Publications

Ian Talley of the Wall Street Journal argues that although the U.S. economy is in its third-longest expansion, there are a number of key underlying weaknesses. Talley points to increasing levels of public debt, weak investment spending, and an aging workforce as structural headwinds for economic growth. WSJ

Robert Samuelson of the Washington Post writes that the usual relationship between wages and inflation has weakened, meaning that inflation may remain subdued despite an uptick in economic activity. Samuelson states that the breakdown of this relationship may be due to globalization and automation, which have eroded workers’ bargaining power for higher wages. WaPo

Reuters reports Minneapolis Federal Reserve Bank President Neel Kashkari says that the Fed should not be raising interest rates on account of cooling inflation and weak wage growth. Kashkari was the lone dissenting vote against the June interest rate hike, stating that there likely is still slack in labor markets. Reuters
 
The Wall Street Journal reports that about two-thirds of contractors and builders who are having difficulty finding labor are struggling to finish projects on time.  Industry officials warn that if the administration goes ahead with its proposed $1 trillion infrastructure program the labor shortage will get even worse, leading contractors to turn down even more projects than they do today. WSJ
 
Janet Yellen stated on Tuesday that globalization and technological change have been harmful to a large share of the population. Yellen also said that it is challenging to help those who have lost jobs and suffered on account of offshoring and technological change, as problems like increased death rates and rising drug use have worsened in recent years. WSJ

The International Monetary Fund (“IMF”) has lowered its forecast for U.S. economic growth in 2017 and 2018 to 2.1%.  The IMF does not expect tax reform or significant infrastructure spending to boost economic activity either this year or next, and the organization believes that structural problems such as an aging population and lagging productivity will hinder growth. WSJ

The Wall Street Journal reports that the Trump administration has begun to hold public hearings regarding its plan to renegotiate the North American Free Trade Agreement (“NAFTA”).  The public hearings will include testimony from leading trade groups, academics, and other industry leaders who hope to influence the administration’s discussions with Mexico and Canada. WSJ

The Wall Street Journal reports that President Trump’s proposed tariffs on steel imports have received opposition from senior leaders on both sides of the aisle.  Opponents say that the tariffs could raise the costs of inputs for U.S. consumers of steel and could also cause retaliatory policies by U.S. trade partners. WSJ
 
Richard Rubin of the Wall Street Journal writes that congressional Republicans have proposed eliminating the tax deduction for interest paid on debt. Rubin argues that the elimination of this deduction could have an outsized effect on the U.S. finance and agriculture industries, as both firms and individuals would struggle to raise and service debt cheaply. WSJ
 
The Bank for International Settlements (“BIS”) on Sunday warned that escalating worldwide protectionist sentiment could threaten the global economy. In its annual report, the organization claims that rolling back globalization could be just as damaging to robust economic growth as reversing critical technological advancements. WSJ