The economy booms!

[Random]

The two statistics in question (the 110K+ new jobs and the slight dip in unemployment) are not quite the wonderful indicators that the GOP would like us to believe.
First, the population of the US is constantly growing. As more and more people graduate from high school and college faster than older workers retire and/or die, the size of the potential labor pool increases. In order to keep up with the expanding potential labor pool, you currently need to add about 150k jobs a month. 110k jobs is better than we have seen in a while, but it really just means that things are getting worse at a slower pace than they were a few months ago. Wake me when the number of new jobs created in a month hits 180k+. That’s when we can start talking about job recovery.
Second, the lowering of the unemployment rate last month is a sign of a more disturbing trend. Simply put, 300k people gave up looking for work last month. They are still part of the potential labor pool, and will still have to find jobs when the economy improves, but for right now, they are not counted in the Federal Unemployment statistics. It’s really just a statistical illusion that makes the situation look slightly better right now. The flip side of it is that when the economy picks up, those people will re-enter the labor pool and actually work to keep the official unemployment rate high.
Third, all of this only talks about the number of jobs, not the quality of them. If we get lose one thousand $15 an hour manufacturing jobs and replace them with two thousand $7 an hour jobs, is that a good thing?

 

[shanek]

There is no economy booming, as far as I can tell.

The jobs that are supposedly being created are on the low-end service side. In other words, I doubt that anyone taking those jobs can support themselves without a second job.

Again, give it time. The low-end jobs are naturally the ones to be added to the market first. The higher paying jobs will follow as the economy continues to build back to the level of total output.

No, it's not booming yet, but it does seem to be recovering nicely.

 

[shanek]

The two statistics in question (the 110K+ new jobs and the slight dip in unemployment) are not quite the wonderful indicators that the GOP would like us to believe.
First, the population of the US is constantly growing. As more and more people graduate from high school and college faster than older workers retire and/or die, the size of the potential labor pool increases. (etc. etc. etc.)

That's why unemployment is expressed as a percentage. 100% represents all those who do not have a job but are actually seeking one. So everything you've mentioned gets figured in.

Second, the lowering of the unemployment rate last month is a sign of a more disturbing trend. Simply put, 300k people gave up looking for work last month. They are still part of the potential labor pool, and will still have to find jobs when the economy improves, but for right now, they are not counted in the Federal Unemployment statistics. It’s really just a statistical illusion that makes the situation look slightly better right now. The flip side of it is that when the economy picks up, those people will re-enter the labor pool and actually work to keep the official unemployment rate high.

This is a good point, and is a good indication of why we can't use unemployment statistics as a sole indicator. You have to look at it in context of what else is going on, and in that context, it does indeed look like things are beginning to recover.

Third, all of this only talks about the number of jobs, not the quality of them. If we get lose one thousand $15 an hour manufacturing jobs and replace them with two thousand $7 an hour jobs, is that a good thing?

See my above point to Girl 6.

 

[Solitaire]

I think this is the start of a recovery... a long, long overdue recovery.

No... It seems way too early.
The business cycle which takes from thrity to fourty years and requires
at least eight to twelve years to rebound. More likely this is the result of
election year spending. When he's in his second term, they'll probably
cut back and employment will drop again.

 

[shanek]

No... It seems way too early.
The business cycle which takes from thrity to fourty years and requires
at least eight to twelve years to rebound.

??? Where are you getting this from? The business cycle is more like ten years and in the past has only required a year or two to rebound. Look at the recession around 1990 that led to the 1990s boom, and there are a lot of similarities between what we're experiencing now and that recovery.

8 to 12 years to rebound?! Poppycock! In fact, this 4-year recession is almost unprecedented, save for the Great Depression.

More likely this is the result of
election year spending.

You're fooling yourself if you think government spending has anything at all to do with economic recovery.

Maybe you should go read the Macroeconomics thread?

