Krugman Calls Labor Market Soft, Disturbed by Warsh's View

Summary

Paul Krugman discusses the June jobs report, calling the data noisy but indicative of a soft labor market with lower break-even job growth due to reduced immigration. He criticizes Kevin Warsh's preference for real-time Fed indicators, warning it could lead to overreaction. Krugman also warns that the Supreme Court's Slaughter ruling increases policy uncertainty, undermining business confidence like 'termites' in the economy.

• June jobs report: 57k gain, downward revisions, but data is noisy and consistent with a soft labor market.
• Labor force growth has slowed due to immigration crackdown, lowering the break-even job growth rate.
• Wage indicators suggest weak worker bargaining power, reinforcing the soft market view.
• Private data sources lack the scale of official BLS data; wage signals argue against stronger alternative estimates.
• Krugman is 'disturbed' by Warsh's call for the Fed to focus on real-time data, seeing it as a path to policy overreaction.
• AI's impact on labor remains unclear; the technology is likely capital-biased but it's too early to assess job losses.
• The Supreme Court's Slaughter ruling gives the president unilateral removal power over agency officials, increasing business uncertainty.
• That uncertainty is not catastrophic but acts like termites, undermining economic principles and planning.