WEBVTT - Claudia Sahm on Economic Policy (Podcast) 0:00:02.240 --> 0:00:06.840 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:00:07.120 --> 0:00:10.320 This week on the podcast, I have special guests. Her 0:00:10.400 --> 0:00:14.720 name is Claudia Sam and if that name sounds vaguely familiar, 0:00:15.000 --> 0:00:18.759 she is the person who invented the some rule, which 0:00:18.840 --> 0:00:22.800 essentially is a way to identify when you are in 0:00:22.880 --> 0:00:27.319 a recession in real time. Traditionally, we wait for the 0:00:27.400 --> 0:00:32.400 official n B e R proclamation. Usually it's a year 0:00:32.479 --> 0:00:37.440 or so later. They were surprisingly quick to declare recession 0:00:37.520 --> 0:00:40.320 and it was either March or April um. The some 0:00:40.600 --> 0:00:44.840 rule essentially gives you a way, by using unemployment data 0:00:45.240 --> 0:00:48.640 to figure out in real time when you're in a recession, 0:00:49.040 --> 0:00:52.720 and it's really tremendously helpful. I know Claudia from a 0:00:52.840 --> 0:00:57.160 number of economic dinners and events I've attended. I always 0:00:57.160 --> 0:01:00.400 thought she was kind of interesting and wanted to have 0:01:00.560 --> 0:01:04.160 her on the show, and I just need an excuse 0:01:04.240 --> 0:01:08.000 to get her on. And then last month she wrote 0:01:08.080 --> 0:01:13.240 this fiery blog post economics is a Disgrace. I'll link 0:01:13.319 --> 0:01:18.720 to it on the blog, and and she specifically calls 0:01:18.720 --> 0:01:22.240 out people by names, she calls out institutions, She talks 0:01:22.280 --> 0:01:26.440 about sexism, she talks about racism, She talks about misogyny, 0:01:26.520 --> 0:01:31.640 she talks about bullying, She does not hesitate to name names. 0:01:31.720 --> 0:01:36.360 And really it was just a blistering blog post. I 0:01:36.400 --> 0:01:41.600 don't say that very often, UM, for someone within an industry, 0:01:41.640 --> 0:01:45.399 within a respected institution, to say, hey, this is an 0:01:45.440 --> 0:01:49.240 utter mess. We better get our acts together soon. And 0:01:50.080 --> 0:01:53.240 you know, by the way physician heal thyself, it was 0:01:53.320 --> 0:01:58.320 really something that that caught my eye. UM. Economics isn't 0:01:58.360 --> 0:02:02.120 the only industry that has these sorts of issues. Between 0:02:02.480 --> 0:02:04.760 the Me Too movement and what we've been seeing with 0:02:04.800 --> 0:02:08.320 Black Lives Matter, it's pretty clear that that this is 0:02:08.480 --> 0:02:13.080 endemic in a lot of institutions and a lot of professions. 0:02:13.080 --> 0:02:15.520 But it's kind of rare to see somebody who's within 0:02:15.680 --> 0:02:19.240 that institution calling it out. We also talk wank out 0:02:19.280 --> 0:02:23.880 about stimulus checks and and recessions and macroeconomic policy and 0:02:23.919 --> 0:02:26.840 what's being done correctly this time and what should have 0:02:26.840 --> 0:02:29.720 been run right In O eight oh nine, it's it's 0:02:29.880 --> 0:02:34.360 good wonky fun. I save all the grievances for the 0:02:34.440 --> 0:02:38.040 last segment, So if that's not UM floating your boat, 0:02:38.080 --> 0:02:40.280 you don't have to listen to that. But she does 0:02:40.280 --> 0:02:43.880 an excellent job explaining what the profession is getting wrong 0:02:43.880 --> 0:02:45.960 and what it needs to fix. And this includes both 0:02:45.960 --> 0:02:50.800 policy and research and publication as well as hiring practices 0:02:50.840 --> 0:02:53.840 and other things. So I think you'll find this very interesting. 