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Tuesday, December 12, 2017

Bernstein: Catching up on links [feedly]

Catching up on links

A number of pieces you might want to check out:

–I use the Illinois gubernatorial election, dominated by candidates with $ to burn, to raise concerns about money in politics: are these elections or auctions?

–The Trump admin is stealthily taking down the guardrails intended to regulate against the shampoo economy: bubble, bust, repeat. Over at the NYT.

–Riffing off of last weeks employment report, which showed solid job growth but weak wage growth, I use a simple model to show nominal wage growth should be faster given our low unemployment rate.

Source: BLS, my analysis

In my brevity re the above post, I left out a key factor right now that's partially holding back nominal wage growth: slow productivity growth. That shaves about half-a-percent off the forecast, but it doesn't fully explain the gap. On the other hand, in a more detailed model, Fed Chair Yellen finds slow productivity growth largely offsets diminished slack.

Measurement aside, the point is that slow productivity growth is a clear drag on wage growth. In that regard, if the recent acceleration in productivity growth should hold–it's way too soon to tell–that should bump up wage growth. However, as I've argued forever, in our age of inequality, what helps at the average doesn't fully pass through to the median.

 -- via my feedly newsfeed