Econ professor at Michigan ● Senior fellow, Brookings and PIIE ● Intro econ textbook author ● Think Like An Economist podcast ● An economist willing to admit that the glass really is half full.
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The lifetime return to college remains enormous: four years of study adds more than a million dollars to expected earnings. And that yields a funny conclusion that I like to remind my students about: It may not feel like it, but these might be the highest earning years of your career.
It's his imagination and we're just lucky to be living in it.
A friend (okay, the youtube algorithm) just reminded me of this lovely—and very personal—interview I did with Jack Stafford (@podsongs). It's a brilliant conceit: He interviews you about your life and work, then draws it all together into a song. www.youtube.com/watch?v=CJh3...
You've got 97 seconds to summarize the labor econ literature on how to obtain causal estimates of the returns to education. Go.
Big turnout for the first day of Econ 101. #GoBlue
Promise tariffs ⟶ faff around ⟶ announce tariffs ⟶ pause tariffs ⟶ promise deals ⟶ court rules tariffs illegal ⟶ appeal ⟶ court order stayed ⟶ make no deals ⟶ 90 days expires ⟶ delay tariffs again ⟶ announce tariffs again ⟶ appeals court rules tariffs illegal again ⟶ you are here
Back-to-school reminder: The market rewards education Average earnings: High school dropout | ### ($35k) High school grad | ##### ($47k) College degree | ######### ($87k) Masters degree | ########### ($106k) Professional degree | ##################($184k)
There's going to be a lot of dumb political noise following this decision, so it's worth being clear about the key finding. It does not ban tariffs. It simply says that you have to convince Congress.
The decision is here: storage.courtlistener.com/recap/gov.us...
This won't end all tariffs. This ruling applies to tariffs applied to entire countries (which is most of the tariff agenda). The industry-specific tariffs use a different legal authority, and will remain. The White House has other (more limited) tariff powers it'll dust off.
BOOM. The federal appeals court rules Trump's tariffs illegal, because they are. There's no national emergency, and so the power to tariff a country rests with Congress. Trump admin has lost at every stage of the process, but stay tuned for the Supremes to chime in.
And a big thank you to @anacabrera.bsky.social and her team for giving me the opportunity to step outside the news cycles and teach the world economics. Hopefully these snack-sized morsels make econ a bit more digestible.
This week's edition of #TheProfessorIsIn is a back-to-school special, we explore what economists have learned about the effects of education in boosting your wealth, health, and happiness. www.youtube.com/watch?v=TwKF...
"so he's got the reins of power, but he's lost the battle of ideas."
Soft data (sentiment) says people are gloomy. Hard data (spending) is distorted by tariffs. Markets? Helpful, but hormonal. Diagnosing the economy right now is like reading tea leaves in a hurricane. The right posture: humility.
No, the economics profession does not suggest ignoring negative consequences of economic activity. Quite the opposite. This comes under the study of "externalities" which is a key part of every econ education. The problem is getting politicians to listen, and make (politically) hard choices.
Econo-podcast-chat-teach-ing -- this time with my friends at The Tent Pod -- on the economy, Fed independence , tariffs, official statistics, nationalizing Intel, and my Big Economic Solution. (Spoiler: Not that big, not that radical.) www.youtube.com/watch?v=teOI...
They're now saying it out loud: The Administration's goal is to undo the political independence that Congress granted the Fed, so that the President can directly set rates.
It's a good moment to brush up on the economics of central bank independence. Fortunately this was the focus of a recent segment of "The Professor Is in," which has aged remarkably well. Trigger warning: Earnest, explainer-ish, presents competing arguments honestly. www.youtube.com/watch?v=fBVu...
"Justin, fact check this for us, because earlier today the President said there's no inflation." Lemme serve up a heaping pile of truth on a bed of context, and do so with a smile.
I know, I know, another podcast. But this one let me play professor: Dig in to the underlying economics of Trump's attempt to strong arm the Fed, how it undermines Fed independence, why it matters, what might happen, and how he's actually undermining his own goals. open.spotify.com/episode/7bzj...
Case study: Erdogan replaced technocrats with loyalists and kept rates low when they needed to rise. Inflation soared to 86%, and is still painfully high. That’s the playbook Trump's floating. Keep the Fed independent if you want low inflation without the drama.
What problems are solved by the government becoming a passive investor in Intel? Some simple analytics: If the government truly remains a passive investor -- as it promises -- this simply shifts stock certificates from one safe, to another, and nothing else changes.