0:02:54.240 --> 0:03:01.480 With no further ado, my conversation with Claudia some vis 0:03:01.720 --> 0:03:05.799 is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:03:06.600 --> 0:03:10.400 My special guest this week is Claudia Sam. She is 0:03:10.440 --> 0:03:14.960 the director of macroeconomic Policy at the Washington Center for 0:03:15.040 --> 0:03:19.920 Equitable Growth. She was previously a senior economist at the 0:03:20.000 --> 0:03:26.320 Council of Economic Advisors for the Obama administration. In from 0:03:26.480 --> 0:03:31.160 two thousand and seven to she was a researcher and 0:03:31.360 --> 0:03:34.520 section chief at the Board of Governors of the Federal Reserve, 0:03:34.880 --> 0:03:39.680 where she specialized in macroeconomics and household of finance. She 0:03:40.080 --> 0:03:44.000 is also the creator of the some Rule, which determines 0:03:44.120 --> 0:03:49.240 if a recession is occurring in real time. Claudia Sam, 0:03:49.280 --> 0:03:53.160 Welcome to Bloomberg. Thank you. I'm so happy to be here. 0:03:53.720 --> 0:03:56.000 Tell us about how you found your way to the 0:03:56.120 --> 0:04:00.920 Council of Economic Advisors for the Obama ministry. Yes, so, 0:04:01.040 --> 0:04:03.760 by the time I went to the Council of Economic 0:04:03.840 --> 0:04:08.200 Advisors which was in the summer off. I had been 0:04:08.240 --> 0:04:11.680 at the Board for several years, so I went as 0:04:12.000 --> 0:04:16.520 the macroeconomic senior economists. I covered at the White House 0:04:16.760 --> 0:04:22.279 all of domestic macro and housing policy. So when I arrived, 0:04:22.360 --> 0:04:25.080 I thought, oh wow, they were like a hundred economists 0:04:25.200 --> 0:04:28.200 or more at the Board that cover these two topics. 0:04:28.920 --> 0:04:31.400 And but by the time I went there, I was 0:04:31.520 --> 0:04:34.200 trained to be able to do that. I started in 0:04:34.279 --> 0:04:37.920 two thousand and seven as an expert on consumer spending. 0:04:38.920 --> 0:04:43.560 Over time I got to manage and oversee the staffs forecast. 0:04:44.160 --> 0:04:46.360 I had been able to do a lot of briefings 0:04:46.400 --> 0:04:48.719 and writing. So by the time I went to c A, 0:04:48.839 --> 0:04:51.320 and that is true of everyone that they sent over there, 0:04:52.120 --> 0:04:54.840 I had the experience to step into that role and 0:04:54.880 --> 0:04:57.400 it for me it was really refreshing because I was like, oh, 0:04:57.560 --> 0:04:59.960 I am a generalist. I said, most of my time 0:05:00.120 --> 0:05:03.160 doing business investment. As I said, no one would have 0:05:03.200 --> 0:05:06.520 asked me what I thought about business investment, and there 0:05:06.680 --> 0:05:09.480 was a really rewarding experience. Jason Furman was chair at 0:05:09.480 --> 0:05:12.679 the time. He is excellent. He worked as so hard 0:05:13.080 --> 0:05:16.039 in a good way. Jay Campbell was a member that 0:05:16.120 --> 0:05:20.680 I worked with UH really closely, and I mean really 0:05:20.720 --> 0:05:24.719 everyone that I worked with, from member to senior economists 0:05:24.800 --> 0:05:29.200 to junior economists too, in terms like they were just fabulous. 0:05:29.560 --> 0:05:34.560 My last day adds the Council of Economic Advisors was Brexit, 0:05:35.279 --> 0:05:38.840 and so uh, I'm really good at picking good times, right. 0:05:38.880 --> 0:05:41.640 My first forecast at the FED was the start of 0:05:41.680 --> 0:05:44.719 the Great Recession. My last day at the e A 0:05:45.000 --> 0:05:48.159 was Brexit. I worked all through the weekend. What was 0:05:48.200 --> 0:05:51.120 funny is when I got back to the board on Monday, no, 0:05:51.320 --> 0:05:53.839 it was crickets, Like nobody was going to come ask 0:05:53.880 --> 0:05:55.840 me what I thought about Brexit. We have a whole 0:05:55.880 --> 0:06:00.000 team of international economists. So it was a really interesting experience. 0:06:00.040 --> 0:06:03.560 Ants I'm glad I did it. It really focused my 0:06:03.640 --> 0:06:08.640 mind on what economic policy could be, frankly should be. 0:06:09.640 --> 0:06:13.240 And I'll end this piece with just a funny story 0:06:13.440 --> 0:06:17.640 and how like the journey to the CEA started back 0:06:17.680 --> 0:06:21.120 in undergraduate So I went to Dennison University, a liberal 0:06:21.160 --> 0:06:26.440 arts college, and in my intermediate macro class, Dick Lucier 0:06:26.520 --> 0:06:29.560 taught the class and part of the class was us 0:06:29.920 --> 0:06:33.440 being like we were economists at the count of Economic Advisors. 