Good post. Jared, you have written about how we need stronger unionization to boost workers. Aren't the last 2 months of declining real wages despite higher inflation and relatively low unemployment prima facie evidence that inflation has a very weak link to wage growth in America today? Isn't it more evidence that the Phillips Curve should go into the dustbin? (I and many other healthcare professionals get 2% raises a year, without regard to our job performance and the only way to get more is to give notice or switch jobs.)
You’re right: it’s getting really difficult for the Fed to “look through” one-time price shocks. But it’s not too difficult to look at the three root causes you enumerated and ask how increasing consumers’ debt servicing costs is going to end the Iran war, kill tariffs or moderate AI input costs (electricity). OK, I know: the “real problem” is that the increasing cost of living might lead to demands for higher wages. The horror. Gee, higher wages might tempt people to waste it all on goods and services.
Quoting "The problem is that in Trump’s alt reality, ...", with only slight artifice, I can claim being fully on-topic by bringing up a recent alt reality case developing.
So, on the two items which the shutdown at the end of last year were over, the items that the Dems unsuccessfully fought for, being the coming early 2027 OBBB cuts mainly to the ACA expanded Medicaid (including but not limited to new work requirements), and the ACA expanded subsidies that the Republicans made lapse 1/1/26,
It seems the administration has prepared highly questionable research indicating a large reduction in poverty due to the work requirements for expanded Medicaid making a lot of people get out of poverty by choosing to work.
Jonathan links to some non-paywalled analysis of the issue by a pair of health economists here:
2) You might remember that I plopped down a link yesterday to my own post on the other half of the cuts: the lapsed expanded subsidies. In particular, that the observed coverage drops are high, that the information on the numbers of drops seems to be being delayed by the administration, and that misleading claims from the administration that the large drops are due mainly to the administration's successful reduction in fraud are forthcoming.
Anyway, the latest Amanpour alerted me that the interview is evidence that POTUS may be preparing to claim the coming midterms are rigged, and to take questionable actions to prevent that rigging.
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(So, if your interests are health insurance (as mine are), and the prevention of the collapse of our democracy, unfortunately the macro stuff is important, interesting, but probably number 4 on the list of important news. 😊)
For 1st time, Kevin Warsh chairs Federal Open Market Committee (FOMC) meeting next week. I will be looking to hear whether Warsh pushes his line that the underlying inflation trend looks good as measured by PCE Trimmed Mean = 2.35% annual rate year to April 2026. If yes, will the FOMC minutes show other FOMC members pushing back by citing core PCE inflation = 3.3% (less food and energy).
Thanks, Jared. I truly like your clear and down-to-earth posts. Thank you.
Good post. Jared, you have written about how we need stronger unionization to boost workers. Aren't the last 2 months of declining real wages despite higher inflation and relatively low unemployment prima facie evidence that inflation has a very weak link to wage growth in America today? Isn't it more evidence that the Phillips Curve should go into the dustbin? (I and many other healthcare professionals get 2% raises a year, without regard to our job performance and the only way to get more is to give notice or switch jobs.)
You’re right: it’s getting really difficult for the Fed to “look through” one-time price shocks. But it’s not too difficult to look at the three root causes you enumerated and ask how increasing consumers’ debt servicing costs is going to end the Iran war, kill tariffs or moderate AI input costs (electricity). OK, I know: the “real problem” is that the increasing cost of living might lead to demands for higher wages. The horror. Gee, higher wages might tempt people to waste it all on goods and services.
Quoting "The problem is that in Trump’s alt reality, ...", with only slight artifice, I can claim being fully on-topic by bringing up a recent alt reality case developing.
So, on the two items which the shutdown at the end of last year were over, the items that the Dems unsuccessfully fought for, being the coming early 2027 OBBB cuts mainly to the ACA expanded Medicaid (including but not limited to new work requirements), and the ACA expanded subsidies that the Republicans made lapse 1/1/26,
1) a great Jonathan Cohn post came out yesterday on the former (behind a bulwark Substack paywall :https://www.thebulwark.com/p/donald-trump-incredibly-misleading-downright-outrageous-case-medicaid-cuts-work-requirements .)
It seems the administration has prepared highly questionable research indicating a large reduction in poverty due to the work requirements for expanded Medicaid making a lot of people get out of poverty by choosing to work.
Jonathan links to some non-paywalled analysis of the issue by a pair of health economists here:
https://donmoynihan.substack.com/p/the-trump-administrations-dubious , for those interested.
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2) You might remember that I plopped down a link yesterday to my own post on the other half of the cuts: the lapsed expanded subsidies. In particular, that the observed coverage drops are high, that the information on the numbers of drops seems to be being delayed by the administration, and that misleading claims from the administration that the large drops are due mainly to the administration's successful reduction in fraud are forthcoming.
That post is here:
https://normspier828307.substack.com/p/loss-of-aca-coverage-after-republicans
3) If we're on alt reality, really we can't really miss JB's remarks of yesterday (https://econjared.substack.com/p/good-job-ms-welker-please-keep-it ), on the Welker interview, where the storming out was over Trump's being challenged on his claim that he won the 2020 election. (Why not enjoy the video? : https://youtu.be/4EusZcKt5fs?si=YmEPn8oIXbRGlHcK&t=2270 )
Anyway, the latest Amanpour alerted me that the interview is evidence that POTUS may be preparing to claim the coming midterms are rigged, and to take questionable actions to prevent that rigging.
--
(So, if your interests are health insurance (as mine are), and the prevention of the collapse of our democracy, unfortunately the macro stuff is important, interesting, but probably number 4 on the list of important news. 😊)
For 1st time, Kevin Warsh chairs Federal Open Market Committee (FOMC) meeting next week. I will be looking to hear whether Warsh pushes his line that the underlying inflation trend looks good as measured by PCE Trimmed Mean = 2.35% annual rate year to April 2026. If yes, will the FOMC minutes show other FOMC members pushing back by citing core PCE inflation = 3.3% (less food and energy).
How will the passage of huge increases in government spending, impact the economy? At what point does increasing debt matter?