 

[Zero]

The two statistics in question (the 110K+ new jobs and the slight dip in unemployment) are not quite the wonderful indicators that the GOP would like us to believe.
First, the population of the US is constantly growing. As more and more people graduate from high school and college faster than older workers retire and/or die, the size of the potential labor pool increases. In order to keep up with the expanding potential labor pool, you currently need to add about 150k jobs a month. 110k jobs is better than we have seen in a while, but it really just means that things are getting worse at a slower pace than they were a few months ago. Wake me when the number of new jobs created in a month hits 180k+. That’s when we can start talking about job recovery.
Second, the lowering of the unemployment rate last month is a sign of a more disturbing trend. Simply put, 300k people gave up looking for work last month. They are still part of the potential labor pool, and will still have to find jobs when the economy improves, but for right now, they are not counted in the Federal Unemployment statistics. It’s really just a statistical illusion that makes the situation look slightly better right now. The flip side of it is that when the economy picks up, those people will re-enter the labor pool and actually work to keep the official unemployment rate high.
Third, all of this only talks about the number of jobs, not the quality of them. If we get lose one thousand $15 an hour manufacturing jobs and replace them with two thousand $7 an hour jobs, is that a good thing?

Shhhhh!! Don't tell the truth, you'll scare the "conservatives"!!

 

[Iacchus]

Shhhhh!! Don't tell the truth, you'll scare the "conservatives"!!

Hey Zero, you've gotta check this out! ... http://www.randi.org/vbulletin/showthread.php?s=&postid=1870304558#post1870304558

 

[shanek]

I somehow missed this before:

Simply put, 300k people gave up looking for work last month.

It is incorrect to say they "gave up" looking for work. All we know is that they stopped looking for work. There could be any number of reasons for that.

For example: I "gave up" looking for work last year when I and my partners started the business. We aren't employees, so technically we're not employed; but neither are we unemployed because we're not seeking work anywhere else. Your wording makes it sound like these people are suffering in dispair with no way to make the bills, and that isn't necessarily the case.

 

[Chaos]

I somehow missed this before:



It is incorrect to say they "gave up" looking for work. All we know is that they stopped looking for work. There could be any number of reasons for that.

For example: I "gave up" looking for work last year when I and my partners started the business. We aren't employees, so technically we're not employed; but neither are we unemployed because we're not seeking work anywhere else. Your wording makes it sound like these people are suffering in dispair with no way to make the bills, and that isn't necessarily the case.

Take me for example. I have now been unemployed for...(how late is it?)...13 months, 11 days. I´ve been looking for a job since then - without success.
My unemployment compensation expired shortly after X-Mas, and I will go to University starting in April (if they accept me), so I will no longer be unemployed.
Both will count as an improvement of unemployment statistics, (one less to pay for, one less lookinf for work) but neither actually means I found a job or started creating a single Cent of GDP. And neither indicates any economic recovery.

 

[shanek]

And neither indicates any economic recovery.

On its own, no. That's why you have to look at all the indicators. We've seen two consecutive quarters of very strong GDP growth. We're seeing new jobs created. Everything is happening just as economics says it does when there's a recovery underway.

 

[Zero]

On its own, no. That's why you have to look at all the indicators. We've seen two consecutive quarters of very strong GDP growth. We're seeing new jobs created. Everything is happening just as economics says it does when there's a recovery underway.

Yeah, only much much slower.

 

[Jim Lennox]

Forgive my ignorance for I know little about such matters, but if the US economy is 'booming', how come my one pound sterling will buy 1.8 dollars?

 

[Rouser2]

Originally posted by American [/i]

>>Unemployment Rate Falls to 5.6%, companies add 112,000 new jobs

>>It's time to play my favorite song:

>>"We're in the money, we're in the money;
We've got a lot of what it takes to get along!
We're in the money, that sky is sunny,
Old Man Depression you are through, you done us wrong. "

>>"We never see a headline about breadlines today.
And when we see the landlord we can look that guy right in the eye
We're in the money, come on, my honey,
Let's lend it, spend it, send it rolling along!"