0:06:33.560 --> 0:06:35.680 We had to cut things out of the newspaper and 0:06:35.720 --> 0:06:39.000 do analysis, and then he role played being the president 0:06:39.120 --> 0:06:42.360 and we had do presentations. I got to when he 0:06:43.480 --> 0:06:46.640 um when I was at the Council of Economic Advisors, 0:06:46.640 --> 0:06:48.719 he came to visit in d C. And I got 0:06:48.760 --> 0:06:50.760 to take him on a tour of the Oval Office. 0:06:51.200 --> 0:06:53.560 So to me, it was just this really special connection 0:06:53.760 --> 0:06:55.760 from how I fell in love with economics as an 0:06:55.800 --> 0:06:58.880 undergraduate and then when I got to contribute as an 0:06:58.880 --> 0:07:04.040 economist to the policy world. Huh. Quite interesting. You were 0:07:04.120 --> 0:07:08.200 also a section chief the Division of Consumer and Community 0:07:08.200 --> 0:07:11.920 Affairs at the FED. What does that mean exactly? What 0:07:12.080 --> 0:07:14.360 is the role of a section chief? Right? So, in 0:07:14.440 --> 0:07:17.360 my last two years as a fellow Reserve, I was 0:07:17.440 --> 0:07:20.640 a section in chief for a research section and the 0:07:20.680 --> 0:07:23.240 Division of Consumer and Community Affair. There were a lot 0:07:23.280 --> 0:07:25.440 of things unique about that because I had moved at 0:07:25.480 --> 0:07:29.120 that point out of a quote unquote economics division. So 0:07:29.280 --> 0:07:33.920 the team that I managed were the only economists doing 0:07:34.080 --> 0:07:37.760 economic research in that whole division. So to me, it 0:07:37.840 --> 0:07:40.440 was very eye opening. I worked with attorneys, I worked 0:07:40.440 --> 0:07:45.280 with policy analysts, and they were all really impressive. The 0:07:45.360 --> 0:07:49.480 division focuses on low and moderate incomes families and communities. 0:07:49.880 --> 0:07:52.840 So they were from the very beginning ahead of the 0:07:52.880 --> 0:07:55.920 game in terms of thinking about diversity and inclusion and 0:07:56.920 --> 0:08:02.720 racial injustice and educational disparity in rural versus urban. So 0:08:03.440 --> 0:08:05.800 that that was a really good experience for me. Back 0:08:05.800 --> 0:08:08.360 to what it means to be a section chief. So 0:08:08.520 --> 0:08:11.440 it is widely known that the section chief is the 0:08:11.520 --> 0:08:14.480 worst job or the hardest job, and the only one 0:08:14.520 --> 0:08:17.160 that comes closed is being a division director. So right, 0:08:17.200 --> 0:08:19.400 that's the very top of the house, and the section 0:08:19.440 --> 0:08:23.240 chief is the first manager job the board. Now it 0:08:23.280 --> 0:08:25.320 didn't when I joined the board, but the board now 0:08:25.440 --> 0:08:30.600 has very intensive management training for section chiefs or anyone 0:08:30.640 --> 0:08:32.800 who starts as a group manager, which is like one 0:08:32.880 --> 0:08:38.440 level down. So anyone who's supervising goes to a manager 0:08:38.520 --> 0:08:41.200 boot camp. It was like three months, every other week, 0:08:41.679 --> 0:08:44.520 three hours, uh, and that was really good. They brought up, 0:08:44.640 --> 0:08:48.160 brought in external consultants. I learned a lot from that. 0:08:48.200 --> 0:08:51.200 I learned a lot from my team, especially the research assistant, 0:08:51.480 --> 0:08:55.120 in how to be a good manager. Now, it won't 0:08:55.120 --> 0:08:57.959 surprise anyone, and this isn't just at the board. You 0:08:58.080 --> 0:09:01.480 get promoted because you're good at doing the job you 0:09:01.520 --> 0:09:04.520 started with, like I was I've made Section chief because 0:09:04.559 --> 0:09:07.240 I'm a very good economist and I could lead my 0:09:07.320 --> 0:09:10.960 team on their economic policy work. That didn't mean I 0:09:11.000 --> 0:09:13.959 knew anything about being a manager, and they don't teach 0:09:14.000 --> 0:09:16.280 us that in the PhD doctoral programs, and often they 0:09:16.280 --> 0:09:18.920 teach us what not to do as a manager. UM 