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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2023 Grand Challenge: Workforce Disrupted
Market-Based Solutions to Vital Economic Issues



UNC Kenan-Flagler Business School’s Christian Lundblad offered his analysis of the May 5 employment report, which showed employers adding 253,000 jobs in April, far above forecasts. He also answered questions about the Fed’s next move and what a sharp revision in March’s numbers might mean.

When policymakers implement a disinflation program directed at high inflation, the real dollar value of their country’s stock market index experiences a cumulative abnormal 12-month return of 48 percent in anticipation of the event. In contrast, the average cumulative abnormal 12-month return associated with disinflations directed at moderate inflation is negative 18 percent. The 66-percentage point difference between cumulative abnormal returns, along with descriptive evidence and case studies, suggests that unlike the swift eradication of past high inflations documented by Sargent (1982), the US will not experience a quick, low-cost transition from moderate inflation to the Fed’s two-percent target.

The economy continued to add jobs in March, but Chief Economist Gerald Cohen pointed out some underlying indicators that point to a slowdown. Also: effects from March’s bank collapses.

Kenan Institute Executive Director Greg Brown discussed the 311,000 jobs that the economy added in February during the institute’s monthly briefing March 10 and answered questions about labor participation rates and news of trouble at Silicon Valley Bank.

Kenan Institute Chief Economist Gerald Cohen explains why we're doubling down on our recessionary forecasts.

Despite encouraging signs, India’s retail market remains largely off-limits to large international retailers like Wal-Mart and Carrefour. Opposition to liberalizing FDI in this sector raises concerns about employment losses, unfair competition resulting in the large-scale exit of incumbent domestic retailers, and infant industry arguments to protect the organized domestic retail sector that is at a nascent stage. Based on international evidence, we suggest that allowing entry by large international retailers into the Indian market may help tackle inflation, especially in food prices.

Kenan Institute Chief Economist Gerald Cohen discussed the 517,000 jobs that employers added in January during the institute’s monthly economic briefing Feb. 3 and answered questions from the press on where workers to fill those jobs are coming from.

2022 was a tumultuous year: NASDAQ, a tech-heavy stock index, closed the year down more than 30%; inflation proved more stubborn than policymakers initially thought and reached 40-year highs; Russia invaded Ukraine, sending commodity prices even higher; and central banks cranked up rates in response, the Federal Reserve raising interest rates at an unprecedented pace in recent history from around zero to over 4%. As we entered 2023, the global economy stood “on a razor’s edge,” the World Bank warned in its latest projections. Add to that a divided Congress with razor-thin majorities, political wrangling over the debt ceiling, and increasingly frequent catastrophic weather events, and it leaves one wondering where we are all headed.

Join us for the Kenan Institute’s virtual press briefing at 9 a.m. EST this Friday, Feb. 3, as we provide instant analysis following the latest employment report from the Bureau of Labor Statistics. Institute Chief Economist Gerald Cohen will offer his insights and answer questions from the audience.

In kicking off the new year, we at the Kenan Institute want to highlight five topics we anticipate will be top of mind for business leaders and policymakers during the 12 months ahead.

2022 has not been kind to many investment portfolios; as Kenan Institute Executive Director Greg Brown argues, this is all attributable to the change in real interest and inflation rates.

Chief Economist Gerald Cohen discussed the Bureau of Labor Statistics’ fresh employment report and what it means for the U.S. economy during the Kenan Institute’s monthly economic briefing Dec. 2. Cohen also discussed the inversion of the yield curve.