Edward Conard

Top Ten New York Times Bestselling Author

  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

AI Summary. The unemployment rate has risen over the past year to 3.9%, just shy of the Federal Reserve's year-end projection of 4%. The author argues unemployment exhibits momentum, with increases tending to foretell further increases, and that an opaque influx of millions of migrants with limited skills and English proficiency adds persistent upward pressure.

Joseph Wang Fed Guy Blog
Date Posted:

.@FedGuy12 notes that the US labor market is softening while labor supply is rising due to immigration, and sees a possible spike in unemployment, implying the “probability of more rate cuts is increasing.”

Will unemployment rise faster than the Fed projects?

Core argument: The U.S. unemployment rate has risen steadily over the past year to 3.9%, just shy of the Fed's expected 4% rate for year-end 2025.

While the Fed expects the labor market to soften this year, the unemployment rate can easily rise by more than they expect. The unemployment rate has steadily risen over the past year and now sits at 3.9%, just shy of the Fed’s expected 4% unemployment rate for year-end 2025. An observation made by Dudley and Sahm is that the unemployment rate exhibits momentum, so increases tend to foretell further increases. In addition, the influx of millions of migrants places persistent upward pressure on the unemployment rate. Many of these migrants have limited skills and lack English proficiency, so they may be particularly vulnerable to weaker labor demand. A large but opaque increase in labor supply combined with a bout of weakening demand could move the unemployment rate upwards faster than anticipated.

Takeaways by Macro Roundup® AI

  1. The U.S. unemployment rate has risen steadily over the past year to 3.9%, just shy of the Fed's expected 4% rate for year-end 2025.
  2. Dudley and Sahm observe that the unemployment rate exhibits momentum, so increases tend to foretell further increases.
  3. The influx of millions of migrants, many with limited skills and lacking English proficiency, places persistent upward pressure on the unemployment rate, and combined with weakening labor demand could push it up faster than anticipated.

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  • Is Nominal Wage Growth Starting to Slow? — Aggregate nominal wage income, which tracks closely with nominal gross domestic product, has grown at a yearly rate of just 4.5%—identical to the pre-pandemic pace—compared with almost 7% over the prior six months. The author argues that several consecutive slow months, rather than a one-off, suggest the deceleration could be significant.
  • Global Views: Friendly Baseline, Greater Risks — Despite upside inflation surprises, the authors argue the broader disinflation narrative remains intact, citing a labor market that continues to rebalance: a jobs-workers gap of 2.0m, a quits rate below pre-pandemic levels, and wage growth running just over 4% year-on-year. They expect wage growth to converge to 3.5%, the pace they estimate is consistent with 2% inflation.
  • The Active Role of the Natural Rate of Unemployment During Cyclical Recoveries — The authors conclude that the natural rate of unemployment declined during the expansion that began in 2009, when unemployment fell from 10% to 3.5% with near-constant inflation. Their reasoning is that with inflation anchored at the Federal Reserve's 2% target over such a long stable period, New Keynesian theory implies the observed unemployment rate equals the natural rate.
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