Publications

Limited job prospects for disabled workers may indicate that the U.S. labor market is still recovering from the recession. Last year, 4.9 million disabled Americans, age 16 to 64, were either employed or looking for work, which is well below the 5.2 million in the workforce in 2009. WSJ

In a press release yesterday, the Federal Reserve announced that US banks passed their first round of stress tests for the year. The tests, meant to determine whether 34 banks would be able to withstand severe global recession, indicated that the banking sector could endure $493 billion in losses and emerge from a market crash “well capitalized.” FT

Former Federal Reserve Governor Kevin Warsh said yesterday that the Federal Reserve is accountable to Congress and should be open to possible reforms.  Warsh also asserted that the Fed needs to review how it communicates internally as well as with the public in order to ensure transparency and accountability for monetary policy decisions. WSJ
 
The Wall Street Journal reports that congressional Republicans are struggling to agree on a fiscal year 2018 budget resolution, which is necessary to enact tax reform this year.  Some Republican members of Congress want to see significant boosts to defense spending while others seek a balanced budget, meaning there will likely have to be a bipartisan budget agreement as in past years. WSJ
 
President of the Federal Reserve Bank of Philadelphia Patrick Harker says that he supports a pause in interest rate hikes while the Fed begins shrinking its balance sheet.  Harker argues that the Fed has discussed its balance sheet long enough and should take action in the coming months to reduce its holdings of various assets. FT

Charles Evans, President of the Federal Reserve Bank of Chicago, says the Fed can wait until the end of the year to decide whether to raise interest rates again but may start shrinking its balance sheet sooner.  Evans believes that the Fed should wait to see if weaker inflation is transitory or here to stay. WSJ

Martin Wolf of the Financial Times argues that the Federal Reserve is ahead of other central banks in normalizing monetary policy and that the Fed should keep its 2% inflation target. Wolf asserts that the central bank should refrain from further rate hikes for the time being to allow inflation to rise above 2% for a sustained period, allowing Fed officials to prove that their 2% goal is not an upper limit, but a “symmetrical target.” FT

The Wall Street Journal reports that House Speaker Paul Ryan will announce in a speech today that he is still confident that Congress can enact comprehensive tax reform in 2017. However, Republican efforts to pass tax reform face significant hurdles, including disagreement on the substance of the tax reform and the need to first pass both healthcare reform and a federal budget. WSJ

Jason Furman and Rohit Kumar argue in an op-ed that the federal debt limit should be repealed because it no longer effectively constrains how much the government can spend. The authors argue that the debt limit is hardly ever observed and that brinksmanship over its extension is harmful to the U.S. economy and raises borrowing costs for the federal government. WSJ

Jacob Schlesinger of the Wall Street Journal writes that President Trump’s plan to curb steel imports for “national security” reasons has the potential to destabilize the global trade regime. Schlesinger argues that U.S. trading partners will likely impose similar restrictions on U.S. exports in response to any steel import restrictions, which could lead to an all-out trade war. WSJ

The Wall Street Journal reports that financial market volatility has approached record lows around the world in recent months. The authors attribute this to healthy consumer spending and rebounding corporate profits, which have supported equity valuations worldwide. WSJ