Ford School economist Betsey Stevenson’s analysis of the volatile U.S. economy is in high demand.
When the June jobs numbers were released at the beginning of July, Stevenson was quoted in the Associated Press.
AP reported, “Friday’s jobs report suggests that the Fed may achieve that often-elusive goal, economists said.”
“The Fed is on track for a soft landing,” said Betsey Stevenson. “What they have to do is steer us the rest of the way down. We didn’t crash, but that doesn’t mean that we won’t crash.”
Commenting on the mixed signals coming from the economy as it emerged from the COVID-19 pandemic, Marketplace noted that the most unpredictable factor in the economy is human behavior. Stevenson commented, “We don’t have a lot of information to make predictions on that.”
In the early days of the pandemic while she was teaching students over Zoom about social security, tax policy and economic behavior, she felt a disconnect. “Models that didn’t match what they saw out the window became even tougher to teach because the students were looking for things that were going to be useful in helping them understand what was happening in the world,” she said.
Regarding Fed policy, she told Bloomberg Daybreak: Australia, “The Fed does not like to surprise markets. It’s made it pretty clear that it’s going to hike 25 basis points this week. What we are all going to be listening for is ‘What are their next steps? Do they think they have done enough? Do they take a wait and see approach? How do they view that real cooling of inflation?’”
As wage growth seemed to be slowing, she noted for Marketplace that the biggest wage gains over the last couple of years have been at the lower end of the pay scale.
“While that’s starting to slow down, we don’t see signs so far that the gains made are being undone,” Stevenson said.
She said that’s because during the pandemic, many employers invested in better technology that helped their existing workers do more. Like self-checkout stations that let workers help more customers at once.
“That makes people more productive, it makes it easier to pay them more because their value-added is higher,” Stevenson said.
And those kinds of improvements, she said, are never going away.
Cooler hiring in June could help the Fed achieve an elusive ‘soft landing’ for US economy, Associated Press, July 6, 2023
Do you find the economy confusing? So do professional economists, Marketplace, July 18, 2023
University of Michigan's Stevenson on Fed Policy, Bloomberg, July 25, 2023
Wage growth may be slowing, but consumers still have the power to spend, Marketplace, July 28, 2023