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Article Artículo

United States

Workers

Labor Market Policy Research Reports, October 2018

CEPR regularly publishes a curated collection of original research from academic institutions and nonprofits on the state of the US labor market. The compilation is part of our ongoing effort to promote informed debate on the most important economic and social issues that affect people's lives.

The Brookings Institution

Seasonally and Weather-Adjusting the Monthly Jobs Numbers
An economist reexamines this month’s Bureau of Labor Statistics (BLS) employment report using three alternative projection methods to account for seasonal weather patterns.

CEPR and Hayley Brown / October 10, 2018

Article Artículo

Trump Tax Cuts: A Little Good Old-Fashioned Crowding Out

(Note: This piece first appeared as a post on my Patreon page.)

The textbook story of what happens if the government runs a budget deficit when the economy is near its potential is that interest rates rise. Higher interest rates then reduce demand in interest-sensitive sectors like residential construction, investment, and car purchases.

Higher rates also lead to a higher-valued dollar. This makes US goods and services less competitive internationally, which means a larger trade deficit. That also reduces demand. The result is that much or all of the demand created by the deficit is offset by the reduction in demand from this crowding out effect.

Of course, the textbooks often underemphasize the intervening step. The Federal Reserve Board could act to prevent this sort of crowding out by committing to keep interest rates low. The risk of doing this is that if the economy is really near its potential, then the excess demand will quickly lead to higher inflation.

It would have been desirable in my view if the Fed had taken this risk and kept interest rates at lower levels, to see how low we could get the unemployment rate. This is especially important since the additional employment would disproportionately benefit the most disadvantaged workers, blacks, Hispanics, people with less education, and people with a criminal record.

CEPR / October 06, 2018

Article Artículo

Economic Growth

United States

The View from the Rear View Mirror: A 'Ten Years After' Critique

CEPR’s senior economist Dean Baker argues in The Housing Bubble and the Great Recession: Ten Years Later that the Lehman event marks the peak of a recession caused by the collapse of the housing bubble. The media’s attention on the failure of Lehman Brothers as the driver of the recession to the exclusion of the bursting housing bubble reveals the class conflict apparent in how the Great Recession was, and still is, reported.

While the fear generated by politicians and media was able to get enough support for saving the financial industry, the country was left to deal with the painful fallout from a collapsed housing bubble. Millions lost their homes and jobs. Even a decade later, by some measures, most notably prime-age employment rates, the labor market has still not recovered.

October 05, 2018

Article Artículo

Government

United States

Sen. Cornyn Unfairly Maligns Consumer Watchdog Agency

On the third day of Brett Kavanaugh’s Supreme Court confirmation hearing, Senator John Cornyn trotted out what has become a staple GOP criticism of the nation’s consumer watchdog agency, the Consumer Financial Protection Bureau. The agency, Cornyn lamented, has “vast powers to get into the personal financial information of every American… really more authority than we would ever give any of our intelligence agencies.” It’s a charge that has been echoed by several of his compatriots on the right, including Chairman of the Senate Committee on Banking, Housing and Urban Affairs, Mike Crapo.

The Consumer Financial Protection Bureau has drawn the ire of Wall Street executives and their allies on Capitol Hill since its inception. Formed in the wake of the 2007-08 financial crisis as part of the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Bureau is tasked with regulating financial products and services and protecting consumers from abusive practices by financial institutions. This has resulted in the return of nearly $2 billion to customers who were duped by credit card companies and refunds of over $60 million to Americans extorted by debt collectors.

CEPR and Hayley Brown / October 03, 2018