Labor Market Still Terrible, Likely to Get Worse
Via Ali Frick, a useful chart from Calculated Risk that helps put today’s terrible employment report in context:
Unfortunately, context only makes things look worse. Employment is what they call a “lagging indicator”—it picks up only after GDP growth is under way. And in the past two recessions it’s lagged especially severely with the peak of unemployment coming about 18 months after the resumption of growth.
Meanwhile, the most optimistic forecasts I’ve seen spy in the current data some signs of recovery. These optimistic forecasts envision further contraction in Q2 of 2009, but at a reduced pace, followed by growth in Q3 and Q4 as stimulus money begins to take effect and purchases of cars and durable goods start creeping up as things break and people need to replace them. That would be followed by some more robust growth in 2010 as confidence returns. That’s a rosy scenario, but it could happen. It’s important to note, however, that even if this rosy scenario takes place, we should still expect to see unemployment continue to rise for about 21 more months and it would take several years after that for the unemployment rate to actually drop to a full employment level. We could perhaps get triply rosy and say that a progressive administration will move more aggressively toward full employment meaning we might be only three and half years away rather than, say, five but that would (a) still be terrible and (b) actually be extremely optimistic on a variety of fronts.
An alternative, also plausible scenario, would be that with since the money supply has grown so rapidly to counteract the recession, that recovery will be unusually slow since every step of growth is going to need to be countered by monetary tightening.
31 Responses to “Labor Market Still Terrible, Likely to Get Worse”
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April 3rd, 2009 at 10:36 am
The thing is, unemployment has acted much more like that seen in 1982 and previous recessions, i.e., spiking quickly and massively. And in those recessions, employment usually picked up fairly quickly after growth had resumed.
The other reason I think that employment might pick up more quickly than we’re expecting is that a lot of businesses have cut payroll by more than is really feasible–if Geithner manages to unf*ck the financial sector and even a little bit of growth returns, these folks are going to start hiring again rather quickly.
April 3rd, 2009 at 10:46 am
MattY, don’t you realize that empathy or acknowledgment of human suffering is talking down the economy????
April 3rd, 2009 at 10:47 am
Al illustrates why I criticized Obama and the Democrats for their ineffective Kumbaya bullshit. This Recession should have been PERMANENTLY hung around the neck of the Republican Party — so that every misfortune in the next two years just makes people hate Republicans all that much stronger.
Instead the Republicans who CAUSED this trainwreck are now blaming Obama and claiming that if elected they can make the trains run on time. Whereas they should be fleeing from lynch mobs at this point.
We need a Third Party — the Democrats aren’t trying to improve our lot — they simply exist to subvert, undermine and sabotage any protests Americans try to make at the royal fucking they’re taking. Because Democratic consultants and politicians are living quite well, thank you very much. The big banks are diverting a few crumbs their way from that $10 Trillion in tax bailout money.
April 3rd, 2009 at 10:53 am
Andrew, thats really only the kind of thing you can say with accuracy AFTER things are over.
Geithner can’t do anything but smoke and mirrors. Things will ‘look’ like they are picking up now. Since the powers that be just decided to let banks make shit up on the value of their holdings. Will people start hiring again? No. Because they’ll know it’s BS. Will the media pretend we’re in recovery anyway? They spent the last year of the recession debating if we were even in one.
April 3rd, 2009 at 10:54 am
I am not sure this means anything. I was talking to some people from Bain and other consultancies, and it seems like they are actually ratcheting up hiring rather than reducing it. They are doing pretty fine.
So no, I don’t think this is any seriously scary stuff.
April 3rd, 2009 at 11:04 am
Not one damm Republican –in House or Senate –voted in favor of the budget yesterday.
http://www.nytimes.com/2009/04/03/us/politics/03budget.html?hp
So how is that bipartisan outreach working, Mr President?
April 3rd, 2009 at 11:07 am
Shorter Myles: Why oppose the war? It’s making the undertakers prosperous.
April 3rd, 2009 at 11:08 am
Gee Matt, a much longer, much slower, much more painful recovery for everyone!
Who woulda’ guessed?
That is exactly what you were told would be the result of ObaStimulator’s unparalleled deficit spending and back then you soiled your pants telling us how the negative CBO projections didn’t count for nothin.
And to top it all you’ve already embraced the coming truly painful regressive tax hikes, guaranteed to only make things worse, to pay for your failures.
Obama’s “just get by the next election” bs and his “say anything do nothing” lies are coming back to bite us all in our ass.
And what the fuck do you think you will have to show for it?
I’ll tell you… a string of massive guv’ment failures and the DemoFrauds being again cast into the wilderness as the steal and spend party of irresponsibility.
