_AriHawkins @PhelimKine @felschwartz
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Increased net premium paid (for worse plan) for a 64-year old making $56,800: $11,600. Tax cut for a 65-year old making $1,000,000: $11,600.
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This might be the lowest point in the 74 year history of the Council of Economic Advisers. The stakes on the epidemiological questions are so high that this utterly superficial and misleading "modeling" has no place whatsoever in any discussion of the government's response.
To better visualize observed data, we also continually update a curve-fitting exercise to summarize COVID-19's observed trajectory. Particularly with irregular data, curve fitting can improve data visualization. As shown, IHME's mortality curves have matched the data fairly well.
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Worth remembering the vicious abuse that @ProfEmilyOster & others who made this argument were subjected to. Then think about other debates like that. You're not hearing from a lot of people on some topics because they don't want to deal with it. The result is worse outcomes.
Breaking News: Test results show the pandemic’s effect on U.S. students: The math and reading scores of 9-year-olds dropped steeply, erasing two decades of progress.
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The most important economics paper released so far today: "Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu".
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President Biden claiming Japan's investment in an American steel company is a threat to national security is a pathetic and craven cave to special interests that will make America less prosperous and safe. I'm sorry to see him betraying our allies while abusing the law.
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Short-run pain: Make consumers stop buying foreign toasters. Long-run suffering: Eventually America starts making toasters! But they're more expensive & the jobs making them are worse than the ones they replaced. (Swap any manufactured import for "toaster" & this still true.).
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If you're not a little confused about the economy you're not paying attention. Three of many historically large disconnects in the data:. 1. Jobs growing & GDP contracting. 2. Price growth rising & wage growth falling. 3. Consumer sentiment plummeting & consumer spending rising.
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I don’t understand how the formula crisis is about capitalism:. —The govt purchases half the product in a way that entrenches market power. —The govt closed a major plant. —The govt protects domestic companies from international trade with heavy regulations & tariffs.
The formula crisis is about capitalism—and the pressure to breastfeed about disregarding women.
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This is the best piece I've read on the epidemiology of the pandemic, including a stab at what a cost-benefit analysis might look like towards the end, filling in the numbers on that will become important as we get past the current phase of our response.
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Student loan relief is not free. It would be paid for. Part of it would be paid for by the 87% of Americans who do not benefit but lose out from inflation. Part of it would be paid for by future spending cuts & tax increases—with uncertainty about who will bear those costs.
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GDP growth dramatically outpaced forecasts made a year ago. Most forecasters expected the economy to grow 3 to 4 percent this year. Instead it has grown 5.5 percent. That is more than a percentage point faster than even the most optimistic forecast was expecting.
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Whatever you thought of the merits of a gas tax holiday in February it is a worse idea now. Refineries are even more constrained now so supply is nearly fully inelastic. Most of the 18.4 cent reduction would be pocketed by industry--with maybe a few cents passed on to consumers.
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You should have gotten the employment numbers from the Council of Economic Advisers yesterday. And if this tweet is conveying inside information about a particularly good jobs number you should never get them in advance from the Council of Economic Advisers again.
Looking forward to seeing the employment numbers at 8:30 this morning.
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I am reassured by the widespread condemnation of the statement by the Harvard Palestine Solidarity Group. But I am appalled by people threatening individual students. I'm even more appalled since many of them had nothing to do with the letter. Read this email from a recent grad.
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Student loan debt forgiveness likely has a multiplier close to zero. Forgiveness is taxable. If this negative cash flow effect outweighs interest savings would even be net negative. And wealth effect small in short run. Arbitrary/regressive $1T for ~$0 GDP, not a great idea.
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I really hope we don't let donors & politicians dictate who leads our school. Claudine Gay denounced calling for genocide before the hearing. She denounced it in the hearing. And she denounced it after the hearing.
