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What Do Today’s Job Growth Numbers And John Blutarsky’s GPA Have In Common?

September 2nd, 2011 · 7 Comments
Economic Growth · Macroeconomics · Policy

I’ll give you a hint…via @joshorton:

I’ve been waiting a long time to be able to relate economics to Animal House, so I am very excited about that right now. What I am not excited about is, well, the job numbers. From the Bureau of Labor Statistics:

Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment in most major industries changed little over the month. Health care continued to add jobs, and a decline in information employment reflected a strike. Government employment continued to trend down, despite the return of workers from a partial government shutdown in Minnesota.

In fairness, the unemployment numbers haven’t really changed significantly since April, but a number of literally zero tends to get people’s attention. In related news, did you know that we haven’t been in a recession since June 2009? Yeah, me neither. Technically, a recession means that the economy is actively getting worse, whereas the current situation is one where things just aren’t getting better.

Fairly or not, the media is pouncing all over President Obama for letting this happen. In my ideal world, I would point out that the United States is supposedly a free-market economy and therefore business cycles are not the government’s problem. However, the Employment Act of 1946 explicitly makes unemployment the federal government’s problem. (Interestingly, it’s also this act that created the Council of Economic Advisers.) This puts the government in somewhat of an awkward spot- it’s expected to make things better but is criticized when it tries to do…well, just about anything.

I suppose that’s a moot point, since it’s unclear what sort of policy would have a real effect. Interest rates are low enough that expansionary monetary policy is likely useless (even QE2 wasn’t the silver bullet that policymakers were hoping for), increasing government spending for stimulus purposes is extraordinarily politically unpopular, and companies are hoarding enough cash that tax breaks aren’t likely to all of a sudden get them hiring.

Austan Goolsbee (and others) have said that “confidence is the cheapest form of stimulus.” So where can we go buy some of that?

Tags: Economic Growth · Macroeconomics · Policy

7 responses so far ↓

  • 1 Hasdrubal // Sep 2, 2011 at 6:46 pm

    I’d love to see the media stop blaming the President every time we get some bad economic numbers. On the other hand, I’d hope they stop praising him every time we get positive numbers as well.

  • 2 David McKittrick // Sep 3, 2011 at 12:42 am

    The evidence is in, and its time we stop looking at our (historically) high unemployment numbers as wholly cyclical, but rather partly and (perhaps) mostly structural unemployment. All the evidence points to the fact that we simply have a workforce that, for the first time in modern history, is not the most skilled and suited to the jobs being created in the global economy.

  • 3 Punditus Maximus // Sep 4, 2011 at 9:39 pm

    As David above exemplifies, when you have Class Warfare, you have a lousy economy.

  • 4 Punditus Maximus // Sep 4, 2011 at 9:50 pm

    So, in 1938, US unemployment jumped from 14.3% to 19.0%. By 1944, it was around 1%.

    Is it just maybe slightly possible that when there is work, people train quickly to take it on? And that this “structural unemployment” idiocy is the anti-Keynesians pretending that they haven’t been wrong this whole time?

    The problem is demand. The banks are damaged, so they can’t allocate capital. You can tell this, because corporations are sitting on piles of cash, but the US can still borrow at 2-3%.

  • 5 Christopher Scott // Sep 6, 2011 at 7:16 pm

    If we had a structural employement problem, wouldn’t wages in one sector be rising while wages in all other sectors be falling? Think about it, if those skills were in demand, the few who have those in demand skills would be able to reap a significant price for their labor. However, wages are down across all sectors, seeming to suggest that overall demand is depressed, and that everyone, regardless of skill, is under pressure…

  • 6 Amarsir // Sep 9, 2011 at 8:51 pm

    I dunno, sectors look fairly varied to me:

    http://www.washingtonpost.com/wp-srv/special/business/unemployment-where-are-the-jobs/

  • 7 Duminy // Jan 28, 2015 at 11:07 pm

    I think the only common thing I could find is that both are incredibility unpredictable. In fact, for that matter the whole Forex industry is like that the only part I find predictable and great is my broker OctaFX as I can easily predict about them. They are one of the best companies to work with due to having lovely 50% bonus on offer for all deposit while also have great conditions which includes low spread of just 0.2 pips, high leverage up to 1.500 and lots more.

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