Publications

The New York Times reports that U.S. Trade Representative Robert Lighthizer said that it is unclear whether the U.S., Canada, and Mexico could reach an agreement to overhaul the North American Free Trade Agreement (“NAFTA”). Negotiators say that redesigned NAFTA would need to be largely finished by the end of this year, as looming elections in all three countries are likely to stall talks. NYT

According to The Wall Street Journal, Senate Republicans are considering a budget that would allow for up to $1.5 trillion in tax cuts over the next decade.  If passed, the budget would let Republicans avoid eliminating certain tax breaks to pay for the cuts. WSJ

Nick Timiraos of the Wall Street Journal writes that while the Federal Reserve is set to announce the unwinding of its massive balance sheet, it is unclear what the target size of its portfolio is.  The Fed has maintained a balance sheet of roughly $4.5 trillion since the recent financial crisis, and even after paring back, experts expect the final size of the Fed’s portfolio to be well above the pre-crisis levels due to how the Fed makes changes to short-term interest rates. WSJ

In a Wall Street Journal op-ed, William Isaac and Richard Kovacevich argue that the Federal Reserve should target a lower inflation rate in the future. The authors contend that low inflation has benefited workers and the American middle class, who have experienced sluggish nominal wage growth but have seen some real income gains due to persistently low inflation. WSJ

The Wall Street Journal reports that new survey data show that business are increasingly using payroll dollars for performance-based pay rather than guaranteed raises. According to the survey, two-thirds of firms plan to use merit pay to encourage employee performance while a quarter of firms said they would reduce or eliminate raises for low performers. WSJ

Patricia Cohen of the New York Times writes that despite record-high median real household incomes in the United States, many Americans still face stagnant wages and rising inequality. Cohen argues that despite higher median earnings, younger generations are actually making less over their careers than older generations, which has contributed to widening inequality. NYT

The Wall Street Journal reports that new Census Bureau data show that the share of Americans who moved to a different residence last year fell to its lowest point in a decade. Research shows that the stagnation is entirely driven by people under the age of 29, while older workers and those near retirement age are actually relocating more than in the past. WSJ

The Wall Street Journal reports that Republicans plan to release their tax reform plan during the week of September 25th.  Congressional Republicans also announced that they plan to finish the budget process by mid-October, at which point they could begin voting on the tax plan in hopes of completing the process before year’s end. WSJ

Greg Ip of the Wall Street Journal writes that recent, weak inflation is forcing the Federal Reserve to decide between lowering its inflation target or allowing the economy to overheat. Ip argues that to stimulate inflation, the Fed must allow the unemployment rate to drop even further and leave interest rates unchanged, which could overheat the economy or allow asset bubbles to form. WSJ

According to the Wall Street Journal, sand suppliers have begun buying large tracts of land in West Texas in order to mine and sell the sand to oil drillers in the Permian basin. As energy prices crashed in 2014, drillers were forced to cut costs and produce oil more efficiently, which resulted in greater use of frac sand in horizontal wells. WSJ

The Wall Street Journal reports that the median inflation-adjusted U.S. household income rose to a new record of $59,039 in 2016. While government officials cautioned against historical comparisons due to methodological changes, the number reflects the current economic expansion which, at nine years, is the third-longest such expansion in U.S. history. WSJ

Eric Morath of the Wall Street Journal argues that the current record-high number of job openings may overstate the tightness of the labor market. Morath writes that a glut of openings in low-skill jobs as well as lower search costs for employers could be driving the increase in openings, and that we would expect faster wage growth if the labor market were truly tight. WSJ

According to the Financial Times, Hurricanes Harvey and Irma are unlikely to cause enough economic damage to alter the Federal Reserve’s rate hike path. While many expect the damage from the storms to detract 0.5 — 0.8% from third quarter GDP growth, the economic effects will likely only be transitory and thus will not warrant response from the Fed. FT