Perhaps more fun: We recorded a short vid to promote the contest, but accumulated an extensive blooper reel along the way. It turned out to be surprisingly delightful. Have fun at our expense... www.youtube.com/watch?v=tHlA...
Want @betseystevenson.bsky.social or me to give a talk to your intro econ class? My publisher is running a fun contest: If you win, one of us will fly in to give a guest lecture in your class. (No, 2nd prize isn't two lectures.) Enter here: go.macmillanlearning.com/SW3e.html #TeachEcon
“As well as sharing conspiracy theories, the account bearing [Trump nominee for BLS Commissioner, EJ] Antoni’s name repeatedly used violent rhetoric to declare how far it was willing to go to ensure Trump secured a second term in office.”
Turkey is the cautionary tale. Erdogan swapped economists for loyalists and forced low rates. Result: inflation peaked at 86%, still painfully high. That’s the movie you don’t want a sequel to. Posting the full interview over on my fledgling youtube channel: youtu.be/faKG7dtmxtU
A “tariff rebate check” is like setting your kitchen on fire and then mailing yourself a bucket of water. There's an easier way to avoid the burn.
Undermining the Fed to get lower rates now is like ripping the batteries out of your smoke alarm because it’s beeping. It’s quiet for a bit. Then your house burns down. Credibility anchors expectations; expectations anchor inflation.
If a president can fire a Fed governor on accusation, not cause, monetary policy shifts from the Fed to the White House. Goodbye independent Fed; hello maga Fed, and watch decades of hard-won credibility turns to dust. Posting the entire interview on youtube as an experiment. youtu.be/DpSqbqQde3Y
If a president can fire a Fed governor on accusation, not cause, monetary policy shifts from the Fed to the White House. Goodbye independent Fed; hello maga Fed, and watch decades of hard-won credibility turns to dust. Posting the entire interview on youtube as an experiment. youtu.be/DpSqbqQde3Y
Compromise suggestion: The President can redesign the Cracker Barrel logo, and the Fed can set interest rates.
Jay Powell has been attacked by the president — in terms no economist alive would support. Yet he’s kept the Fed independent, and steered us to a soft landing. That’s a legacy to be proud of.
The Fed fights back.
Calling tariff revenue a “windfall” is like calling your speeding ticket a bonus for the police budget. Sure, it’s revenue. But for you, it’s a tax.
Wow, I didn’t even know I was being considered.
If I sound a little unhinged here, it's because I don't know what else to think.
Thoughts -- and a few analytic points -- on Intel becoming a partly state-owned enterprise. www.youtube.com/watch?v=BkBk...
A lovely FT writeup is here: www.ft.com/content/727d... And the full research paper is here: iacmr.org/wp-content/u..., showing that Trump is following the standard populist playbook, undermining courts, the media, and institutions.
A careful study of every populist episode since 1900 finds catastrophic consequences, which play out slowly. On average, incomes fall behind by nearly 15% over 15 years. For the U.S., this is a cost of about $13k per person per year. Over a lifetime, that's million bucks.
"f you look at the short list of people being considered for the Fed chair job, at least half of them are totally credible, serious economists. They're not necessarily the folks I'd choose, but they're very serious people. The bad news is that half of the group are charlatans."
I enjoyed a nice long chat with Jen Rubin over at The Contrarian today, touching on the Fed, the sort-of nationalization of Intel, the state of the economy, and the rise of state control. Tune in here: contrarian.substack.com/p/justin-wol...
No-one knows how this ends. And so the narrative shifts from pointless tariff uncertainty to pointless monetary uncertainty, and none of this helps the American people.
If Trump were operating in the best interests of America's businesses, his move to fire Lisa Cook would cause stocks to shrug, or maybe rise. But they're saying: This is dangerous. This move serves Trump, but not America. Our economy is at risk when the President undermines the Fed.
Trump fires Lisa Cook in an unprecedented move, and immediately the US dollar sinks against the Yen (in red), the Euro (teal), and the British Pound (purple). Stocks are also sorting it out, but down around a quarter point. Point is: Markets don't think this is move helps American business.
Yes, the stakes here are large. Very large.
The start of the school year in Ann Arbor: sunshine, nervous energy, and the best & brightest arriving from all around the country and the world for a glorious adventure. The opening chapter of so many extraordinary stories. I’m thrilled to be part of it—teaching Econ 101 this afternoon. #GoBlue
August 7: Trump demands Intel fire its' CEO, Lip-Bu Tan August 11: Trump meets with Lip-Bu Tan August 22: Trump announces purchase of 10% of Intel, and that "I negotiated this Deal with Lip-Bu Tan, the Highly Respected Chief Executive Officer of the Company." ¯\_(ツ)_/¯
something something collective ownership of the means of production
And so apparently this is what we're doing.