Surprise! It takes the “progressives” to make the Bushit look good.
April 3rd, 2009 at 11:12 am
JT, there is little point to writing incoherent screeds against MattY. The truly fun thing to do is try to irritate the other commenters, if what you seek is attention. Take the example of Myles and Al as your models.
April 3rd, 2009 at 11:12 am
How many days after Bush took office did 9/11 occur? Because that’s the precise span of time that conservatives have asserted a president is not responsible for anything that happens in this country. Sorry Al, but this economy still officially belongs to George W. Bush.
April 3rd, 2009 at 11:21 am
“Monetary tightening” has become a meaningless term. The textbook says that Fed monetary policy (itself a term subject to question) acts through the banking system to expand or contract credit, which in turn is strongly determinate in economic growth rates.
Well the Fed raised it’s target rate for 3 straight years in in 17 steps from early 03 to early 06 but total credit continued to grow at an every accelerating pace during the entire period. So their ‘policy’ of ‘tightening’ did not effect the market at all in the ways the textbooks describe.
In other words “monetary tightening” has lost all practical functional meaning. Since 2000 and the dot com collapse the Fed has been easy in an unprecedented faction and still we are in the deepest recession since the 1930’s.
You tell me how they are ever going to ‘tighten’. The systematic addiction to credit is terminal. Ever increasing amounts of credit bring every shrinking returns of economic growth. As it now stands the US needs at least $3 trillion in credit just to prevent GDP shrinkage. Where is it going to come from?
This is getting to the very heart of our dilemma.
April 3rd, 2009 at 12:07 pm
According to the chart, only in the last two recessions did the unemployment rate continue to go up well beyond the end of the recession. Why is that?
April 3rd, 2009 at 12:22 pm
Al, this is weak, coming from you. Aren’t the talking points faxes giving you anything of better quality? You want the “annoy and anger my friends and relatives” right wing talking points, not the “make people feel sorry for what I’m resorting to” talking points.
April 3rd, 2009 at 12:25 pm
Hi Matt, NBER does weight employment heavily in dating cycles. This is from their website:
They use personal income as well because when can often see the opposite of today’s numbers — stable job growth but lower wages.
April 3rd, 2009 at 1:07 pm
It’s making the undertakers prosperous.
While you are sitting safe in the USA moralising and luxuriating in your ludicrous liberal smugness, I am actually applying for short-term positions (clerical, etc) in the Green Zone of Baghdad working with Western contractors. Not only do they pay well, but also offer the war-zone excitement which you would not be able to have working in North America.
So while I am actually trying to do the work, you are just slagging people off. Bugger off you sick bastard.
April 3rd, 2009 at 1:26 pm
@ 4 Although I agree in principle with your argument, I hold out hope there is a grander strategy involved.
The Right began pounding “Obama Recession” rhetoric into the collective brain even before the election was concluded. The Pit Bulls, Sean, Glenn, Rush, Greta, Britt et al…, are relentless but how effective they are remains to be seen. Either way, they can’t be stopped. Not yet, anyway.
Obama promised bi-partisanship. My fervent hope is, he was bullshitting the American People. My fervent hope is, his plan was to reach out the hand of friendship to Republican Party knowing they would publicly bitch slap him. The bitch slap would resonate in the American Psyche, hopefully forever, but at least a year or two, and help win the 2010 election.
The Obama Master Plan was to produce a black and white paradigm for the American Simpletons, you are either with Obama or against him. Your are either with the hard working, sensible nice guy doing his best or your are with the frothing dogs. The choice is yours.
As for a third party, it sounds great, but it would just get bought off too. If anything, applying the divide and conquer principle would just make it an easier corruption.
April 3rd, 2009 at 1:27 pm
According to the chart, only in the last two recessions did the unemployment rate continue to go up well beyond the end of the recession. Why is that?
I reckon it’s because the last two recession were relatively shallow and tepid. Which is why — contrary to Matt’s suspicions — I actually think there’s a decent chance we’ll see a fairly sharp and robust recovery — accompanied by fairly substantial employment growth — once things get going. Mind you I don’t doubt that employment will lag the impending recovery like it always does — I just doubt we’re going to see the peak in unemployment come a full eighteen months after growth resumes. It’s just a hunch. On the other hand I do suspect the rate of decline in the unemployment rate will be pretty unimpressive, given the substantial pool of discouraged workers.
April 3rd, 2009 at 1:43 pm
how Matthew and the rest of the left-wing blogosphere get their talking points through the Journolist.
