Sunday, May 6, 2018

Bill Mitchell — US labour market tepid – there is plenty of scope fiscal expansion

On May 4, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – April 2018 – which showed that total non-farm employment from the payroll survey rose by just 164,000 in April, which was an improvement on the very modest rise in March. The Labour Force Survey data, however, showed that employment only rose by 3 thousand) in April 2018 but was accompanied by a substantial fall in the labour force (236 thousand) which meant that total unemployment fell by 239 thousand. The unemployment rate fell to 3.93 per cent (from 4.07) but this does not signal a stronger labour market. There is still a large jobs deficit remaining. Finally, there is no evidence of a wages breakout going on. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.
Bill Mitchell – billy blog
US labour market tepid – there is plenty of scope fiscal expansion
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Bond Economics
Why The U.S. Labour Market Befuddles Forecasters
Brian Romanchuk


Matt Franko said...

“society demands that inflation be forecast”.

The highest ranked economist in the USA Janet Yellen just said they don’t really know what inflation is... so how can you forecast something that you don’t even know what it is????

Noah Way said...

The highest ranked corporate bank stooge ...

There, fixed it for you.

Tom Hickey said...

It's not exactly true that "we don't know what inflation is."

The correct way to state this is we know know exactly what inflation is in a way that we could write an equation that covers it and allows for accurate forecasting — because there are so many contingent factors involved in change in price level.

That is to say, change in price level is contingent on many factors rather than determined by a few parameters and variables, while holding everything else equal (cet. par.). It's complex, and this is no model with accurate forecasting power.

Quantity threory of money blew up, and so has the assumption of NAIRU and Phillips curve.

So what Yellen is saying is that the Fed doesn't have a very accurate model.

This is important since central banks are suppose to have the best models and data, owing to their privileged position in the economy. So the assumption is that if the Fed doesn't have a great model, then no one else does. In that case, we really don't know what inflation is.

Matt Franko said...

There is no ‘inflation’ except as the monetarists define it..

Matt Franko said...

“Federal Reserve Chair Janet Yellen acknowledged that the fall in inflation this year was a bit of a “mystery”

“Mystery” means you don’t know what it is...

“We don’t understand gravity it’s been a mystery!” Means you don’t know what gravity is...