Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent….

The unemployment rate declined by 0.2 percentage

....The average workweek for all employees on private nonfarm payrolls was unchanged…. [A]verage hourly earnings for all employees on private nonfarm payrolls rose by 4 cents, or 0.2 percent, to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9 percent….

The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000. Monthly revisions result from additional sample reports and the monthly recalculation of seasonal factors…

http://delong.typepad.com/sdj/2012/02/h ... overy.html


Hmm.... The GOP won't get many chances to create budget fights this year to screw with things either. As Greg Mankiw(Romney's lead economist) points out this is good news for both job seekers and President Obama....
http://gregmankiw.blogspot.com/


For some perspective 243k jobs is still only fast enough growth to return to full employment at the end of Newt Gingrich's second term...

GT2211 wrote:For some perspective 243k jobs is still only fast enough growth to return to full employment at the end of Newt Gingrich's second term...

So this is an endorsement for Newt?

jk

Whether US unemployment will worsen or improve further is anyone’s guess, CdesignProponentsist, yet figures as these, and with five percent unemployment considered full employment, it must boost Obama’s re-election prospects.

Part of the better employment figures is allocable to slower productivity growth though, and fourth quarter gross domestic product data was far from encouraging, much of the increase comprising a build-up in inventories.

Europe’s problems are also far from resolved, with the upcoming bond auctions by Italy and Greece crucial (the ‘problem countries’ need to refinance nearly a total of one and a half trillion euros this year) – if things ever get that drastic, the EU should be able to bail out Greece, but Italy is a different story.

Things are looking up for the US, it seems then. I think Spain's official unemployment rate just hit 20pc.

There are plenty of people who aren't included in the official figures. Me, for example. I've given up and no longer am looking for work. Luckily I'm in a position to do so in reasonable comfort, I just have to buy a smaller boat and give up on the idea of a private plane.

Seriously though, there are a lot of people who have either given up entirely or are working in the black or grey markets.

You're right, laklak, it’s part of the conundrum.
With things apparently picking up, those who’ve stopped looking for work may well re-enter, in the process boosting the official unemployment numbers.

laklak wrote:There are plenty of people who aren't included in the official figures. Me, for example. I've given up and no longer am looking for work. Luckily I'm in a position to do so in reasonable comfort, I just have to buy a smaller boat and give up on the idea of a private plane.

Seriously though, there are a lot of people who have either given up entirely or are working in the black or grey markets.

Righto, Mr. Lak, and this is an angle that's not mentioned too often, although I did read a piece yesterday where it was elaborated on in some detail, including the idea that the unemployment rate would jump to well over ten per cent if you and others like you were in the count. There's at least 2 million if not three million who have given up searching for work and are doing whatever they're doing, but they are not counted as "unemployed," even though most of them are.

The primary media spin will always make these kinds of reports out to be "good news" and "things are looking up!" because part of their job is to cheerlead the system and try to give people something to be hopeful about. Obama certainly wants it spun that way, "Hey, things aren't so bad afterall!"

But the truth is things are as bad if not worse than they've ever been. Unemployment in the 18-24 year age group remains well above 20 per cent, in the black community it's 30 per cent, and it's around 20 per cent in the Hispanic community. Those are Depression era numbers. We all read the report the other day about how a third of American families are living one financial hiccup away from going off the cliff. And American Airlines just announced it's laying off 10,000.

It takes a long time to climb out of a deep hole, and the US let itself plunge into a very deep hole, much deeper than many were led to think or believe. Remember how long the Great Depression of the 1930's lasted? Yeah, right, almost a decade. We may be just getting started.

Rick wrote:Whether US unemployment will worsen or improve further is anyone’s guess, CdesignProponentsist, yet figures as these, and with five percent unemployment considered full employment, it must boost Obama’s re-election prospects.

Part of the better employment figures is allocable to slower productivity growth though, and fourth quarter gross domestic product data was far from encouraging, much of the increase comprising a build-up in inventories.

Is it true though that slower productivity growth raises employment in the short run?

Typically it is thought that higher productivity growth leads to higher levels of employment because the marginal productivity of labor rises. This seemed to be the view of Obama's economic team as they crafted the stimulus package including tax breaks for investments like machinery. There are some studies that confirm this, but IDK that this applies in today's economy. It would make sense that it would lower the natural rate of unemployment. I don't see why though that higher productivity would lead to lower unemployment in a recession prolonged by a lack of aggregate demand for goods/services .