Perhaps the history of this song may sober you up a bit -- written in 1933 for the movie "Gold Diggers," there followed 10 more years of ever deepening depression. Written by Harry Warren and Hal Dubin, the last line "Let's lend it, spend it, send it rolling along" could have been written by J. Maynard Kaynes, or for that matter FDR. That's just what he and his predesessor did, and those spend-thrift programs only produced the deepest, severest, longest lasting depression in Am. history. Sorry to rain on your parade. But I would suggest that it perhaps is time to batten the hatches; we're in for it.

-- Rouser

 

[shanek]

Forgive my ignorance for I know little about such matters, but if the US economy is 'booming', how come my one pound sterling will buy 1.8 dollars?

The exchange rate has little to do with economic factors internally in an economy, with certain exceptions. Check the Macroeconomics thread for more information.

 

[shanek]

Re: Re: The economy booms!

Perhaps the history of this song may sober you up a bit -- written in 1933 for the movie "Gold Diggers," there followed 10 more years of ever deepening depression. Written by Harry Warren and Hal Dubin, the last line "Let's lend it, spend it, send it rolling along" could have been written by J. Maynard Kaynes, or for that matter FDR. That's just what he and his predesessor did, and those spend-thrift programs only produced the deepest, severest, longest lasting depression in Am. history.

Because the money wasn't there. The Federal Reserve refused to grow the money supply and didn't provide liquidity for the banks' assets like they were supposed to. It wasn't until World War II, when Federal spending for the war effort finally encouraged the Fed to expand the money supply, that we were able to grow out of the economy (because expanding the money for the Federal government to use also expands it for everyone else to use).

Again, I must urge people to read the Macroeconomics thread.

http://www.randi.org/vbulletin/showthread.php?s=&threadid=28574

Sorry to rain on your parade. But I would suggest that it perhaps is time to batten the hatches; we're in for it.

There's no reason at all to believe that.

 

[Jim Lennox]

Cheers Shane, I will crack on with the macroeconomics thread.

I find the subject incredibly tedious but it is something I feel I should learn about.

I may have to ask you some questions over there once I get round to finishing the thread. (We can't all be as smart as Corpy)...

 

[The Central Scrutinizer]

For example: I "gave up" looking for work last year when I and my partners started the business. We aren't employees, so technically we're not employed;

You're not employees of your own business? So your just an investor?

 

[RussDill]

The job market has definately changed significantly in the past year. A year ago, it took me more than 3 months to find a job, and when I did find one, it was on pure luck. Just now, I found a just in just under a month with no problem (computer engineering field)

 

[American]

Don't make me sing the song again.

 

[Rouser2]

Re: Re: Re: The economy booms!

Originally posted by shanek [/i]


>>Because the money wasn't there. The Federal Reserve refused to grow the money supply and didn't provide liquidity for the banks' assets like they were supposed to.


That simply is not true. The Fed in fact made the mistake of trying to reflate the supply of money, when it should have deflated. The attempted reflation only exacerbated the situation.

In reviewing Murray Rothbard's landmark book "America's Great Depression, Frank Shostack points out that...


"...when credit is created out of "thin air" and returned on the maturity day to the bank this amounts to a withdrawal of money from the economy, i.e, to a decline in the money stock. The reason for this is because there wasn't any original saver/lender, since this credit was created out of "thin air."


This vewi is in sharp conatrast to the Milton Freidman monetarist view of those events, but one that seems far more logical. The boom of the 20s was caused by easy credit policies of the Fed which was the receipe for the eventual bust. Instead of trying to prop up the system with more easy credit simply created from out of thin air and continuting to prop up the malinvestments created by the previous boom, the Fed should have deflated further, allowing these malinvestments to liquidate quickly, and thus restore real assets to valid investment. The result of these mis-guided inflationary and then reflationary policies of the Fed along with profligate fiscal activities of the Hoover and Roosevelt administrations all contributed to the longest and deepest depression in American history.

http://www.gold-eagle.com/gold_digest_03/shostak041903pv.html

-- Rouser