http://www.nytimes.com/2013/03/09/business/economy/us-added-236000-jobs-in-february.html?ref=business&_r=0
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"Every child is an artist. The problem is how to remain an artist once he grows up." (Pablo Picasso)
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We have to be grateful for the "good news" in whatever form it takes when dealing with the U.S. economy. According to today's "Times," the American economy created 236,000 positions in February and the unemployment rate was 7.7% (compared with 7.9% for January). "Economists," and I use that term loosely, had expected 165,000 jobs to be added in February with no movement in the unemployment rate.
The problem is that the federal budget cuts went into effect March 1, so they are not reflected in the February data. The "236,000" number above reflects an actual private payroll addition of 246,000 jobs minus 10,000 public sector jobs that have already been eliminated.
The Hamilton Project has created a "Jobs Gap" chart which tracks what a real recovery would entail: the U.S. faces a jobs gap of 11.4 million jobs, 5.2 million from jobs lost since 2007, and another 6.1 million jobs that should have been created in the absence of the recession. Looking at The Hamilton Project trend line projections, if the economy adds about 208,000 jobs per month, which was the average monthly rate for the best year of job creation in the 2000s, it will take until February, 2020 - 8 years - to close the jobs gap. Given a more optimistic rate of 321,000 jobs per month, which was the average monthly rate for the best year of job creation in the 1990s, the economy will reach pre-recession employment levels by April, 2016 - not for another 4 years.
Looked at in this perspective, any good news is welcome but there is much progress that's needed. Cutting government jobs would not appear to be in the interest of reducing unemployment rates or increasing GDP growth. Of course, I'm not an economist or a politician, thankfully.
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ReplyDeleteGovernment jobs should decrease following implementation of new software systems and IT architectures. Productivity of the median government worker will increase yet require more education and experience to manage more responsibilities than predecessors. This is long overdue and will bring greater agility and accountability to government operations.
ReplyDeleteHa! Picasso? I like the quote but not the guy. His strokes of a brush were genius in his time, but his human nature was unoriginally and stubbornly fallacious, kind of like those economists and politicians.
I would be skeptical about returning to something closer to full employment. This is rooted in fundamentals of human nature as follows. Economic growth is linked to child births. Go to:
http://research.stlouisfed.org/fred2/categories
Run through anything related to debt, credit, or securitized assets. It all begins in the 1970s. For whatever reason, everyone decided to start borrowing, both public and private sectors. China started reforming in the 1970s too... irony. When we started on a path of darkness, they started searching for the light. Anyways! Debt really begins accelerating in the 1980s. Information technology drove huge productivity gains that slowed in the late 1990s, hence the tech bubble. People are short-sighted. They saw the tech gains as sustainable and increased debt even more rapidly, but these productivity gains were not sustainable. We picked the last of the low hanging fruit in the early 2000s. Now it is time for business intelligence, cloud computing, software based networks... Who knows if robots will work out. Some of my engineering buddies give dim forecasts. Nanotechnology is going nowhere. Artificial intelligence crawls at a slow pace and is limited by decreasing gains in computational ability. Mobile computing is okay. Personally, I think it is a fad that is reaching maturity and ultimately commoditization. I admire Steve Jobs, but I don't think we gained much true productivity by mobilizing information. Just like Facebook or Groupon. They are kind of cool, but how do they transform the economy? Maybe they decrease asymmetrical information that results in decreasing monopolistic behavior thus decreasing prices and increasing quantity of production, thereby increasing living standards and GDP and employment? Maybe. I am not just saying things. That stuff is backed by economics. Somebody won a Nobel in the past decade for something on asymmetric information. Common sense... yet nothing can beat common sense illustrated and quantified through data.
Wow. I am going on a tangent. Lets return to childbirths. If GDP should have been 20% less over the past couple of decades, do we have 20% too many kids? Maybe this is the harsh reality. These kids came about through debt generated by all people. A conscious decision not well-thought out. The median American attitude tends to want healthcare, social security, and social welfare for all. This 20% extra population over the past couple of decades (just a number I made up) will increase those costs. This comes at a time when developed countries are stuck in neutral and emerging economies, primarily China, are increasing their share of the global economy exponentially.
ReplyDeleteWe are sitting at an inflection point now. I think people are going to look at their reflection and not like what they see. I see it all too often... the attitude that someone else will do it.
I believe we will make it out of this, but it will be slow. I am curious to see how this endless array of intricately woven values and goals plays out. I came to it through hard work and an open mind that economies and politics ultimately converge with the aggregated values and goals of any group of people. Even more ultimately... what are the right values and goal, those which reality ultimately conforms to? Strange how simple and complex all this is. A gazillion simple interactions culminating at miraculous highs and tragic lows. Such is the nature of being human.
This all makes sense right? Sometime I think these brainstorms are essentially mixing an already mixed salad. Nothing changes but I mixed it a bit more.