The inventory build up last quarter was a bit concerning. But manufacturing orders and indices were up, restaurant numbers were good, and auto sales are continuing to grow. I really hope this doesn't restrain the Fed from further action, but I think it is likely has.

FACT-MAN-2 wrote:

laklak wrote:There are plenty of people who aren't included in the official figures. Me, for example. I've given up and no longer am looking for work. Luckily I'm in a position to do so in reasonable comfort, I just have to buy a smaller boat and give up on the idea of a private plane.

Seriously though, there are a lot of people who have either given up entirely or are working in the black or grey markets.

Righto, Mr. Lak, and this is an angle that's not mentioned too often, although I did read a piece yesterday where it was elaborated on in some detail, including the idea that the unemployment rate would jump to well over ten per cent if you and others like you were in the count. There's at least 2 million if not three million who have given up searching for work and are doing whatever they're doing, but they are not counted as "unemployed," even though most of them are.

The BLS calculates unemployment various ways. You can see the figures and differences below.
http://www.bls.gov/news.release/empsit.t15.htm

The official rate takes the number of unemployed divided by those in the labor force. That excludes the marginally attached(which discouraged workers are a subset of) as they are not counted as part of the labor force. There are various surveys and employment indicators and a sole focus on one usually does not give the full story.

The primary media spin will always make these kinds of reports out to be "good news" and "things are looking up!" because part of their job is to cheerlead the system and try to give people something to be hopeful about. Obama certainly wants it spun that way, "Hey, things aren't so bad afterall!"

It is certainly good news various indicators have show that unemployment is trending down. Is the trend sustainable? Will it plateau? Will it peak? These are somewhat murkier questions. Unemployment is a lagging indicator, many industrial level signs are pointing up, but things like inventory build up are going to have a drag as we will need to produce less because of that.

One thing that gives me slight optimism, is that we performed at about expectations last year. Not great, but not horribly. But that was including the giant dip we seemed to have in March(Japan?) which seemed to derail the recovery for a few months. You can see that in employment/auto sales/ and many other indicators If that were not the case it leaves me wondering how much stronger are year would've looked last year and if without a similar shock we may beat expectations this year....

But the truth is things are as bad if not worse than they've ever been. Unemployment in the 18-24 year age group remains well above 20 per cent, in the black community it's 30 per cent, and it's around 20 per cent in the Hispanic community. Those are Depression era numbers. We all read the report the other day about how a third of American families are living one financial hiccup away from going off the cliff. And American Airlines just announced it's laying off 10,000.

If we use more broad employment numbers for the G.D.(like you mentioned earlier for the US today) the US saw unemployment levels in upper 30's so we are certainly doing better now, then we were then.

Unemployment has fallen by 2-3% according to pretty much whatever indicator you look at, and wages have not grown as fast we would like(which tells me the Fed is not doing its job) but they are up 2% since Obama took office.

It takes a long time to climb out of a deep hole, and the US let itself plunge into a very deep hole, much deeper than many were led to think or believe. Remember how long the Great Depression of the 1930's lasted? Yeah, right, almost a decade. We may be just getting started.

Agreed. And what concerns me is that we saw a decent recovery once FDR took office, but that took place with a huge monetary stimulus and some fiscal policy help. We have no chance of getting that help from the fiscal side of things(in fact tax hikes will start any day now) and I fully expect the Fed will bypass its obligation to maintain full employment and announce it will maintain its current policy of keeping money too tight to prevent inflation. So any recovery we will see will likely have to come in spite of fiscal and monetary policy instead of being accommodated by it.

GT2211 wrote:

FACT-MAN-2 wrote:

laklak wrote:There are plenty of people who aren't included in the official figures. Me, for example. I've given up and no longer am looking for work. Luckily I'm in a position to do so in reasonable comfort, I just have to buy a smaller boat and give up on the idea of a private plane.

Seriously though, there are a lot of people who have either given up entirely or are working in the black or grey markets.

Righto, Mr. Lak, and this is an angle that's not mentioned too often, although I did read a piece yesterday where it was elaborated on in some detail, including the idea that the unemployment rate would jump to well over ten per cent if you and others like you were in the count. There's at least 2 million if not three million who have given up searching for work and are doing whatever they're doing, but they are not counted as "unemployed," even though most of them are.

