As usual, one is smarter after reading Mike. But riddle me this: why is the labor market weaker? Tariffs definitely in play, but if that was all it was, we could "look through" them as one-time price-level boost, like Fed says on inflation. Less immigration lowers labor supply & demand and lowers breakevens.
Typically, we'd say say C, I, G must be in play. C's a bit damper (and more coming from top) so there's that, but I's stronger (AI), and gov't fiscal impulse pretty neutral and about to go more positive (BBB cuts).
You ask me, Trumpian madness, chaos, etc. just bad for biz (esp smaller biz that imports; see Beige Book anecdotes), but markets generally booming.
1. Tariffs on intermediate goods permanently alter the rate of inflation (holding all else constant). This means the Fed will in the long run have to keep rates higher than absent tariffs. I would say that this would not be a large impact - based on certain econ papers, we're talking around 0.8pp higher inflation and 0.8pp higher interest rates.
2. Immigration, whether skilled or unskilled, boosts people's incomes. Immigrants are not that substitutable with domestic workers. Moreover, rather than hiring locally, firms are more likely to expand overseas operations (especially service sector jobs).
The two things together, although small on their own, are pushing against the labor market, increasing unemployment and reducing real wage growth.
Jim Beam laying off 1000 Kentucky workers because……….Canadians aren’t buying US booze cause they’re pissed at Trump.
US oil company layoffs because crude oil prices are down $20/bbl since January, despite ~$2 in cost savings from less regulation. And Trumps goal is $40 crude oil and will work with MBS to keep the Saudis pumping more oil. $40 oil will badly damage the oil industry and the economies of the likes of NM, Texas and ND.
Reading a different Substack addressing global power comparisons (US-China-Russia), I concluded that all Trump admin officials working to implement Trump's foreign policies are either idiots or sycophants: idiots if they don't know better; sycophants if they do know better but support T's policies because ... loyalty. Reading Mr. Konczal's post today has led me to extend that categorization to all Trumpists who work to implement T's economic policies as well.
I think the last point is most relevant to the economic decisions of the Trump administration. This administration makes decisions to promote the radical reactionary right-wing view of what the economy and culture of this country should be.
The arrest, detention in deplorable conditions, and deportation of 300 South Korean workers in Georgia earlier this year is a perfect example. Asia nations combined have the largest economy on the planet in both nominal and PPP measurement. On a PPP basis Asia has about 49% of global GDP, per my Wikipedia search.
The radical right’s desire for mass deportations trumps the economic reality of the 21st century, where Asia, especially China, is becoming dominant economically.
I think evaluating this administration’s economic policies without examining how it fits into their broader radical right-wing reactionary vision of what American society should be is remiss.
Edit: Just wanted to add the cuts in scientific research, for example, are about their cultural agenda and not the long term economic impact it will have on this country.
As usual, one is smarter after reading Mike. But riddle me this: why is the labor market weaker? Tariffs definitely in play, but if that was all it was, we could "look through" them as one-time price-level boost, like Fed says on inflation. Less immigration lowers labor supply & demand and lowers breakevens.
Typically, we'd say say C, I, G must be in play. C's a bit damper (and more coming from top) so there's that, but I's stronger (AI), and gov't fiscal impulse pretty neutral and about to go more positive (BBB cuts).
You ask me, Trumpian madness, chaos, etc. just bad for biz (esp smaller biz that imports; see Beige Book anecdotes), but markets generally booming.
Whadya got here??
I think two parts explain labor market weakness.
1. Tariffs on intermediate goods permanently alter the rate of inflation (holding all else constant). This means the Fed will in the long run have to keep rates higher than absent tariffs. I would say that this would not be a large impact - based on certain econ papers, we're talking around 0.8pp higher inflation and 0.8pp higher interest rates.
2. Immigration, whether skilled or unskilled, boosts people's incomes. Immigrants are not that substitutable with domestic workers. Moreover, rather than hiring locally, firms are more likely to expand overseas operations (especially service sector jobs).
The two things together, although small on their own, are pushing against the labor market, increasing unemployment and reducing real wage growth.
Jim Beam laying off 1000 Kentucky workers because……….Canadians aren’t buying US booze cause they’re pissed at Trump.
US oil company layoffs because crude oil prices are down $20/bbl since January, despite ~$2 in cost savings from less regulation. And Trumps goal is $40 crude oil and will work with MBS to keep the Saudis pumping more oil. $40 oil will badly damage the oil industry and the economies of the likes of NM, Texas and ND.
Reading a different Substack addressing global power comparisons (US-China-Russia), I concluded that all Trump admin officials working to implement Trump's foreign policies are either idiots or sycophants: idiots if they don't know better; sycophants if they do know better but support T's policies because ... loyalty. Reading Mr. Konczal's post today has led me to extend that categorization to all Trumpists who work to implement T's economic policies as well.
In other words, the government is then run only by lackey “yes men,“ so there’s no one to say “no” or push back on bad ideas.
Meaning, we get… lots of bad ideas.
The emperor has no clothes.
Good post. I look forward to further understanding of why MAGA-nomics isn't working out.
I think the last point is most relevant to the economic decisions of the Trump administration. This administration makes decisions to promote the radical reactionary right-wing view of what the economy and culture of this country should be.
The arrest, detention in deplorable conditions, and deportation of 300 South Korean workers in Georgia earlier this year is a perfect example. Asia nations combined have the largest economy on the planet in both nominal and PPP measurement. On a PPP basis Asia has about 49% of global GDP, per my Wikipedia search.
The radical right’s desire for mass deportations trumps the economic reality of the 21st century, where Asia, especially China, is becoming dominant economically.
I think evaluating this administration’s economic policies without examining how it fits into their broader radical right-wing reactionary vision of what American society should be is remiss.
Edit: Just wanted to add the cuts in scientific research, for example, are about their cultural agenda and not the long term economic impact it will have on this country.