Gloves off. It's sickening. Fight for workers, fight against the Fed #TeamWorkers
We are living the first job-full recovery in twenty years. Consumers are buying more, even after adjusting for high inflation. Families who have never had money in the bank, have some. That's good!
Update: "Total nonfarm payroll employment increased by 223,000 in December, and the unemployment rate edged down to 3.5 percent." Inflation is cooling, and unemployment is staying low. GOOOOOOOOD! #TeamSoftLanding
Tomorrow is Jobs Day. Regardless of the print, it will seal the deal: The Person of the Year was the American workers. The Fed tried hard but is not winning its ‘War on Workers.’ With inflation coming down, wage growth solid, jobs coming back, and income up, THE FED WILL LOSE. So, do not tell me good news tomorrow is bad.
Source: Getty Images.
Also, please tell Gita and all the macroeconomists who will be gnashing teeth tomorrow that “resilience” in the labor market is a BLESSING. The United Kingdom, Europe, Asia, and the entire Global South would love to have this ‘concern.’
I am done being nice. I tried. Read my Substack, and you will see it over and over again. American workers, not Wall Street, not price stability, not the Fed, are THE backbone of our country and our economy. Here are three of many posts:
The best way to solve a labor shortage is with labor.
The pandemic caused shortages of goods and workers, leading to inflation. More workers, not fewer customers, is best solution. Higher wages can get us more workers, and Fed interest rate hikes get us fewer customers.
Get the people to the table
The Fed must hire a real person. Here’s an idea: hire one of the contract workers in the cafeteria full-time to work with Jay. Rather than being hell-bent on smaller raises for workers and your credibility, listen to the people your policies affect. Ya ain’t losing your job. Your paychecks at the Board aren’t too shabby now. And I promise you will make a shit ton [technical macro term] of money after you finish with Wall Street jobs and in speaking fees.
Here’s some pushback I got on that argument from an economist:
I question whether she has ever talked to anyone who wasn’t a researcher or lawyer in government employ in DC. Some of the service and facilities workers, they can barely form sentences.
I grew up on a four-generation hog farm in Indiana, shoveling hog shit and holding pigs while my mom castrated them. Since the pandemic, I have talked with her every day. She is a Trump voter, a recently retired medical technician, and my hero.
My mom would be an excellent policymaker as would all my high school classmates, from the Amazon warehouse worker to the car mechanic to the junkyard owner, the lunch ladies and janitors at my junior high, and the men and women who worked on our farm, especially, the Mexican man who did not speak English.
I am not the one out of touch. Elite macroeconomics is.
Trash the tools that don’t work in the real world.
Clinging to the Phillips Curve threatens the U.S. economy. We don’t need a recession; we don’t need sky-high interest rates. We need more workers and investment. This is not an academic debate; our future is on the line.
The NARIU [the sustainable level of unemployment] is a made up number.
I am taking tomorrow off macro. I am pulling for American workers. I am cheering.
Instead, tomorrow morning, I am discussing a research paper on how families spent their Child Tax Credit in 2021. The Fed hiking rates are not the only war we are waging against people.
Poverty, as with jobless recoveries, is a policy choice. Choose better!
My approach to macroeconomics is data-driven, non-partisan, and distinctive. To live that principle, I am self-employed. Your support is greatly appreciated. Here I make the case:
I am going to make a shirt and the only thing it’s going to say is
“I grew up on a four-generation hog farm in Indiana, shoveling hog shit and holding pigs while my mom castrated them.”
Dr. Sahm: I may be biased from my work on Jay Forrester’s National Economic model (in the late ‘70s), but it seems to me that the culprit here is the assumption of cost-push efficacy in creating inflation. Try as we might, we could not create inflation via a wage-price spiral. Demand *always* slackened, hitting profits and subsequent wages.
The wage-price spiral is a just-so story, like so many macro models that have mathematical elegance but lack empirical support.
It’s just as likely that sticky services inflation will lead to goods disinflation. Thank you for fighting the fight. We need to get the FOMC back into the real world.