Given the Fed’s recent framework revisions and forward guidance commitment to maintain current interest rates until “maximum employment” is achieved, the Fed’s communication with respect to its assessment of “maximum employment” is overdue for a clarification.
This post is the first in a series that uses the history and economics of the American semiconductor industry to ask big picture questions about the future of fiscal policy and industrial policy.
Commentary about the Biden administration’s proposed fiscal relief policies has relied heavily on estimates of the economy’s potential output. However, few commentators or policymakers look under the hood to check how these estimates are calculated.
The Framework Review and Forward Guidance center labor market outcomes over inflation in evaluating interest rate policy. However, the Fed haven't clarified how they will evaluate inflationary dynamics under the new regime.
While The Shock may have ended, labor market indicators suggest that we still need to respond appropriately to The Slog if we are to avoid a repeat of the lackluster “jobless recovery” following the 2008 crisis.