0:09:19.000 --> 0:09:21.880 So that was a really hard year. That was like 0:09:22.000 --> 0:09:25.760 my impostor syndrome year, on par with that year in 0:09:25.800 --> 0:09:27.680 two thousand and eight when I was like, oh my gosh, 0:09:27.880 --> 0:09:30.839 I'm supposed to forecast the US economy in crisis. So 0:09:30.880 --> 0:09:32.600 it was a very different time and I handled it 0:09:32.640 --> 0:09:35.960 weight better than two thousand eight. But it's a tricky job, 0:09:36.040 --> 0:09:39.640 and it's one where the board helps us do a 0:09:39.679 --> 0:09:42.440 good job now. But if you don't do a good job, 0:09:42.559 --> 0:09:45.240 you can not only have a team that's not effective 0:09:45.240 --> 0:09:49.360 at doing policy work, you can really damage people. And 0:09:49.440 --> 0:09:51.199 we don't want to do that because that doesn't help 0:09:51.200 --> 0:09:54.800 any We're going to talk more about that and how 0:09:54.880 --> 0:09:59.800 the UM field, especially the academic programs, not only do 0:09:59.880 --> 0:10:03.160 they not teach management, they really don't teach writing. They 0:10:03.160 --> 0:10:06.360 don't teach a lot of skills that would be helpful. 0:10:06.679 --> 0:10:10.240 So but we'll come back to that. What also makes 0:10:10.280 --> 0:10:13.839 you a little unusual as an economist is you are 0:10:13.920 --> 0:10:17.240 pretty active on Twitter and you maintain an active blog, 0:10:17.679 --> 0:10:23.200 as do I. Why are you uh using these platforms? 0:10:23.320 --> 0:10:27.120 Tell us what an economist gets out of participating in 0:10:27.200 --> 0:10:32.920 social media. So I joined the platforms Twitter. The blogging 0:10:33.000 --> 0:10:37.679 came later. Uh my gateway quote unquote drug to economic 0:10:37.760 --> 0:10:42.120 social media was commenting on economic blogs like marginal Revolution, 0:10:42.600 --> 0:10:46.760 money illusion. Um, that was really how I dipped my 0:10:46.840 --> 0:10:51.120 toe in the water there Twitter. I spent time on it. 0:10:51.280 --> 0:10:54.800 The reason I went to Twitter was because after I'd 0:10:54.840 --> 0:10:58.080 had some difficult periods at the board and also was 0:10:58.120 --> 0:11:03.920 trying to figure out how are all these smart, caring colleagues, Like, 0:11:04.000 --> 0:11:06.200 how are we missing it that the recovery from the 0:11:06.200 --> 0:11:09.040 Great Recession is going to be really slow? I like, 0:11:09.080 --> 0:11:13.040 our staff forecast was consistently too strong, and I and 0:11:13.120 --> 0:11:17.400 there were others were consistently saying, what are you thinking? 0:11:17.840 --> 0:11:21.600 There's no way we have families that are absolutely decimated 0:11:21.800 --> 0:11:25.160 from this recession. And so for me that moment and 0:11:25.160 --> 0:11:28.120 then reflecting back, remember I showed up in the summer 0:11:28.160 --> 0:11:31.160 of two thousand and seven reflecting back, and I was like, 0:11:31.200 --> 0:11:34.560 how did we miss this right, Like, there's all these 0:11:34.600 --> 0:11:38.960 people and that was a moment where I said, Okay, 0:11:39.000 --> 0:11:43.600 maybe it's because we don't have enough diverse voices, we're 0:11:43.640 --> 0:11:48.480 not connected enough to reality. And well Twitter has got 0:11:48.520 --> 0:11:51.160 a lot of diverse voices, right, So I went on 0:11:51.240 --> 0:11:55.680 to econ Twitter. I like to as it would be 0:11:55.679 --> 0:11:58.160 apparent to anyone who knows me, I like to talk 0:11:58.160 --> 0:12:00.560 to people. I like people. I like people that are 0:12:00.559 --> 0:12:04.200 a little prickly. I mean, I'm a macro economist, right like, 0:12:04.640 --> 0:12:07.760 so I went there to hear from people who don't 0:12:08.000 --> 0:12:10.720 they're not inside the building, and frankly, it's probably a 0:12:10.720 --> 0:12:12.920 good idea, Like some of them would be absolutely horrible 0:12:13.000 --> 0:12:16.160 macro forecasters at the board. But that was for me 0:12:16.320 --> 0:12:21.640 very important. Now that was my upside. No one at 0:12:21.679 --> 0:12:24.480 the board saw that as an upside, right, and I 0:12:24.600 --> 0:12:29.960 was a walking downside risk within a very short time 0:12:29.960 --> 0:12:32.680 of being on Twitter. It's very good about it. I 0:12:32.679 --> 0:12:35.440 don't talk about monetary policy, but I was linked to 0:12:35.520 --> 0:12:39.000 things on the board's website like Bernankee gave us speed 0:12:39.160 --> 0:12:43.240 and Da Da Da Da. So I got found out 0:12:43.400 --> 0:12:46.960 by public affairs because I was driving traffic to the 0:12:47.000 --> 0:12:51.560 board's website and yeah, and it was bad. And I 0:12:51.600 --> 0:12:54.000 got called to an off site coffee that was basically like, 0:12:54.040 --> 0:12:56.960 what is wrong with you? You were the only staff 0:12:57.000 --> 0:13:02.000 economist talking about economics on Twitter. And the reward for 0:13:02.040 --> 0:13:04.400 that is I had all of public if not all, 0:13:04.440 --> 0:13:08.360 I had Michelle Smith and several other public affairs people 0:13:08.440 --> 0:13:11.600 following me on Twitter when I would do something that 0:13:11.720 --> 0:13:14.679 they felt was a miss step. Even I've never broke 0:13:15.200 --> 0:13:19.640 like ah, I never talked about um information that wasn't 0:13:19.679 --> 0:13:23.280 public like forecast information. But I would get within a 0:13:23.280 --> 0:13:25.760 half an hour a call from my division director or 0:13:25.840 --> 0:13:28.600 via my boss saying you got you can't do that. 0:13:28.640 --> 0:13:30.960 You gotta do you know. And so there was this 0:13:31.080 --> 0:13:35.319 aspect of surveillance, which I get, Like Michelle Smith, public 0:13:35.360 --> 0:13:39.079 affairs at the Board has such a hard job, and 0:13:39.160 --> 0:13:41.280 every once in a while I stepped in their lane. 0:13:41.800 --> 0:13:45.840 I never meant to like, how how dare you promote 0:13:45.920 --> 0:13:49.199 something that we've hidden in public view on our publicly 0:13:49.360 --> 0:13:53.800 accessible website. Yeah. No. And when my last year at 0:13:53.800 --> 0:13:58.280 the FED, and I really thought, because Howell like loves Twitter, 0:13:58.760 --> 0:14:00.880 right when he was a brand a governor, I was 0:14:00.960 --> 0:14:03.840 in his office with another economist he wanted to understand 0:14:03.920 --> 0:14:06.720 like labor markets superstar effect. We went and talked to 0:14:06.800 --> 0:14:08.880 him at the end of the meeting. He looked at 0:14:08.920 --> 0:14:10.600 me and he's like, oh, yeah, you had a really 0:14:10.640 --> 0:14:13.560 big day. And I'm like, well, duh, I'm here, you know, 0:14:13.600 --> 0:14:17.679 breathing a governor and he's like, no, it's Smiths retweeted 0:14:17.760 --> 0:14:22.440 you on Twitter. I over I know no, because I 0:14:22.520 --> 0:14:26.720 was like, you're on Twitter and you followed Noah and 0:14:26.760 --> 0:14:29.720 you were on Twitter during the day, right. So I 0:14:29.840 --> 0:14:32.680 was just blown. When he became chair, I thought, oh, 0:14:32.680 --> 0:14:36.360 Twitter is gonna be okay. Yeah, that was wrong. Um. 0:14:37.800 --> 0:14:40.120 So I got in trouble two more times because Poal 0:14:40.240 --> 0:14:42.160 read one of my tweets and asked about it and 0:14:42.160 --> 0:14:44.680 he shouldn't be learning anything from my tweets, so I 0:14:44.720 --> 0:14:47.240 was told. And twice I got in trouble for linking 0:14:47.240 --> 0:14:50.520 to the distributional financial accounts on the board's website because 0:14:50.520 --> 0:14:52.640 they didn't want attention drawn to it. And I was 0:14:52.640 --> 0:14:54.680 always like, you know, the board's website is the best 0:14:54.680 --> 0:14:58.040 place to put information you don't want anyone to see. Um, 0:14:58.280 --> 0:15:03.560 but that's hilarious. I love the board. I understand much 0:15:03.600 --> 0:15:06.640 better than I did in the beginning why what I 0:15:06.680 --> 0:15:11.640 was doing could be problematic. And I never never wanted 0:15:11.680 --> 0:15:15.560 to be the person who brought down the bed right 0:15:15.800 --> 0:15:20.360 or cause immense stress. I was just having fun, and 0:15:20.440 --> 0:15:22.640 like I said, I was trying to learn from people 0:15:23.160 --> 0:15:25.680 who weren't like anybody else that was in the building. 