The BLS calculates unemployment various ways. You can see the figures and differences below.
http://www.bls.gov/news.release/empsit.t15.htm

The official rate takes the number of unemployed divided by those in the labor force. That excludes the marginally attached(which discouraged workers are a subset of) as they are not counted as part of the labor force. There are various surveys and employment indicators and a sole focus on one usually does not give the full story.

The primary media spin will always make these kinds of reports out to be "good news" and "things are looking up!" because part of their job is to cheerlead the system and try to give people something to be hopeful about. Obama certainly wants it spun that way, "Hey, things aren't so bad afterall!"

It is certainly good news various indicators have show that unemployment is trending down. Is the trend sustainable? Will it plateau? Will it peak? These are somewhat murkier questions. Unemployment is a lagging indicator, many industrial level signs are pointing up, but things like inventory build up are going to have a drag as we will need to produce less because of that.

One thing that gives me slight optimism, is that we performed at about expectations last year. Not great, but not horribly. But that was including the giant dip we seemed to have in March(Japan?) which seemed to derail the recovery for a few months. You can see that in employment/auto sales/ and many other indicators If that were not the case it leaves me wondering how much stronger are year would've looked last year and if without a similar shock we may beat expectations this year....

But the truth is things are as bad if not worse than they've ever been. Unemployment in the 18-24 year age group remains well above 20 per cent, in the black community it's 30 per cent, and it's around 20 per cent in the Hispanic community. Those are Depression era numbers. We all read the report the other day about how a third of American families are living one financial hiccup away from going off the cliff. And American Airlines just announced it's laying off 10,000.

If we use more broad employment numbers for the G.D.(like you mentioned earlier for the US today) the US saw unemployment levels in upper 30's so we are certainly doing better now, then we were then.

A quick check at Wiki will show you that unemployment in the US never exceeded 25 per cent during the Great Depression. This is why I characterized current unemployment rates in minority communities as "depression era" numbers.

GT2211 wrote:
Unemployment has fallen by 2-3% according to pretty much whatever indicator you look at, and wages have not grown as fast we would like(which tells me the Fed is not doing its job) but they are up 2% since Obama took office.

I'm not sure how you can say this when if those who have given up looking for work were counted the rate would jump to above ten per cent.

GT2211 wrote:

fact-man-2 wrote:
It takes a long time to climb out of a deep hole, and the US let itself plunge into a very deep hole, much deeper than many were led to think or believe. Remember how long the Great Depression of the 1930's lasted? Yeah, right, almost a decade. We may be just getting started.

Agreed. And what concerns me is that we saw a decent recovery once FDR took office, but that took place with a huge monetary stimulus and some fiscal policy help. We have no chance of getting that help from the fiscal side of things(in fact tax hikes will start any day now) and I fully expect the Fed will bypass its obligation to maintain full employment and announce it will maintain its current policy of keeping money too tight to prevent inflation. So any recovery we will see will likely have to come in spite of fiscal and monetary policy instead of being accommodated by it.

The Fed doesn't have any responsibility to maintain full employment. The Fed controls the supply of money and lends money to fed banks and sets interest rates. As low as they've held their rates one would think that'd aid the employment situation but it's by no means any sort of direct boost.

To keep up with ever growing numbers of people flowing into the work force and to replace the millions of jobs that have been lost over the past four years, the economy would have to create a net gain of 200K jobs a month for several years, and the likelihood of that happening is not good.

GT2211 wrote:Is it true though that slower productivity growth raises employment in the short run?

Typically it is thought that higher productivity growth leads to higher levels of employment because the marginal productivity of labor rises. This seemed to be the view of Obama's economic team as they crafted the stimulus package including tax breaks for investments like machinery. There are some studies that confirm this, but IDK that this applies in today's economy. It would make sense that it would lower the natural rate of unemployment. I don't see why though that higher productivity would lead to lower unemployment in a recession prolonged by a lack of aggregate demand for goods/services

I’m not sure I follow your thinking here, GT2211. I think a more productive work force, whether through the introduction of better machinery, increased economies of scale, or for whatever reason, automatically reduces the need to hire additional workers.

Maybe there’s another way of looking at it. Don’t cite me on the exact percentages, but I seem to recall that as a rule-of-thumb, economists settle on five percent unemployment as full employment by attributing one percent to normal population growth, two percent to ongoing productivity growth, and the rest to a variety of reasons. It follows that if productivity growth in fact slows – falls below the more normal two percent – it will make the official unemployment rate look better than it would otherwise.

