‘u*’ is econo-shorthand for the so-called “natural rate” of unemployment, or the lowest unemployment rate consistent with stable inflation. The problem is, as I explore over at WaPo today, it’s an unobserved variable that is increasingly hard to pin down. That makes it an…um…imperfect yardstick for Fed policy.
A few people have asked me about the rumored pick of CNBC host Larry Kudlow to head the Council of Economic Advisers in the incoming Trump administration (I’m never sure if that’s supposed to be an ‘e’ or an ‘o’ in Advis_rs; the WaPo piece just cited has ‘o’ in the headline and ‘e’ in… Read more
The Fed started its December meeting today, one in which they are highly likely to decide it’s time for another rate hike. Prediction markets are posting a 95 percent probability that the Fed lifts their benchmark interest rate tomorrow from a target range of 0.25-0.50 basis points (hundredths of a percent) to 0.50-0.75. I’m confident… Read more
I’ve written very little about the Fed in recent weeks, in part because there’s this other thing going on, but more because I don’t have much to say that isn’t being amply said elsewhere. But it’s not even 9am yet and I’ve already bumped into a number of Fed-related arguments that seem worth weighing in… Read more
Before the first presidential debate fades into the next news cycle, there are three economic points that bear revisiting: We need a new paradigm for trade policy. The outsider campaigns of Trump and Sanders, along with the realities of many people and communities hurt by globalization, have elevated international trade as a major issue in this… Read more