0:15:26.560 --> 0:15:28.680 That's so funny that, by the way, bringing down the 0:15:28.680 --> 0:15:31.760 FED is Judy Shelton's job. It's not Clodius Tom's job. 0:15:31.880 --> 0:15:34.240 So we can leave that, we can leave that to home. 0:15:34.440 --> 0:15:38.480 I'm coming now, I know. That's why I'm sticking my 0:15:38.520 --> 0:15:42.120 two bits in. And by the way, my economics gateway 0:15:42.200 --> 0:15:47.440 drug was Brad DeLong, the economist from Berkeley, and he 0:15:47.520 --> 0:15:52.160 was one of the earliest academic bloggers, just musing in 0:15:52.280 --> 0:15:56.520 public on a blog and discussing economic data. And it 0:15:56.600 --> 0:16:02.280 was so refreshing compared to the sort of stayed releases 0:16:02.440 --> 0:16:06.000 from BLS and even back then the Wall Street economists 0:16:06.000 --> 0:16:09.880 were very, very tame, and to have someone come out 0:16:09.960 --> 0:16:14.160 and just like boom, here's what's wrong with the data 0:16:14.240 --> 0:16:18.880 analysis was really a refreshing change of pace. Yeah, and 0:16:18.920 --> 0:16:21.240 I will say there are two things that I really 0:16:21.320 --> 0:16:23.880 like about Brad DeLong on Twitter, Like I liked him 0:16:23.920 --> 0:16:26.440 off Twitter. I've learned a lot from him. One he 0:16:26.560 --> 0:16:29.680 is an economic history why he has a good grounding 0:16:29.720 --> 0:16:32.520 in economic history, that's not the only thing he works. 0:16:32.520 --> 0:16:35.560 And he does a lot in macro space. To his blog, 0:16:35.760 --> 0:16:38.280 I mean he was like live tweeting World War two 0:16:38.480 --> 0:16:40.440 or you know, I mean like it would have it 0:16:40.520 --> 0:16:43.760 showed a side of him that was like not like 0:16:44.960 --> 0:16:47.160 an economy that you wouldn't have seen this in an 0:16:47.200 --> 0:16:50.600 economic seminar. The other thing that Brad does on Twitter, 0:16:51.040 --> 0:16:55.520 which is very rare, is that he engages with people, 0:16:56.280 --> 0:17:00.080 like he will reply to tweets. Have I looked on 0:17:00.120 --> 0:17:03.760 from Paul Krubin's Twitter feed, and I Paul like does 0:17:03.840 --> 0:17:07.080 so much in terms of communicating economics and pushing us 0:17:07.119 --> 0:17:11.240 to think and pushing a broader audience. He never replies 0:17:11.520 --> 0:17:15.399 to tweets, like never, So I like Brad that he 0:17:15.480 --> 0:17:19.399 engages like I like to engage. So that to me 0:17:19.600 --> 0:17:22.159 is like econ Twitter can be a special place, but 0:17:22.280 --> 0:17:27.359 it's hard if it's a lecture and not a conversation. Huh. 0:17:27.440 --> 0:17:32.040 Quite fascinating. So let's talk a little bit about fiscal stimulus. 0:17:32.080 --> 0:17:34.760 You know, when we look back at the financial crisis 0:17:34.760 --> 0:17:38.320 of oh eight oh nine. The vast majority of that 0:17:38.400 --> 0:17:41.800 response seemed to be coming from the Federal Reserve and 0:17:41.920 --> 0:17:47.679 a monetary ast response, not a fiscal stimulus compared to 0:17:47.800 --> 0:17:51.080 this one, How would you do a side by side 0:17:51.119 --> 0:17:57.720 comparison between two thousand and eight and on a fiscal basis. 0:17:58.160 --> 0:18:02.560 So I have done a lot of work thinking about 0:18:02.760 --> 0:18:08.040 how compares to two thousand and eight, And the reason 0:18:08.160 --> 0:18:12.880 for that is I had a very unique experience at 0:18:12.880 --> 0:18:16.200 the Board in terms of understanding what happened in two 0:18:16.240 --> 0:18:20.720 thousand and eight and the years after that. And it 0:18:20.800 --> 0:18:25.120 may is the encounterintuitive. So I covered consumer spending at 0:18:25.119 --> 0:18:30.919 the Federal Reserve. I didn't advise on monetary policy. What 0:18:31.080 --> 0:18:33.480 my job was to do was say, Okay, what's going 0:18:33.520 --> 0:18:37.840 to happen, what is happening for families and they're spending 0:18:38.520 --> 0:18:42.159 in the economy. To do that during the crisis and 0:18:42.280 --> 0:18:45.960 during the recovery, I had to understand and have an opinion, 0:18:46.040 --> 0:18:49.879 expert opinion on what is fiscal relief doing or fiscal 0:18:49.920 --> 0:18:52.960 stimulus doing in the economy. Because then the Board in 0:18:53.000 --> 0:18:57.280 the monetary policy, they work around the edges. They need 0:18:57.320 --> 0:18:59.560 to know what we think is happening in the economy, 0:18:59.600 --> 0:19:02.800 and part of that is what is Congress doing? And 0:19:02.880 --> 0:19:06.800 so not only did I follow the data in real time, 0:19:07.240 --> 0:19:10.040 I would update my forecast as the data came in. 0:19:10.200 --> 0:19:14.760 This is a very unique UH expertise and experience for 0:19:14.840 --> 0:19:18.360 a macro economist to have. Academics do not do this 0:19:18.920 --> 0:19:21.160 right and people at the board do and I learned 0:19:21.280 --> 0:19:25.720 very well. So in addition to that, I started a 0:19:25.760 --> 0:19:30.440 research program with Matthew Shapiro, who was my advisor at Michigan, 0:19:30.960 --> 0:19:34.320 and Joel Slemrod, who's also a professor there. They had 0:19:34.359 --> 0:19:40.119 a prior research program studying the changes in tax withholding 0:19:40.400 --> 0:19:44.159 the two thousand one rebates they had me joined this product, 0:19:44.240 --> 0:19:47.800 this research program of THEIRS in two thousand eight. We 0:19:47.960 --> 0:19:51.080 did research and ran surveys on the two thousand eight 0:19:51.080 --> 0:19:55.160 tax rebates, the two thousand nine and ten Making Work 0:19:55.160 --> 0:19:57.840 pay tax credit, and the two thousand eleven and two 0:19:57.840 --> 0:20:03.440 thousand twelve payroll tax cut. Fast forward to last year, 0:20:03.680 --> 0:20:06.960 I contributed to a volume called Recession Ready that the 0:20:07.000 --> 0:20:10.480 Hamilton's Project of Brookings and Equitable Growth Right Now Work 0:20:11.280 --> 0:20:16.320 oversaw the volume. I had a chapter on individual payments 0:20:16.359 --> 0:20:21.639 that would happen automatically in a recession. I from my 0:20:21.760 --> 0:20:25.760 expertise that it's got to be big direct payments to 0:20:25.840 --> 0:20:30.520 household This little divvy debby changing with holdings. This is 0:20:30.560 --> 0:20:33.440 not a good way to find a recession. It doesn't 0:20:33.440 --> 0:20:36.080 help families fast enough, and they don't even know what 0:20:36.200 --> 0:20:40.399 happens like still stimulus, Like I don't know much about politics, 0:20:40.400 --> 0:20:43.520 but I know enough to know that probably won't help 0:20:43.560 --> 0:20:46.720 you a lot in terms of saying, you know, Congress, 0:20:46.760 --> 0:20:50.040 the President saying we help the American people. So I 0:20:50.080 --> 0:20:56.720 took my forecasting expertise, my research knowledge, and the research 0:20:56.760 --> 0:20:59.000 knowledge from a lot of other people who work in 0:20:59.000 --> 0:21:01.760 this space. One of the things that the board because 0:21:01.800 --> 0:21:04.080 you don't put your forecast together. You don't walk into 0:21:04.119 --> 0:21:07.680 the boardroom and say, I think this is the right 0:21:08.240 --> 0:21:09.919 thing to do, or this is the right way to 0:21:09.920 --> 0:21:13.479 think about the economy. And here's my research paper, right 0:21:13.520 --> 0:21:16.560 like you come in with here's my paper, here's three 0:21:16.560 --> 0:21:20.360 other papers, here's how they agree, here's how they disagree, 0:21:20.880 --> 0:21:23.879 like and so these were again skills that a lot 0:21:23.880 --> 0:21:26.119 of economists don't have. But that's what I've put into 0:21:26.160 --> 0:21:30.720 my chapter. And in addition, I said, we know the 0:21:30.760 --> 0:21:33.960 two thousand eight in particular, worked really well, like that's 0:21:34.000 --> 0:21:37.080 the way to do it. And and then the add 0:21:37.119 --> 0:21:39.159 on was me thinking about, well, how will we do 0:21:39.200 --> 0:21:43.880 that automatically? And the reason that I had it automatic 0:21:44.000 --> 0:21:47.439 and I had also my proposal in a severe recession, 0:21:48.000 --> 0:21:51.400 not every recession is severe, but in our severe recession, 0:21:51.680 --> 0:21:56.560 those payments would happen automatically on a repeated basis until 0:21:56.600 --> 0:22:01.440 the unemployment rate came down. And that was born out 0:22:01.440 --> 0:22:04.120 of a very painful experience, because I have a very 0:22:04.119 --> 0:22:07.000 emotional reaction to the macro economy. It came from a 0:22:07.040 --> 0:22:10.200 painful experience in two thousand and twelve when the payroll 0:22:10.280 --> 0:22:15.400 tax cut stopped and there wasn't anything else that went 0:22:15.440 --> 0:22:19.240 to a large number of families, and the unemployment rate 0:22:19.280 --> 0:22:23.040 was still high. So I knew from fiscal policy that 0:22:23.119 --> 0:22:26.360 they stepped away. I mean, they're the politicians. I'm not, 0:22:26.480 --> 0:22:30.280 but they made a decision that it was time to 0:22:30.320 --> 0:22:33.080 stop the fiscal relief and in fact they cut back 0:22:33.480 --> 0:22:37.280 on government spending that had a lot of damage the economy. 0:22:37.440 --> 0:22:40.879 Are last recovery was very long, but that's actually a 0:22:40.960 --> 0:22:43.640 bad sign in some ways because it took us so 0:22:43.680 --> 0:22:47.679 long to get the unemployment right down. And that was 0:22:47.720 --> 0:22:51.680 the fiscal policy stepped away, and frankly, monetary policy did 0:22:51.720 --> 0:22:55.439 not step up enough in the recovery. Like they didn't 0:22:55.480 --> 0:23:00.840 save Main Street, they saved Wall Street. There were political 0:23:01.080 --> 0:23:05.960 existential risks to the FED that are why they justified, 0:23:06.359 --> 0:23:11.280 at least internally or in my impression, the like not 0:23:11.400 --> 0:23:15.719 going all in on Main Street. But it it hurts people, right, 0:23:15.760 --> 0:23:18.080 so I knew, like the Fed really can't do this 0:23:18.160 --> 0:23:21.879 in some ways they really shouldn't. But the Congress not 0:23:21.960 --> 0:23:24.639 only can, but they have to. And that is what 0:23:24.720 --> 0:23:28.920 has been so hard right now, Like last week when 0:23:29.040 --> 0:23:32.000 the extra six d a week to the unemployed expired, 0:23:33.119 --> 0:23:35.920 that is going to hurt so many families this year. 0:23:36.359 --> 0:23:39.960 And that program should have been and could have been 0:23:40.080 --> 0:23:44.440 on autopilot, and it was. So let's talking the fallout. 0:23:45.600 --> 0:23:49.399 So let's talk about that program. When Congress passed the 0:23:49.480 --> 0:23:54.600 Cares Act, they sent a check to everybody making I 0:23:54.640 --> 0:23:58.760 think it was less than dollars if memory serves, plus 0:23:58.880 --> 0:24:03.720 five dollars per dependent and then a six hundred dollar 0:24:04.960 --> 0:24:09.280 was that a a weekly or monthly unemployment bonus? How 0:24:09.359 --> 0:24:13.720 much weekly? So? And and that's based roughly on the 0:24:13.760 --> 0:24:18.000 median income across the country. So so that's quite a 0:24:18.119 --> 0:24:21.879 substantial fiscal stimulus or or is it not. What do 0:24:21.920 --> 0:24:26.720 you think of those six hundred plus extending unemployment plus 0:24:26.760 --> 0:24:29.840 five hundred per dependent on a one time check plus 0:24:29.880 --> 0:24:32.439 twelve hundred on a one part check. How would you 0:24:32.960 --> 0:24:36.040 rate that fiscal stimulus and what was the impact in 0:24:36.080 --> 0:24:39.119 the economy in a period where the I think that 0:24:39.200 --> 0:24:43.800 at its worst the Atlanta GDP now then they're now 0:24:43.880 --> 0:24:49.000 casting tool had GDP contracting at fift not on an 0:24:49.040 --> 0:24:52.720 annual basis, but when they happen to take that snapshot 0:24:52.840 --> 0:24:57.600 at the worst part of the economic contraction, the economy 0:24:57.640 --> 0:25:02.560