Trump: "They gave me $600 billion. And that’s a gift... That’s not a loan... There’s nothing to pay back. They gave us $600 billion that we can invest in anything we want.” European Union: Me: “He didn’t get a penny” White House spox: ”Pointless nitpicking” www.cnn.com/2025/08/22/p...
National security may justify paying more for AI chips. It doesn’t justify buying stock in Intel. Specific problems need specific solutions, not the stock-picker-in-chief making bets with our bucks.
He campaigned on lowering costs. He governed by raising them—tariffs are taxes on consumers. And his pressure on the Fed risks unleashing even more inflation.
My Jackson Hole preview: Nothing Powell says will matter as much as Trump failing to land the “$600b EU donation.” That shock leaves the economy ~2% smaller—about $5,000 per household. Rare to see an economic hit this large, this negative, or this unexpected.
Following news that Trump didn't get a $600b donation from the EU, the Administration is surely marking down their econ forecasts (this is 2% of GDP!), rejiggering the budget as this shortfall is more than 2x tariff revenue, and providing support for families who had anticipated their $5,000 share.
Two of my favorite coauthors, and the leading textbook authors of their respective generations -- Greg Mankiw and @betseystevenson.bsky.social -- in today's @nytimes.com dig into what Trump is doing to the economy. www.nytimes.com/2025/08/21/o... (gift article)
Think of BLS data as the economy’s highway system: invisible, vital, taken for granted. Corrupt it, and every decision—from Fed policy to plant openings—crashes. Good stats → Good choices → Higher living standards. Bad stats → Bad choices → Lower living standards.
I expect there will be soul-searching, an investigation, and recriminations, as the White House explores how its negotiators fell $600 billion short of the deal the President thought he had struck. Resignations seem likely, and a re-think of the entire deal-making apparatus.
Bottom line: The final text of the EU-US trade deal delivers $5,000 less to the average American household than the handshake agreement Trump boasted of on August 5.
Text of the US-EU trade deal is out: www.whitehouse.gov/briefings-st... The most important thing is what's not there. Trump had boasted "They gave me $600 billion, and that’s a gift." But guess what? They didn't. He didn't get a penny.
He's never run a Bureau, has no expertise about Labor, and has no expertise in Statistics, suggesting that merit has nothing to do with Trump's decision to nominate him to lead the Bureau of Labor Statistics.
Corrupting economic statistics will change our economic reality. Here's how: Tariffs raise prices. Social Security is indexed to inflation. If Trump tells a partisan BLS head to downplay inflation, seniors' social security checks won't keep up. Rigged stats = stolen benefits.
You can’t bend reality; you can shatter trust. Politicized stats fool no one—markets, the Fed, and CEOs will ignore propaganda—but they will all suffer without reliable data. Break the thermometer, and you still have a fever. And without reliable diagnostic tools, you won't get the right medicine.
Capitalism works when competition decides winners. The President is swapping market tests for political favors—mates rates, not merit. It leads companies to spend more on K Street than R&D. The result: fewer breakthroughs, slower growth, and lower incomes. But it won't happen overnight.
What happens when governments meddle with official statistics? Here's a terrific piece from the former head of Greece's statistical system, outlining just how badly it can distort economic and political life. www.nytimes.com/2025/08/19/o... (gift link)
"we are now in the early stages of crony capitalism... The most important business asset right now is being friends with the White House." ...and lemme explain the Knowledge Problem, and Hayek, and markets and humility, and what Reagan stood for. All on MSNBC.
What problem does the U.S. government solve by buying Intel stock? None. It just moves stock certificates from one safe to another. But it does create a new problem: the White House as stock-picker in chief.
Lemme roll and I'll connect the Michigan v. Michigan State score, the search for meaning, the role of truth, the human urge to record our reality, the cost of adding noise to statistics, and why we can't afford to appoint a partisan hack to head of the Bureau of Labor Statistics.#GoBlue
Presidents aren’t stock pickers. They’re not sugar consultants. They’re not HR for Harvard. They’re supposed to set the rules and let the economy work.
"if you bring across a semiconductor inside a computer, it'll get no tariff. But if you pluck it out of the computer, it'll get 300%." That’s not policy; that’s a loophole factory. You’ll get creative packaging, not new fabs.
