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Wendy Edelberg @wendyedelberg.bsky.social · 8d

The decline in work permit applications among immigrants is stunning. @hamiltonproject.org is tracking this on the regular: www.hamiltonproject.org/data/trackin...

My guess is that labor force growth has coming to a screeching (near) halt.

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Reposted by Wendy Edelberg

Wendy Edelberg @wendyedelberg.bsky.social · 17d

Core inflation is running ~1 pp ABOVE Fed’s target. The reason to look at inflation & yet still cut would be BECAUSE you think inflation is being temporarily boosted by tariffs. If Miran doesn’t think it’s tariffs that are boosting inflation, surely that would make him MORE worried about inflation??

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Wendy Edelberg @wendyedelberg.bsky.social · 17d

Core inflation is running ~1 pp ABOVE Fed’s target. The reason to look at inflation & yet still cut would be BECAUSE you think inflation is being temporarily boosted by tariffs. If Miran doesn’t think it’s tariffs that are boosting inflation, surely that would make him MORE worried about inflation??

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Wendy Edelberg @wendyedelberg.bsky.social · 18d

immigration policy was going to mean actual output needed to weaken in line with weakening potential output. Just, tariff policies (and policy uncertainty) have done the work the Fed would have otherwise had to do. 4/4

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Wendy Edelberg @wendyedelberg.bsky.social · 18d

That means we don’t need the Fed to bring output *down* to potential. I get wanting to take out insurance that the labor trend could accelerate too much, but 3/4

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Wendy Edelberg @wendyedelberg.bsky.social · 18d

I think those worries were overblown because the immigration policy itself would weaken labor demand but… Insofar as those worries were justified, tariff policies seem to have done the work that restrictive monetary policy would have had to do. 2/4

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Wendy Edelberg @wendyedelberg.bsky.social · 18d

In late 2024, many worried that Trump’s immigration policy would mean massive labor shortages & wage (& thus price) inflation. That would have meant output was above potential & the Fed would need restrictive policy. 1/4

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Wendy Edelberg @wendyedelberg.bsky.social · 19d

If Trump wins SCOTUS case, he could claim cause to fire a Fed gov & gov couldn't serve while courts decide if there's really cause. (Cook's suit on that still open.) Yes, big deal. But even if he loses this, new reality for Fed officials unchanged: Trump will come after them with everything he has.

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Wendy Edelberg @wendyedelberg.bsky.social · 19d

Yes

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Wendy Edelberg @wendyedelberg.bsky.social · 19d

Since immigration’s effect on job growth is in the news:
@taraelizwatson.bsky.social & @stanveuger.bsky.social and I explain how breakevens are affected by current immigration policy. There’s lots of uncertainty but my preferred estimates from the paper are in this table.
www.aei.org/wp-content/u...

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Wendy Edelberg @wendyedelberg.bsky.social · 28d

So, UI data will likely lead to downward revision of 0.9m to March 2025 employment level. In spirit of "maybe other data already reflected in policy pointed to a big revision": 3/25 emp (in CES) is running 1.6m higher than what household survey suggests. This revision would close much of that gap.

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Reposted by Wendy Edelberg

Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

Reupping this @bencasselman.bsky.social @colbylsmith.bsky.social @nytimes.com piece from July that lays much of this out.

www.nytimes.com/2025/07/02/b...

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

Reupping this @bencasselman.bsky.social @colbylsmith.bsky.social @nytimes.com piece from July that lays much of this out.

www.nytimes.com/2025/07/02/b...

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

Many worried Trump’s immigration policy meant labor shortages & wage inflation, w/ presumably much lower UR. Co-authors & I argued ⬇️ immigration also ⬇️ spending & labor demand. Add tariff policy effects ➡️ labor demand & supply are about in balance. This labor mkt likely can’t manage much more demand

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

It certainly isn’t normative. And we may need to adjust how we think about a recession insofar as that reflects business cycle weakness & not structural weakness. A useful statistic is the unemployment rate. I wouldn’t expect that to increase just because job growth stays very low.

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

My posts have been too wonky so I‘ll say it plainly:

This jobs report is healthy. It doesn’t mean a “worrying slowdown” or a recession.

Despite the cognitive dissonance, a low UR/low job growth world will be our version of a healthy labor market for years to come under current immigration policy.

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

With @taraelizwatson.bsky.social and @stanveuger.bsky.social we explain how breakevens are affected by current immigration policy. There’s a lot of uncertainty but my preferred estimates from the paper are in the table here.

www.aei.org/wp-content/u...

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 5

With immigration policy as it is, we need to radically adjust our expectations of the employment report. The reason that the unemployment rate can be at a low 4.3% with an increase in jobs of only 22,000 is because 22k is now a healthy payroll increase. And, that number is only going down.

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 4

The workers who are quitting accommodations and food services (eg, hotels and restaurants - disproportionately staffed by immigrants) are not being replaced. Here's job openings.

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Wendy Edelberg @wendyedelberg.bsky.social · Sep 4

I think we're seeing evidence of ⬇️immigration & ⬆️deportations in the accommodation & food service sector. Seems we were at stable 550,000 monthly quits, then March to July: an astonishing extra 610,000 quits. The sector has fewer people to serve, helping to explain why wage growth remains modest.

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Dean Baker @deanbaker13.bsky.social · Sep 4

The Bureau of Labor Statistics projects job growth will average 43,000 a month over the next decade cepr.net/publications... Few immigrants mean fewer workers.

Fewer Immigrants Means Fewer Workers, Less Growth: BLS Labor Force Projections

BLS projects just 5.2M new jobs from 2024–2034 as reduced immigration and retirements slow growth.

cepr.net

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Reposted by Wendy Edelberg

Wendy Edelberg @wendyedelberg.bsky.social · Aug 29

Amplifying @econberger.bsky.social’s point. Waller isn’t right that expected ⬇️ revision to avg employment from 3/24-3/25 suggests weaker job growth in recent months let alone negative. New birth-death model might mean moderate ⬇️ revision, but would leave recent emp growth near my breakeven estimate.

Guy Berger @econberger.bsky.social · Aug 29

5/ As I said, I think it's *reasonable but speculative* to assume that the May-July 2025 data will be revised down eventually, whether in early 2026 or in early 2027.

But it will be out of scope for the preliminary benchmark estimate that I & Waller are eagerly anticipating.

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Wendy Edelberg @wendyedelberg.bsky.social · Aug 29

Amplifying @econberger.bsky.social’s point. Waller isn’t right that expected ⬇️ revision to avg employment from 3/24-3/25 suggests weaker job growth in recent months let alone negative. New birth-death model might mean moderate ⬇️ revision, but would leave recent emp growth near my breakeven estimate.

Guy Berger @econberger.bsky.social · Aug 29

5/ As I said, I think it's *reasonable but speculative* to assume that the May-July 2025 data will be revised down eventually, whether in early 2026 or in early 2027.

But it will be out of scope for the preliminary benchmark estimate that I & Waller are eagerly anticipating.

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Reposted by Wendy Edelberg

Wendy Edelberg @wendyedelberg.bsky.social · Aug 29

It's remarkable to me that markets aren't pricing in monetary policy being set to achieve the goals & whims of the President, who has been clear he wants lower rates because he thinks that will save federal interest costs (true until the day infl expectations rise, pushing interest costs up wildly).

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Wendy Edelberg @wendyedelberg.bsky.social · Aug 29

It's remarkable to me that markets aren't pricing in monetary policy being set to achieve the goals & whims of the President, who has been clear he wants lower rates because he thinks that will save federal interest costs (true until the day infl expectations rise, pushing interest costs up wildly).

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