Today @EconomicSecProj released its Affordability Framework by @chao_becky and me. As affordability remains central to economic and policy debates, it's helpful to step back and examine the key drivers of the current crisis to get a theory of the case. This is what we found. /1

hello old friends, it's been a minute. Time to lock in and update these for a whole new post-shutdown jobs Discourse, starting tomorrow morning. (Note: make sure none of these catch on fire because a month of CPS is missing.)

ICE agents pepper sprayed a baby girl. The baby girl, mother and father are all US Citizens - just in case you thought your family was safe. Rafael Veraza was spending his weekend like any other dad, on a grocery run with his wife and baby daughter at Sam’s Club. When they

I like Mike's recommended approach, which says that the central bank should aim to keep inflation within a range to provide scope to respond to real shocks, while tracking a price level path over time. Perhaps we could call it "flexible average inflation targeting"?

https://t.co/37eZh2eFgk (cc @JustinBloesch @TheStalwart @M_C_Klein )

New post, making sense of the Fed's week, and also bringing in some worthwhile Canadian and Australian macro initiatives: Does a Target Range Make Sense of the Fed's Actions? (link next)

Why aren't families having more babies? This brand new paper argues that part of the reason is because childcare is so expensive. "A 10% increase in the price of childcare leads to a 5.7% decrease in the birth rate"

This was a great conversation (with some notable clips in thread).

Is there a smart MAGA-reflected account for why Trump II has gone so soft on China? Lobbying to Trump is an obvious one. That they are more concerned about Europe as our adversary fits (and tracks the NSS shift). Just the AI-sector's influence? I feel like I'm missing something.

Juuuust a bit outside

I loved my time at Heritage Action and was proud to be a co-founder of what was such an important part of the conservative movement. So I say this with respect and sadness: There is nothing conservative about backing threats to a state’s federal funding because it declines to

Got state-level unemployment today. So far this year overall unemployment increased 0.35%. The admin says this is all immigration related. However there's *no* significant correlation between state-level unemployment increases and noncitizen population. Unemployment is just up.

True across measures. Note that peak 2022 inflation saw real wages falling even as nominal wages were increasing. Quarters come and go, but reason to believe inflation stays higher a bit longer, while wages continue to decelerate. May need to take a + off the A+++++ economy.

Here we go: real wages just fell for the first time since 2022. We got quarterly ECI this morning, which economists and the Fed follow closely for wage trends, and for Q3 it fell below inflation. This is as inflation picks up, and the labor market and wages further weaken.

This is the last thing that domestic toy makers want to hear. They’ve already been hit by $1 billion in tariffs and plenty are grappling with a drop in sales. Now Trump is pushing austerity before Christmas https://t.co/BdBpSKQQit

https://t.co/vZNJwTI13x

Classic scene to revisit under our new 'fewer toys' economy. "Now what happens to all the toys that are supposed to be in those stockings? Nobody buys them. The toy manufacturers are going to like that; so they have to lay off a lot of their employees..."

POLITICO: I wonder what grade you'd give the economy  TRUMP: A+ POLITICO: A+? TRUMP: A+++++

I will say that get proper microfoundations did help me navigate the weird politics of pronatalism on the left. It helps to ground your thinking in toy models people! https://t.co/7Dk2o6k6D9

A post for the real ones, where we stress test our new fertility take by using the baby Bellman equation, baby first-order conditions, and the baby envelope theorem to get: The Baby Euler Equation. (Link next.)

In collaboration w/ @Groundwork & @MorePerfectUS, we convened hundreds of volunteers from across the country to investigate Instacart’s AI-assisted pricing experiments at popular grocery stores like Target & Kroger. Read our full investigation below: