Justin Wolfers
@JustinWolfers
1.5K Following 452.1K Followers
I woke up early this morning — though perhaps not as early as Bob Hall & Mike Woodford—so that I could explain to the historical context of their Nobel, the work that won the prize, their contributions to the world, and who they are.
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And so it continues... Our economic debates seem utterly disconnected from the reality.
That reality: This is an economy mostly creating healthcare jobs, and it does so month after month, and everything else is just noise.
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The latest version counts phone and internet, but that wouldn't even make sense to economists in 1963. The bigger question is who makes the call about what counts and what doesn't?
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Put a bunch of economists in a room and they can argue about anything, but in the '90s they all agreed to update the poverty measure to include more than just the grocery bill.
It finally happened. That moment in an absent-minded professor's life when I walked into a packed classroom of hundreds of students, and started teaching the wrong lecture. They had all done the reading, so must have known. No-one interrupted me, until a few minutes in.
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Look for choices that still work when the future surprises you.
Economists call that robustness.
Seems useful for picking members for Trump’s AI commission.
Scott Bessent sounds like a parent counting to 3 who’s been stuck at “2 and a half” since 2025.
Another note for silent Kevin, you're gonna have to speak up whether you like it or not. Trillions of dollars are on the move.
Another week, another avalanche of economic news with @svaneksmith
-- The Fed raised rates
-- Inflation eats affordability
-- U.S.-Canada tensions keep rising
-- Poverty is improving (depending on your measure)
-- Trump's $5000 checks
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Think of the current job market like a bathtub.
Right now the water level (unemployment) is low, but the flows are tiny. Almost no one's getting fired. Almost no one's getting hired.
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Credibility is monetary policy's secret weapon.
If a Fed chair convinces you inflation will be low, you start acting like inflation will be low. Restaurants print lower prices, wages settle down, and the expectation becomes the reality.
Belief is half the battle.
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Markets read into every word from the Fed like I used to read into every word in a note from my high-school crush. It felt like trillions of dollars were on the line.
The bond market has figured out that there's no plan to stop borrowing. This year's deficit is the largest postwar deficit outside a recession or war. Trump can say whatever he wants, but the markets are only looking at the bank statements.
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A six year old does not deserve to be in poverty. Full stop.
Every kid in poverty is a policy failure. But since kids don't have separate incomes, you can't help the kid without helping the household they're in. That's the whole political tension.
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Pretty clear to me that the social safety net keeps people out of poverty. That's not up for debate. Instead, people debate who deserves it. You hear names like "welfare queen" get tossed around, but if a person is in need isn't it our responsibility to help?
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Kevin Warsh doesn’t like forward guidance. But it looks like investors are unsurprisingly attached to knowing what the Fed might do next.
Social Security is the largest anti-poverty program in the U.S.
In the latest poverty numbers, the Census estimates it kept 28.8 million people out of poverty. More about poverty here:
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Yesterday, Kevin Warsh said the neutral interest rate is higher than markets think. That's good for homeowners and bad for homebuyers.
Threatening tariffs on other countries because the Fed made a domestic rate decision makes no economic sense, and today's vote made the point for me: 12 out of 12 FOMC members voted for this hike.
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Today's Fed rate hike was about a whole lot more than a quarter percentage point change in rates.
Lemme platypus-splain:
