The debate over the Federal Reserve’s proper course of action for the rest of 2023 was getting a little stagnant in recent months. The argument centered on whether inflation’s persistence was really a sign of an overheated economy that still needed cooling or if it was due to stubbornly large—but dampening —ripples stemming from the huge pandemic and war shocks of previous years. The recent failures of Silicon Valley and Signature banks and chaos in other corners of the banking sector definitely provide a new twist to this debate.

My view on what the Fed should do now in the wake of banking failures is relatively straight-forward:

• Before the Silicon Valley Bank (SVB) failure, it was already clear that the Fed should pause interest rate hikes at this week’s meeting, based largely on consistent deceleration of nominal wage growth. 
• The SVB failure and subsequent banking turmoil are far more likely to be demand-destroying events than not. If one thought the Fed already should be reducing the pace of their rate hikes (or even pausing entirely) due to labor market cooling, the fallout from SVB just means this cooling will happen more quickly and hence the case for halting further rate hikes is stronger.
• It is a genuine problem that interest rate hikes of nearly 5% in a year cause this much distress in the financial sector, indicating a clear failure of bank management and supervision. These failures should be addressed going forward. But they exist today and the fallout of them clearly provides another argument for standing pat on further rate increases.

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The American Rescue Plan Act (ARPA) celebrated its second anniversary on March 11. In those two years, ARPA has supported a strong economic recovery and, through its provision of $350 billion in State and Local Fiscal Recovery Funds (SLFRF), allowed state and local governments to make transformative investments in their communities.

At the time of President Biden’s inauguration on January 20, 2021, the U.S. economy had recovered less than 60% of the 22 million jobs lost during the pandemic recession. Overall, 26.8 million workers—15.8% of the workforce—were either unemployed, out of work due to the pandemic, or employed but experiencing a drop in hours and pay. Additionally, key economic indicators suggested that the economic recovery had begun to reverse.

The American Rescue Plan Act was both a vital emergency measure that helped the nation through the worst of the COVID pandemic and a significant step toward addressing the nation’s economic inequalities. The $1.9 trillion package provided fiscal relief at the necessary scale to counteract the negative economic impacts of COVID. As a result, 2021 and 2022 saw the highest job growth of any of the past 40 years.

As ARPA enters its third year, state and local policymakers should use their remaining SLFRF dollars to rebuild public-sector workforces and support low-wage workers and their families. In particular, many Southern states have significant amounts of unspent funds, and workers, families, and underfunded public services could greatly benefit from the local economic boost SLFRF investments allow.

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In a recent EPI report investigating the national teacher shortage, we documented a large and growing number of teaching vacancies, which we linked to poor compensation and highly stressful working conditions. The data we assembled show that teacher pay has been falling relative to college graduates in other fields since 1979, and reported levels of teacher stress are comparable to other jobs that are typically recognized as being stressful, such as nursing or being a manager or executive. A recent working paper by Matthew A. Kraft and Melissa Arnold Lyon has similar findings after casting an even wider net over the data.

In their report, Kraft and Lyon examine four broad sets of indicators of the overall well-being of the teaching profession: professional prestige, interest in teaching, enrollment in preparation programs, and job satisfaction. They compile nationally representative time-series data and find compelling evidence of four distinct periods in the status of teaching over the last half century: a rapid decline in the 1970s, a quick rise in the early- to mid-1980s, no significant change over the next 20 years, and the start of a steep decline around 2010. Kraft and Lyon’s findings since 2010 are very similar to what we found: While the pandemic exacerbated challenges facing teachers, “most of these declines occurred steadily throughout the last decade suggesting they are a function of larger, long-standing structural issues with the profession.”

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Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 311,000 jobs added in February and wage growth continuing to decelerate. 

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We are still living in the aftermath of 2020’s overlapping crises of racial injustice, our nation’s polycrisis. Between the emergence of the COVID-19 pandemic, the ensuing economic recession, and the public police murder of George Floyd, we saw a harsh truth about the structure of American political economy: White supremacy has shaped our institutions such that their outcome is consistent Black precarity and premature death.

This confluence of tragedies brought awareness of the Black American condition to a new generation. It also reinvigorated interest among academics and policymakers to finally do something about the problem of racial disparities (though activists and community organizers largely never lost interest in this).

This renewed awareness and interest in addressing racial disparities brought attention to arguably the only structural solution to persistent Black-white economic and social disparities, one that we have put off as a country for generations: reparations for slavery, Reconstruction, Jim Crow, and mass incarceration.

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In the wake of the appalling decision to overturn Roe v. Wade, the Supreme Court is yet again at the forefront of repealing sweeping legislative precedent that will change the lives of millions of Americans. Following arguments from Harvard University and the University of North Carolina on whether race-conscious admission programs are lawful, the Supreme Court is expected to overturn affirmative action in college admissions later this year. 

Similarly, the Supreme Court will hear arguments later this month over President Biden’s student loan debt relief plan that would forgive at least $10,000, and up to $20,000, for tens of millions of federal student loan borrowers. The Supreme Court will likely strike down the plan.

Both affirmative action and student loan debt forgiveness are critical measures for college access and completion for students of color. Sadly, these statutes, along with many others, have been targeted and threatened within the courts over the years—leaving students of color to bear more acute barriers to higher education and more disparate socioeconomic outcomes.

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The U.S. goods trade deficit reached a record $1.182 trillion in 2022—an increase of $105 billion from the 2021 trade deficit—according to U.S. Census Bureau data released this morning. Below, EPI senior economist Adam S. Hersh offers his initial insights. Read the Twitter thread here. 

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