Author Archives: Menzie Chinn

October Employment Release: Market Improvement, but Not Yet Tight

The October employment release was much in line with expectations. I will focus my observations on a few observations:
(1) Alternative indicators indicate better improvement than headline (estimated) nonfarm payroll employment; (2) estimated nonfarm payroll employment has been revised upward over the past couple months; (3) estimated employment compensation growth remains muted, especially after taking into account catch-up and estimated productivity gains.

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Known Unknowns in Macro

Reader Tom argues that economic discourse should not include discussion of variables that are unobservable, to wit (or at least indicate that it’s an estimate):

You announce somebody’s estimations of a theoretical, unobservable phenomenon as “the output gap” or “the actual output gap” as if you and they actually know them to be the output gap.

If we used this criterion, what variables would be ruled out from polite conversation? A lot…let’s just take the real interest rate.

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