That set of talking points you were fed is now at least a few weeks old. Things really do suck over on your end, don’t they?
we need to invite fake Al from WaMo over here. He does a better job.
Al, I hate to say it, but “your early stuff was better.”
April 3rd, 2009 at 1:53 pm
You know what’s funny? I see liberal blogs run “look at how the talking point spreads” posts all the time.
Here’s (ACORN, birth certificate, Community Reinvestment Act, whatever) in NRO. An hour later, here it is on the Weekly Standard’s site. Here it is on Glenn Reynolds, here it is on Red State, here it is on Town Hall. Liberal blogs love those posts, because they’re so easy.
Now, having been humiliated by having their brain-dead conformity pointed out to them over and over again, right-wingers are trying to turn the tables by using the word JournoList. “You liberals get all your talking points from JournoList.” The problem is, they’ve never been able to come up with a single example of a talking point that liberals bloggers have decided on and pushed in a coordinated fashion, the way conservative bloggers and pundits do.
Which raises the question: why would wingnuts simply assume, without evidence, that bloggers and activists of a similar ideological orientation who talk to each other on a listserve must be using it to coordinate talking points?
Just another case of right-wing projection. The liberals must be doing this, because this is exactly what we do.
April 3rd, 2009 at 3:37 pm
Re Myles’ comment “While you are sitting safe in the USA moralising and luxuriating in your ludicrous liberal smugness, I am actually applying for short-term positions (clerical, etc) in the Green Zone of Baghdad working with Western contractors. Not only do they pay well, but also offer the war-zone excitement which you would not be able to have working in North America. ”
————
1) Ah, sucking on the Halliburton teat, eh Myles? I think that particular spigot is about to run dry , if what I hear re latest Defense budgeting is true.
And I’m sure the Shites of Iraq will just LOVE someone with a White Man’s Burden complex.
2) If you see that fat fucker Michael Kelly in IED hell, tell him Joschka Fischer and Bill Clinton grinned recently when they said to tell him Hi.
http://www.postwritersgroup.com/archives/kell0211.htm
http://poynter.org/content/content_view.asp?id=28541
April 3rd, 2009 at 4:13 pm
The high water mark of the American Empire has been reached , Myles. The tides starts running out this weekend — when SecDef Gates briefs on the cancellation of the Transformational Satellite Communications System(TSAT). Decision won’t be announced till Monday but that drop in Lockheed Martin’s stock today tells the tale.
TSAT is the plus ne ultra of an American Empire, Myles.
Basic Infrastructure. Constellation of very high bandwidth sats interlinked with lasers. You need a cable in the sky to carry all those Predator broadcasts, Centcom communications,etc. Been in the works for 15 years. lots of money invested.
Without TSAT, the US military remains an expeditionary force. The Russians and Chinese know we’re cashing in our chips — even if the American news media won’t figure it out for 10 more years. Going for an inside straigh on that last Wall Street hand pretty well bankrupted us.
April 3rd, 2009 at 4:20 pm
According to today’s job market report, the unemployment rate for government workers is 2.8%. I fear that the increasing number of federal workers are working to keep the remainder of the economy unemployed.
April 3rd, 2009 at 4:58 pm
1) Ah, sucking on the Halliburton teat, eh Myles? I think that particular spigot is about to run dry , if what I hear re latest Defense budgeting is true.
Halliburton is a gloriously successful and profitable company. Do you just hate capitalistic success or something? Because even without Halliburton, there are things like oil companies, western consulting outfits, construction companies, and more, that charge the Iraqi govt and pay immensely well.
It would be like being a British Empire pioneer to India or whateve at the turn of the 20th century.
April 3rd, 2009 at 7:52 pm
@ 27 The British had a gloriously successful and profitable company working for them, the Halliburton of the Empire, The East India Company. It was eventually dissolved, but not before the the Company sucked every last drop from momma’s teat.
So it is a matter of timing. You could get rich.
April 3rd, 2009 at 8:45 pm
So it is a matter of timing. You could get rich.
Well put. Off to the Green Zone I hope to go.
April 4th, 2009 at 12:38 am
@ 29
Politics aside Myles, stay safe.
April 4th, 2009 at 2:52 am
Politics aside Myles, stay safe.
I shall try my best to do so. I really imagine there won’t be that many future chances to be involved in an imperial war in my life.
Still, I feel bad for the many maimed soldiers. Dead, not a big deal, at least for me. But to be permanently maimed for a cause that didn’t exist, well, that reaches the depth of tragic. I suppose that’s life. I wonder if they thought about this sort of thing when they signed up. I suppose some of the did not and the others thought about it and chose to bite the bullet anyway. Quite tragic.