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In my classes, I strive to create an inclusive environment for all perspectives. That's partly why I avoid public statements outside my lane. But as a member of the Harvard community, I feel compelled to address the statement from 36 Harvard student groups
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The macroeconomy is strong--high growth, low unemployment, falling inflation--the best of any advanced economy. But there was a reluctance to present/understand how families were still not out of the deep inflation hole. And too much masked by cherrypicking/misleading stats.
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I worry that many large endowment and pension fund managers won't get the joke.
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This is interesting. (From Baumol, Blinder and Solow textbook.)
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Another strong GDP report (2.8% in Q3) pushes real GDP even further above the pre-pandemic forecast.
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The White House fact sheet has sympathetic examples about a construction worker making $38K and a married nurse making $77,000 a year. But then why design a policy that would provide up to $40,000 to a married couple making $249,000? Why include law and business school students?
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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?.
News: House Dems have yet another SALT plan. Would raise the cap to $80k for nine years, per people familiar, rather than $72.5k for ten years.
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First reaction to jobs numbers: Shock. Second reaction: Nervousness. Further reflection: This could be quite good. 336K jobs, participation remains high, wage growth moderated further. We could be in the middle of a sustainable increase in labor supply.
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The federal minimum wage has been cut 2% in inflation-adjusted terms so far this year. It has been cut 20% in inflation-adjusted terms since it was last increased in 2009. It would seem worthwhile to get back to the discussion about how to increase it.
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The Inflation Reduction Act is what the country needs right now--helping to address one of our biggest long-run challenges (climate change) while making progress on our biggest short-run challenge (inflation) while protecting the most vulnerable. A 🧵on inflation/fiscal aspects.
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I consider myself a deficit dove. I'm comfortable with 3% GDP deficits--and higher in downturns. I don't think deficit reduction should be our top priority. But, deliberately sending an essentially full employment economy into deficits of 5% to 7% of GDP is nuts.
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Janet Yellen: Uniquely equipped for this moment. She has made monumental contributions to understanding & policy on the biggest issues of the day, from economic recovery to climate change. I can't wait to see what she will accomplish as Treasury Secretary.
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Preparing for class and just learned that the "pink tax" seems to be a myth. Identical (or nearly identical) goods marketed to women are, if anything, slightly cheaper on average than when marketed to men--contrary to this graphic and many more like it.
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Ceci Rouse: An outstanding economist & wonderful person, she brings deep knowledge & commitment to the most important issues the country faces including how to raise wages, reduce discrimination and improve education. She is also experienced with previous stints at NEC and CEA.
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If these tariffs stay in effect for the rest of the year the chances of recession are 104%.
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This is a landmark proposal from President Biden, a minimum tax that also applies to unrealized gains—as a prepayment against future capital gains. This should get serious consideration as a fair and efficient way to raise significant revenue.
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Neera Tanden: Knows politics and policy, brilliantly balances & communicates about both. She will lead a powerful OMB that is oriented around advancing the President's most important goals, including tackling climate change, reducing inequality, and fostering growth.
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Getting everyone to switch from Bitcoin to Gamestop would be a big improvement for climate change.
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Jared Bernstein: A stalwart of economic policymaking. Jared is a keen analyst and passionate advocate for working people who is also trusted and respected across the political spectrum. He brings macro, trade, labor & more to the role.
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Everything who thinks the pandemic will change everything forever should contemplate this.
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South Korea is not in TPP.
While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States. Too many contingencies and no way to get out if it doesn’t work. Bilateral deals are far more efficient, profitable and better for OUR workers. Look how bad WTO is to U.S.
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Half measures and delays won't work--there is way, way too much uncertainty that has been unleashed. The word of the President & his team won't work--they are not credible. The only option to eliminate uncertainty would be for Congress to pass a law by veto-proof margins.
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After-tax premium increase for 64 year old making $26,500: $12,900.Tax cut for 64 year old making $1,000,000: $12,900.
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I try not to troll but there is a limit to my willpower.
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In the last two quarters:. GDP: -1% (assuming GDP Now is correct, a big assumption). Employment: +2%. We have never seen a disconnect like that before in the data (available since 1948).