I wouldn’t care to make any predictions about future US economic prospects - while the Fed, and Bernanke in particular, is of course used as political football by all sides of politics

Ryan of the House Budget committee, only last Thursday, felt free to accuse the Fed of fuelling asset bubbles, of destabilizing prices, and of eroding the currency.

But what’s meant by “the Fed is not doing its job”?

The Fed has kept interest rates at rock bottom, pumped cash into the system via its ‘discount window’, and purchased more than two trillion dollars worth of securities (I think they’ve still carry a bloated 2.6 trillion worth).

It was also only days ago that Bernanke, fronting congressional committee, reminded how it was political gridlock that caused the US credit rating downgrade, and that unless Congress chopped four to six trillion from the coming decade’s projected deficits, a euro-zone style crisis was quite probable: investors would lose confidence in US debt and generally, inflicting high interest rates, with then the only option disruptive remedies in place of more thoughtful solutions.

He furthermore discounted the efficacy of reducing future deficits by taxing the rich while ignoring the problem of soaring healthcare costs, with federal spending for the latter heading toward 9 or 10 percent of GDP (the private sector another eventual 8 to 9 percent) – scary figures in anyone’s book?

Rick wrote:

GT2211 wrote:Is it true though that slower productivity growth raises employment in the short run?

Typically it is thought that higher productivity growth leads to higher levels of employment because the marginal productivity of labor rises. This seemed to be the view of Obama's economic team as they crafted the stimulus package including tax breaks for investments like machinery. There are some studies that confirm this, but IDK that this applies in today's economy. It would make sense that it would lower the natural rate of unemployment. I don't see why though that higher productivity would lead to lower unemployment in a recession prolonged by a lack of aggregate demand for goods/services

I’m not sure I follow your thinking here, GT2211. I think a more productive work force, whether through the introduction of better machinery, increased economies of scale, or for whatever reason, automatically reduces the need to hire additional workers.

Maybe there’s another way of looking at it. Don’t cite me on the exact percentages, but I seem to recall that as a rule-of-thumb, economists settle on five percent unemployment as full employment by attributing one percent to normal population growth, two percent to ongoing productivity growth, and the rest to a variety of reasons. It follows that if productivity growth in fact slows – falls below the more normal two percent – it will make the official unemployment rate look better than it would otherwise.

I wouldn’t care to make any predictions about future US economic prospects - while the Fed, and Bernanke in particular, is of course used as political football by all sides of politics

Ryan of the House Budget committee, only last Thursday, felt free to accuse the Fed of fuelling asset bubbles, of destabilizing prices, and of eroding the currency.

But what’s meant by “the Fed is not doing its job”?

The Fed has kept interest rates at rock bottom, pumped cash into the system via its ‘discount window’, and purchased more than two trillion dollars worth of securities (I think they’ve still carry a bloated 2.6 trillion worth).

It was also only days ago that Bernanke, fronting congressional committee, reminded how it was political gridlock that caused the US credit rating downgrade, and that unless Congress chopped four to six trillion from the coming decade’s projected deficits, a euro-zone style crisis was quite probable: investors would lose confidence in US debt and generally, inflicting high interest rates, with then the only option disruptive remedies in place of more thoughtful solutions.

He furthermore discounted the efficacy of reducing future deficits by taxing the rich while ignoring the problem of soaring healthcare costs, with federal spending for the latter heading toward 9 or 10 percent of GDP (the private sector another eventual 8 to 9 percent) – scary figures in anyone’s book?

Bernanke doesn't think taxing the rich would be a helpful move ... because he's one of them! Others, perhaps a bit more generous in their ways, have stated the opposite, that increasing taxes on the rich would be a good thing and is one of the right things we could do, including Bill Clinton, Warren Buffet and Bill Gates.

I think I'd take the word of the latter three over Mr. Bernanke any day of the week.

And besides, taxes on the rich are lower today than at any time in the past 60 years, can they not handle a bit of a bump? Buy one fewer Learjets there, buddy.

But your commentary here highlights some of the very real issues the economy is grappling with, all while keeping as many doors open as possible and keeping the wheels on the rig and turning. No mean feat, juggling on every hand, with hundreds if not thousands of competing interests all clamoring for their favor.