I'm not sure anything will ever illustrate the state of The Discourse quite as well as Stephen Moore misreading his own pie chart while opining about the state of our national statistics.
The Producer Price Index is running a bit too hot. Firms can smooth rising costs by trimming margins, but not for long—especially with tariffs about to lift costs again. Next act: how much gets passed through to the prices you and I pay, and how long will it take?
Seems problematic.
Cut immigration, cut labor supply, add tariffs on imports… and voilà: higher food prices.
"think about this as the snake that swallowed the inflationary rat. We're seeing it halfway along the snake and there's a big bulge in the snake right now... [Can] the snake can just digest that enormous rat stuck halfway through or is he going to poop it out the end?" -- Me, explaining the PPI
Why aren't powerful executive speaking out? Because the new game is crony capitalism: you need the president’s say-so. When the referee also keeps score, you don’t heckle the ref—you play along.
"I'm curious, what are you more worried about? Would that be higher prices and inflation from the tariffs or the job market and it showing these signs of weakening?" 🤔
When every big decision needs a permission slip from the White House, you don’t get dynamism—you get a command-and-control economy. Fewer experiments, less risk-taking, and living standards that slowly slip behind. It won't happen overnight, but your kids will feel it.
If the President were to ask for my economic advice...
This isn’t about left vs right; it’s rules vs rulers. If you want strong American business, defend the nerds with calculators and the central bank with a spine.
Four things can happen when a tariff hits: 1) Foreign firms cut prices 2) Retail margins get squeezed 3) Retailers pass it on to you 4) Some imports just stop Latest data: #1 didn’t happen, #2 a lot at first, #3 a bit so far, and #4 in spots. Bottom line: Americans (#2, #3) are paying the tariffs.
The stock market is not the economy, but if you listen carefully, the stock market can inform you about the economy. And every time Trump leans into his economic instincts -- threatening tariffs, undermining the Fed, or destroying institutions, stocks tank. Every time he tacos, they bounce back up
Boardroom chatter has changed. It used to be: “How do we beat our competitors?” → Competitive capitalism and the genius of the invisible hand. Today it's: “How do we please Trump?” → Crony capitalism and the corruption of the golden handshake.
Recession watch, updated to include the latest industrial production numbers.
When tariffs were “maybe,” firms waited. The pause is over, and the tariffs are here. So finally, by August, businesses will be pushed to choose—absorb costs, reprice, or re-source. Expect consumers to really start to see price hikes over the next few months as the fog lifts and the invoices arrive.
Why meet with Russia to hammer out a deal when we could just send them a letter?
Once you realize that a pause is a symptom of not having an endgame, you understand why we just paused tariffs with China in response to the end of our earlier pause on tariffs with China, which we confirmed in earlier meetings after concern that our earlier pause with China might unpause.
Tariffs hurt. AI helps. News about tariffs comes in intemperate social media bursts, while optimism about AI slowly builds. Put it all together and you've got an explanation for why: 1. The Dow tanks when Trump tariffs 2. The Dow spikes when he TACO's 3. The market maintains momentum
"This is the most interventionist White House of my lifetime."
I'm starting to think that Trump’s tariff policies may not be in the interests of the American people.
Data aren’t just numbers—they’re the map we all use to navigate the economy. Undermine their credibility, and you’ve taken away the compass from businesses, policymakers, and families alike.
Imma use interpretive dance, playing the role of the Energizer bunny, to explain where the American labor market is right now.
You don't need a weatherman to know which way the wind blows, but you do need a weatherman if you want to know how fast it's blowing and the weatherman's insights make forecasts a lot more accurate.
Measuring the economy is like weighing the president: if you’ve got an honest doctor, you get the truth. If you’ve got a spin doctor, suddenly he’s 100 pounds lighter.
Just an honest labor statistician collecting the data, crunching the numbers, and reporting them fairly, and definitely not an extremist ideologue with an axe to grind, unshackled from respect for the law or political norms.
The President has created more economic uncertainty than even the novel coronavirus and today the only certainty is continued uncertainty.
If politics corrupts economic data, it stops being useful. Businesses won’t trust it. Voters can’t hold leaders accountable. The value of data lies in the truths it reveals — lose that, and you lose everything.
BLS Commissioner is a role that has never gone to an ideologue. It’s been for data nerds who care only about numbers. Put in someone with a record of distorting data, and every figure becomes tainted.
Mr President: Tariffs will slow the economy and raise inflation. Come at me bro.
"The one thing we need in a BLS commissioner is a commitment to truth. This guy’s got no commitment to it."