Wendy Edelberg
@wendyedelberg.bsky.social
Senior Fellow in Economic Studies at Brookings. Previously, director of The Hamilton Project at Brookings and before that chief economist of CBO.
Reposted by Wendy Edelberg
...as part of this event @wendyedelberg.bsky.social reviewed an extensive literature & created a practical & useful taxonomy for thinking about types of supply shock and transmission channels on inflation. Highly recommend!
www.brookings.edu/articles/a-t...
www.brookings.edu/articles/a-t...
A taxonomy of supply shocks and their effects on inflation | Brookings
www.brookings.edu
November 24, 2025 at 5:04 PM
...as part of this event @wendyedelberg.bsky.social reviewed an extensive literature & created a practical & useful taxonomy for thinking about types of supply shock and transmission channels on inflation. Highly recommend!
www.brookings.edu/articles/a-t...
www.brookings.edu/articles/a-t...
@jrothst.bsky.social makes excellent points & language is important. I'm estimating "full employment" ~given~ cruel immigration policy. To measure slack, Fed compares actual labor mkt to estimate of current "full emp" (also dicey language as that estimate generally means UR is high for some groups).
October 30, 2025 at 3:16 PM
@jrothst.bsky.social makes excellent points & language is important. I'm estimating "full employment" ~given~ cruel immigration policy. To measure slack, Fed compares actual labor mkt to estimate of current "full emp" (also dicey language as that estimate generally means UR is high for some groups).
The old rules—100k-200k jobs/month = healthy—no longer apply. My concern: if the Fed thinks the labor market is weakening when it's actually adjusting to a smaller population, they could overshoot. So far, an UR of 4.3% suggests labor demand and labor supply are moving down together. 5/5
October 30, 2025 at 2:05 PM
The old rules—100k-200k jobs/month = healthy—no longer apply. My concern: if the Fed thinks the labor market is weakening when it's actually adjusting to a smaller population, they could overshoot. So far, an UR of 4.3% suggests labor demand and labor supply are moving down together. 5/5
I appreciate why the Fed cut 2x - makes sense as insurance. Tariffs will keep pushing up inflation, but if expectations stay anchored, Fed should "see through" this. On December: if unemployment stays low & employment growth remains around ~20-30k, standing pat on rates will likely make sense. 4/5
October 30, 2025 at 2:05 PM
I appreciate why the Fed cut 2x - makes sense as insurance. Tariffs will keep pushing up inflation, but if expectations stay anchored, Fed should "see through" this. On December: if unemployment stays low & employment growth remains around ~20-30k, standing pat on rates will likely make sense. 4/5
This creates cognitive dissonance: Low unemployment (healthy!) + low employment growth (weak?) can BOTH be true when labor supply isn't growing. This combination—possibly even negative employment growth—is our future. It's not a bug, it's a feature of current immigration policy. 3/5
October 30, 2025 at 2:05 PM
This creates cognitive dissonance: Low unemployment (healthy!) + low employment growth (weak?) can BOTH be true when labor supply isn't growing. This combination—possibly even negative employment growth—is our future. It's not a bug, it's a feature of current immigration policy. 3/5
Immigration has been THE driver of US labor supply growth. This year, net immigration is likely NEGATIVE. That means for the labor market to be healthy and balanced, we actually NEED low labor demand and low employment growth. We need to recalibrate what "good" looks like. 2/5
October 30, 2025 at 2:05 PM
Immigration has been THE driver of US labor supply growth. This year, net immigration is likely NEGATIVE. That means for the labor market to be healthy and balanced, we actually NEED low labor demand and low employment growth. We need to recalibrate what "good" looks like. 2/5
Reposted by Wendy Edelberg
next year isn't going to be fun
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...
@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...
October 9, 2025 at 4:40 PM
next year isn't going to be fun
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
September 19, 2025 at 1:22 PM
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
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
September 19, 2025 at 1:22 PM
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
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
September 19, 2025 at 1:22 PM
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