Man, I wouldn't count on it for a microsecond.

And predictions become a tangled web of "if's," "and's" and "buts" and "maybe's" and "or's" real quick like and nothing makes any sense. There's hardly a way to know how this thing is going to go. Economists have their histories, mainly in the form of statistics, and they can extrapolate from them to make predictions, and they have some models that have "look ahead" or predictive aspects to them.

But, they'll only get what we might term as the "vanilla" prediction, because neither their data nor their models account for about ten-thousand different variables that can come into play in a willy nilly manner at any time, day or night, tomorrow or a month from now.

Those variables or some of them or some groups of them are what eventually colors economic predictions, and shows them to have either been "about right" or "badly off" or "not so badly off," depending on what impacts occur from all those variables coming in and going out of play over time.

In other words, nobody knows anything.

Or, as some say, "it's risky business."

I was born at the beginning of the Great Depression. I grew up during the Great Depression, saw it first hand and lived it in more ways than I'd care to go into, most of which were painful in one way or another, although my family managed to hang together and survive and get me graduated from High School and into the Army, where I might learn a trade.

I don't know to what degree this kind of background may color or affect my thinking about today's situation.

But after watching this beast for 60 years I'm very hard pressed to think how they're going to keep it from going off the cliff. Not tomorrow, not the next day, probably not even the day after that, but ... soon enough, and it'll happen right smack dab in the middle of your life, which is to say I give it about a decade.

But that saves me the "agony of defeat" so to speak or as it were, because the odds are good that I won't be here a decade from now (!) If I'm right, there will be no redux for me. I won't have to live through another Great Depression. One was enough, thank you very much. But I do have children and grandchildren to be concerned about. I'm hanging on to my 40 acres here in the mountains just for them, so when the SHTF and if things get really sour, they can come here and have a life.

But for most Americans I think going forward will be a real grind. Many will do well, some will do exceedingly well, but the great majority will be swimming against the current the whole way, one financial hiccup away from debtor's prison, or wherever they send deadbeats these days.

FACT-MAN-2 wrote: Bernanke doesn't think taxing the rich would be a helpful move ... because he's one of them!

Bernanke only indicated that, asides from taxing the rich, there were a number of crucial issues to be addressed, the ballooning cost of health care not the least

His exact words?

“That [taxing the rich] by itself is not going to close the budget deficit. We need a much broader set of policies. I think the elephant in the room is really healthcare costs.”

Rick wrote:

FACT-MAN-2 wrote: Bernanke doesn't think taxing the rich would be a helpful move ... because he's one of them!

Bernanke only indicated that, asides from taxing the rich, there were a number of crucial issues to be addressed, the ballooning cost of health care not the least

His exact words?

“That [taxing the rich] by itself is not going to close the budget deficit. We need a much broader set of policies. I think the elephant in the room is really healthcare costs.”

Oh I was joking, really.

Ben's right, a much broader set of policies is in order, but just try to get something along those lines passed in the House! Or even the Congress as a whole. Obama's kind of limited as to what he can do all by his lonesome. And the Congress is not showing much zeal for cooperating with him and in fact the R members have made "a one-term president" their principle policy objective. They'd let the thing crash before they'd work with the "O" man to help turn this thing around.

Gridlock.

Very little gets done.

The so-called Congressional "super-committee" that came out of last Summer's debt ceiling debacle was tasked with finding cuts in the same range as Bernanke said they'd have to be, they were looking for $4 trillion over ten years and Ben said "$4 to $6 trillion." But nothing came of that committees efforts, they couldn't find $4 trillion they felt they could cut.

So try as they might they keep running into a brick wall, and a big part of that wall is indeed healthcare costs, in Medicare and Medicaid and in Veterans care (which has shot way up because of the wars). And of course private care is out of the question for many Americans now. It just becomes more expensive for those who can afford it, and it has already become pretty outrageous. Surely way past my bedtime.

And I think Obama's healthcare plan did include cuts in payments to practitioners and hospitals, albeit not by any big margin. Medicare Part "D" is what's killing them, GWB's drug benefit, which was never paid for.

When ya figure out where it's going to end, let me know.

Rick wrote:

GT2211 wrote:Is it true though that slower productivity growth raises employment in the short run?