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Congratulations to all six, I'm looking forward to further appointments. The country has big economic challenges, President Biden has ambitious economic goals, and now he will have an amazing group of women and men who can help him achieve those goals.
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Heather Boushey: Has built a phenomenal organization (the Washington Center for Equitable Growth) that is at the nexus of academic research and DC policymaking, exactly what the CEA should be. Heather has been a leading champion of inclusive growth and working families.
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I am beyond thrilled the President Biden is taking the long overdue step to adjust the Thrift Food Plan to be in line with the increased cost of healthy food. This is a large advance for poverty reduction, nutrition and opportunity for children.
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Most of the economic problems we're facing (inflation, supply chains, etc.) are high class problems. We wouldn't have had them if the unemployment rate was still 10 percent. We would instead have had a much worse problem.
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Wally Adeyemo: A major force in international economic policymaking in the Obama Administration, Wally rose rapidly through the ranks as one of the most talented economic policymakers of his generation. He is smart, effective and also kind.
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Latest Atlanta Fed GDP Now: -2.8% annualized growth in Q1. And BTW, if you look at "private GDP" it would be even worse at -3.8% (my calculations based on their component details).
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I have a new piece in @ForeignAffairs titled, "The Post-Neoliberal Delusion and the Tragedy of Bidenomics". They were generous about giving me a lot of words but were less generous with charts--so this long thread partially rectifies that. (And links to the piece at the end.)
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The best feasible step Democrats could take this year to dramatically reduce macroeconomic tail risks would be to eliminate the debt limit. The odds of something worse than the 2011 brinksmanship are higher than ever before and the consequences would be even worse than before.
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I know many skeptics of prediction markets. I don't have an ideological faith in them (OK, maybe quasi ideological). But the empirical evidence is they have worked really, really, really well. And did again on Tuesday night. A short 🧵 about this remarkable picture.
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The economist in me loves that Spirit Airways charged me $49 for a ticket and $55 for a carry-on bag. But there is a lot more inside me than just an economist.
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Could people who understand pop music better than I do explain to me why Taylor Swift increases GDP but Beyoncé increases inflation?
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Amazing inflation data for June!!!. A big slowdown in shelter growth meant that core was up only 0.1% (0.8% annual rate). That + transitory gasoline decline drove headline down 0.1% (0.7% annual rate). Over the last 3 / 6 /12 months core has been:. 1.1% / 3.3% / 3.3%
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If you had told me we would have a massive pandemic I would have predicted an increase in health spending. Shows why you shouldn't listen to me. Health spending down 4.9% in Q1 (not annualized). Responsible for nearly 1/2 of the overall GDP decline. Likely down much more in Q2.
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Real GDP fell at a 0.3% annual rate in Q1. The underlying numbers are very extreme--with an enormous increase in imports and inventories. My preferred measure of "core GDP" a better signal, up at a 3.0% annual rate (see next)
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There are a number of other highly problematic impacts including encouraging higher tuition in the future, encouraging more borrowing, creating expectations of future debt forgiveness, and more.
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It is getting global attention and the sentiments it expresses are egregious. Blaming the victims for the slaughter of hundreds of civilians. Absolving the perpetrators of any agency. This is morally ignorant and painful for other members of the community.
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The crypto industry claims that if they were subject to basic tax compliance measures they would cease to exist. What does that say about the desirability of the existence of the industry?.
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This is a favorable development. Big businesses generally pay better, do more training, engage less in wage theft and other abuses and have more upward mobility.
The US is no longer a nation of small business. 53% of Americans work for big businesses now (with 500+ workers). That's a big shift from the 1980s/90s/early 2000s. The biggest change of all has been more people working for companies with 10,000+ workers and fewer people
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Alan Krueger taught me about economic policy for more than two decades. His convincing empirical research on the most important questions is a lasting legacy. A devastating loss.
