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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

Full report here: budgetlab.yale.edu/r...
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

And of course our approach is symmetric: policies that *reduce* the deficit have *higher* aggregate net benefits under our methodology than under conventional distributional analysis.
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

One can think of our "existing fiscal distribution" as basically being the equivalent of assuming proportional spending cuts & tax hikes in the future to pay for a policy. The result is that a policy's aggregate benefit falls & its distributional impact looks quite different.
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

There’s no consensus or single way to incorporate deficit-financing into distributional analysis, especially for public goods like defense. We choose an “existing fiscal distribution”—stacking taxes & mandatory spending, & divvying discretionary spending equally per tax unit.
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

But of course, this is an illusion. Higher deficits present a host of trade-offs, including interest costs & the fact that higher debt eventually needs to be paid off. This can skew how policymakers weigh the costs & benefits of different financing options.
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

The problem in a nutshell: imagine two versions of a $1,000-per-family tax credit. One finances the policy with higher deficits (i.e. no payfors). The other fully pays for the policy with an offsetting tax hike. Version 1 will look like it *clearly* has a greater net benefit.
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Ernie Tedeschi @ernietedeschi.bsky.social · 1h

New report this morning from @budgetlab.bsky.social thinking through the challenges of distributional fiscal analysis when a policy is deficit-financed. We talk about the issues and present our preferred methodology.
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Reposted by Ernie Tedeschi

Bobby Kogan @bbkogan.bsky.social · 8d

Phenomenal opportunity for macroeconomists of all levels. Truly cannot recommend the Yale Budget Lab team enough. I've worked extremely closely with most of the people there, and their simultaneous dedication to accuracy and usefulness while ensuring the work environment is enjoyable is unmatched.

Martha Gimbel @marthagimbel.bsky.social · 8d

Hi all! We're still waiting on the official posting - but @budgetlab.bsky.social is looking for a new macro hire to add to our team! We're agnostic on level (Recent PhD, decades of experience, MA+ research experience, who knows?) - we care more about flexible thinking and curiosity

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Reposted by Ernie Tedeschi

Martha Gimbel @marthagimbel.bsky.social · 8d

Hi all! We're still waiting on the official posting - but @budgetlab.bsky.social is looking for a new macro hire to add to our team! We're agnostic on level (Recent PhD, decades of experience, MA+ research experience, who knows?) - we care more about flexible thinking and curiosity

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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

Full report here: budgetlab.yale.edu/r...
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

FISCAL EFFECTS: New 2025 tariffs raise $2.5 trillion over 2026-35 conventionally-scored and $2.0 trillion dynamically-scored.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

COMMODITY PRICE EFFECTS: Consumers face particularly high increases in leather and clothing in the short-run: prices increase 36% for leather products (shoes and hand bags), 34% for apparel, and 21% for textiles.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

DISTRIBUTIONAL EFFECTS: Tariffs are a regressive tax, especially in the short-run. The average annual cost to households in the first and top income deciles from all 2025 tariffs are $1,350 and $5,350 respectively in 2025$. The median cost is $2,000 per household.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

GLOBAL EFFECTS: In the long-run, China real GDP is -0.3% smaller, about 3/4 of the effect to the US. The economies of Mexico, Canada, the EU, and the UK are all larger.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

SECTORAL EFFECTS: In the long-run, tariffs present a trade-off. Total US manufacturing output expands by 2.7%, but advanced manufacturing shrinks by 4.2%. Moreover, the manufacturing gains are more than crowded out by other sectors: eg construction output contracts by 3.7%.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

ECONOMIC/LABOR MARKET EFFECTS: US real GDP growth is -0.5pp lower over 2025 & -0.4pp lower over 2026. The level of US real GDP is persistently -0.4% smaller in the long-run. By the end of 2025, the unemployment rate is +0.3pp higher & employment is -490K lower.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

PRICES: The price level rises by 1.7% in the short-run (2-3 yrs) from all 2025 tariffs, assuming the Federal Reserve looks through their price effects. This is the equivalent of a $2,400 average per-household loss of purchasing power in 2025$.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

TARIFF RATE: The September 25 announcement raises the average effective tariff rate by 0.5pp to 17.9% pre-substitution (as of Oct 1), the highest since 1934. After consumers & businesses shift their spending mix, the post-substitution rate is 16.7%, highest since 1936.
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Ernie Tedeschi @ernietedeschi.bsky.social · 17d

New @budgetlab.bsky.social tariff update out tonight, incorporating the heavy truck, furniture, and pharmaceutical tariffs announced by President Trump yesterday. Details are still sparse; we will update in the future as more specifics about the policy are published.
In brief...
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Ernie Tedeschi @ernietedeschi.bsky.social · Sep 9

The preliminary benchmark revision of -911K amounts to -0.6% to March 2025 payroll employment. Combined with 2-month revisions, recent total revisions are big but hardly unprecedented, & smoothed over the business cycle the payroll survey has gotten more accurate over time.

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Reposted by Ernie Tedeschi

Erika McEntarfer @erikamcentarfer.bsky.social · Sep 5

The larger-than-usual downward revision last month was in large part driven by a negative skew in the job growth distribution among late reporting firms. That’s unusual, but it’s happened before when the pace of job growth slows rapidly. This print is more evidence that was the case

Ben Casselman @bencasselman.bsky.social · Sep 5

U.S. employers added 22,000 jobs in August and the unemployment rate ticked up to 4.3 percent.
Data: www.bls.gov/news.release...
Live coverage: www.nytimes.com/live/2025/09... #NumbersDay

Employment Situation Summary - 2025 M07 Results

www.bls.gov

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Ernie Tedeschi @ernietedeschi.bsky.social · Sep 4

Full report here: budgetlab.yale.edu/r...
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Ernie Tedeschi @ernietedeschi.bsky.social · Sep 4

3. The long-run hit to US real GDP levels is now only -0.1%, but there is still an outsized negative effect on advanced manufacturing (due to the remaining 232 tariffs).
4. The effective tariff rate would be 6.8%, still the highest since 1969.
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Ernie Tedeschi @ernietedeschi.bsky.social · Sep 4

But what if the IEEPA tariffs were both 1) overturned, & 2) not replaced? We show a "No IEEPA" scenario assuming a SCOTUS decision in June 2026. A few highlights:

1. IEEPA tariffs make up ~70% of the 2025 tariffs to date.
2. Revenues shrink to $700B over 2026-2035.
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Ernie Tedeschi @ernietedeschi.bsky.social · Sep 4

All tariffs to date in 2025 raise $2.4 trillion over 2026-35, with $454 billion in negative dynamic revenue effects, bringing dynamic revenues to $2.0 trillion.
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