Typically it is thought that higher productivity growth leads to higher levels of employment because the marginal productivity of labor rises. This seemed to be the view of Obama's economic team as they crafted the stimulus package including tax breaks for investments like machinery. There are some studies that confirm this, but IDK that this applies in today's economy. It would make sense that it would lower the natural rate of unemployment. I don't see why though that higher productivity would lead to lower unemployment in a recession prolonged by a lack of aggregate demand for goods/services

I’m not sure I follow your thinking here, GT2211. I think a more productive work force, whether through the introduction of better machinery, increased economies of scale, or for whatever reason, automatically reduces the need to hire additional workers.

In normal times, higher levels of productivity correlate with lower unemployment. I don't know how that applies today though. In more normal times you generally are at or around full employment and have supply constraints. In a liquidity trap you don't suffer from supply shortages, but lack of demand for goods at which means that producing more stuff may not translate into people buying more stuff via lower prices.

Here are two papers on productivity and employment noting the positive correlation
http://www.nber.org/digest/nov05/w11354.html
http://econpapers.repec.org/article/fip ... A13-27.htm

Maybe there’s another way of looking at it. Don’t cite me on the exact percentages, but I seem to recall that as a rule-of-thumb, economists settle on five percent unemployment as full employment by attributing one percent to normal population growth, two percent to ongoing productivity growth, and the rest to a variety of reasons. It follows that if productivity growth in fact slows – falls below the more normal two percent – it will make the official unemployment rate look better than it would otherwise.

The 'natural' rate varies based on the policies, social aspects, and demographics of a state. In Mankiw's textbook there is a chart showing the natural rate ranging from the middle four percent range in the 50's then rising to around 7% and then falling. It has generally been thought to be higher in many European countries, due in part to their safety net.

But what’s meant by “the Fed is not doing its job”?

The Federal Reserve job's is to maintain price stability and full employment. By letting nominal incomes fall and remain far below their trend, and by failing to respond for the increased demand for money, they have completely failed at their job and are responsible for prolonging this crisis.

The Fed has kept interest rates at rock bottom, pumped cash into the system via its ‘discount window’, and purchased more than two trillion dollars worth of securities (I think they’ve still carry a bloated 2.6 trillion worth).

It has kept the Fed Fund's Rate near its ZLB. It is worth noting that the fed's fund rate is a tool to achieving the appropriate monetary policy. Only one tool out of many possible tools and once it has hit zero the Fed should be using different tools to achieve the appropriate monetary goals. I believe Bernanke knows this, as he lectured Japan about many times. I know Charles Evan's knows this because he has made the case eloquently many times. The Fed has also payed interest on excess reserves and continues to place finite dollar amounts on its QE easing when it should be targeting NGDP or inflation which is undermining its cause.

FACT-MAN-2 wrote:

GT2211 wrote:

FACT-MAN-2 wrote:

laklak wrote:There are plenty of people who aren't included in the official figures. Me, for example. I've given up and no longer am looking for work. Luckily I'm in a position to do so in reasonable comfort, I just have to buy a smaller boat and give up on the idea of a private plane.

Seriously though, there are a lot of people who have either given up entirely or are working in the black or grey markets.

Righto, Mr. Lak, and this is an angle that's not mentioned too often, although I did read a piece yesterday where it was elaborated on in some detail, including the idea that the unemployment rate would jump to well over ten per cent if you and others like you were in the count. There's at least 2 million if not three million who have given up searching for work and are doing whatever they're doing, but they are not counted as "unemployed," even though most of them are.

The BLS calculates unemployment various ways. You can see the figures and differences below.
http://www.bls.gov/news.release/empsit.t15.htm

The official rate takes the number of unemployed divided by those in the labor force. That excludes the marginally attached(which discouraged workers are a subset of) as they are not counted as part of the labor force. There are various surveys and employment indicators and a sole focus on one usually does not give the full story.

The primary media spin will always make these kinds of reports out to be "good news" and "things are looking up!" because part of their job is to cheerlead the system and try to give people something to be hopeful about. Obama certainly wants it spun that way, "Hey, things aren't so bad afterall!"

It is certainly good news various indicators have show that unemployment is trending down. Is the trend sustainable? Will it plateau? Will it peak? These are somewhat murkier questions. Unemployment is a lagging indicator, many industrial level signs are pointing up, but things like inventory build up are going to have a drag as we will need to produce less because of that.