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I like the Biden-Harris proposal to tax unrealized capital gains. For any given level of capital taxation it's more efficient & fair to tax unrealized gains, reduces lock in & tax planning. The proposal does a thoughtful job of addressing tricky implementation issues.
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Part of the reason people might be upset is that this is not true. Real wages are down ~1% since the pandemic. Your data suffer from composition bias: about 5m generally lower-wage workers are no longer employed and not having them in the data spuriously raises wages.
Yes, inflation is troubling. But real wages are up since prepandemic 4/
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Overall I quite like the American Jobs Plan. It is a serious proposal that would help increase economic growth, ensure growth was more fair, and raise additional revenue in a broadly reasonable manner. Much that I would love to add, a bit I would subtract. A thread.
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The US economy has grown almost as much in six months as many major forecasters expected for the entire year (pre-American Rescue Plan forecasts). The economy is rapidly outpacing all of the major pre-ARP forecasts.
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Big picture on the jobs number: we are still 11.9 million jobs short of trend. February was OK but at that pace would take 4-1/2 years to recover. We need more like 1m jobs a month.
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The decline in real average hourly earnings at this point is terrible, the fastest pace of decline in 40 years.
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The United States has only 2.8 hospital beds per 1,000 people. Italy has 3.2 beds per 1,000. We are moving rapidly towards a massive shortage: expanding hospitals, getting more beds, and figuring out how to make some mobile to handle local outbreaks is critical.
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Uncomfortably hot jobs report. 528K jobs added & unemployment rate falls to 3.5%. What worries me re inflation is avg hourly earnings were up at a 5.8% ar in July. June revised to 5.4% (up from 3.8%). The wage moderation we were all discussing last month was simply wrong data.
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Every time you hear someone belittle cheap goods substitute lower wages and ask how it sounds. Critics of free trade argue we should care about workers & not just cheap goods. But we care about what workers can buy with their wages. Costlier goods is the same as lower wages.
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Will Sweden's strategy work to grow its economy? The forecasters at the European Commission appear not to think so. Deaths so far per 1 million population:.Sweden: 314.Denmark: 90.Finland: 47. Commission forecast for growth in 2020:.Sweden: -6.1%.Denmark: -3.9%.Finland: -5.3%.
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Terrific CPI report. Can't do much commentary but wanted to share charts so you can see the data yourself. Here is core CPI (i.e., excluding volatile food and energy).
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If the economy adds zero jobs in August what is the best way to describe the jobs situation:. *Zero jobs added in August. *5.6m jobs added over the last year.
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I was appalled to see a leading scholar of poverty repeat the misleading claim that the poverty rate has not improved in the last 50 yrs in @nytimes. This is only true if you look at data that ignores most our major anti-poverty programs including the EITC, SNAP and more.
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Most importantly, everyone else will pay for this either in the form of higher inflation or in higher taxes or lower benefits in the future. I did a thread on this last night but given the new announcement you need to double everything in it.
3 possibilities if transferring $250b to a group:. 1. They raise their consumption (now and/or in future). Total output unchanged or rises by less--consumption of others falls. 2. Same but total output rises commensurately--others held harmless. 3. They never raise consumption.
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Don't freak out about the GDP report, the underlying inertial components were strong. The headline was -1.4% growth at an annual rate. BUT, inventories subtracted 0.8pp and net exports subtracted 3.2pp. Consumption, fixed investment, and key domestic demand components strong.
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Great personal income data. Strong income growth. Moderate consumption growth. Prices down in the month of July--excluding food & energy up at only a 1.0% annual rate in the month. Consumers still financing spending out of savings. Lots of challenges but a good month. More soon.
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Seems like a premature judgment. It takes a while to build a ship industry. I think we should give it another century before we reach conclusions.
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A month ago 3 month-annualized supercore inflation (i.e., ex food, energy, shelter and used cars) was 1.8%. Now with new seasonal adjustment and an additional month of data it is 3.7%. Time to update your inflation views.
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