One thing that gives me slight optimism, is that we performed at about expectations last year. Not great, but not horribly. But that was including the giant dip we seemed to have in March(Japan?) which seemed to derail the recovery for a few months. You can see that in employment/auto sales/ and many other indicators If that were not the case it leaves me wondering how much stronger are year would've looked last year and if without a similar shock we may beat expectations this year....

But the truth is things are as bad if not worse than they've ever been. Unemployment in the 18-24 year age group remains well above 20 per cent, in the black community it's 30 per cent, and it's around 20 per cent in the Hispanic community. Those are Depression era numbers. We all read the report the other day about how a third of American families are living one financial hiccup away from going off the cliff. And American Airlines just announced it's laying off 10,000.

If we use more broad employment numbers for the G.D.(like you mentioned earlier for the US today) the US saw unemployment levels in upper 30's so we are certainly doing better now, then we were then.

A quick check at Wiki will show you that unemployment in the US never exceeded 25 per cent during the Great Depression.

The official rate peaked around 24%. The alternative (broader) measures of unemployment, that you mentioned earlier in your post which show unemployment today over 10+% back then were near 40% during the Great Depression.

GT2211 wrote:
Unemployment has fallen by 2-3% according to pretty much whatever indicator you look at, and wages have not grown as fast we would like(which tells me the Fed is not doing its job) but they are up 2% since Obama took office.

I'm not sure how you can say this when if those who have given up looking for work were counted the rate would jump to above ten per cent.

Because if you look at the link I posted earlier. There are alternative measures of unemployment done by the BLS that include those who are not in the labor force. The U-6, the broadest measure including "total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force" was at 17.3% at the beginning of last year. It is now at 15.1%

GT2211 wrote:

fact-man-2 wrote:
It takes a long time to climb out of a deep hole, and the US let itself plunge into a very deep hole, much deeper than many were led to think or believe. Remember how long the Great Depression of the 1930's lasted? Yeah, right, almost a decade. We may be just getting started.

Agreed. And what concerns me is that we saw a decent recovery once FDR took office, but that took place with a huge monetary stimulus and some fiscal policy help. We have no chance of getting that help from the fiscal side of things(in fact tax hikes will start any day now) and I fully expect the Fed will bypass its obligation to maintain full employment and announce it will maintain its current policy of keeping money too tight to prevent inflation. So any recovery we will see will likely have to come in spite of fiscal and monetary policy instead of being accommodated by it.

The Fed doesn't have any responsibility to maintain full employment.

Wrong:
In 1977, Congress passed a law requiring the Federal Reserve to promote both maximum employment and price stability. This is often called the "dual mandate" and guides the Fed's decision-making in conducting national monetary policy.

http://www.chicagofed.org/webpages/publ ... andate.cfm

The Fed controls the supply of money and lends money to fed banks and sets interest rates. As low as they've held their rates one would think that'd aid the employment situation but it's by no means any sort of direct boost. To keep up with ever growing numbers of people flowing into the work force and to replace the millions of jobs that have been lost over the past four years, the economy would have to create a net gain of 200K jobs a month for several years, and the likelihood of that happening is not good.

I think this chart would of interest to you and gives some perspective on the numbers I posted in the OP

When I first wrote my ‘productivity growth’ explanation, GT2211, I qualified with the words ‘all things being equal’, only to delete them in the name of simplicity: I obviously should have left them!

Naturally there are sets of economic circumstances or periods where employment may increase simultaneously with, or despite greater productivity, including where the economy is growing rapidly, or where lower prices happen to spur demand to such a degree that producers find it appropriate to add new workers regardless.

You also note, again somewhat irrelevantly it seems, that the actual ‘natural’ rates of unemployment tends to vary across the board, and then as a result of any one of a number of factors What else would one expect, GT2211?

The simple fact remains that at present, where the US as a whole is concerned, five percent unemployment is considered full employment, with an average of two percent thereof, merely by ‘rule of thumb’, deemed attributable to ongoing productivity growth.

Which automatically indicates that had productivity growth accelerated beyond two percent, the recent unemployment figures would in reality be stronger than they prima facie appear to be, with the reverse applicable if productivity growth had slackened to below this figure, as in fact happened to be the case.

Bernanke is patently dealing with a complex set of problems, somewhat like trying to be sure-footed while standing in quicksand. It’s just not a case of, oh let’s just quickly and deliberately take care of this or that. Neither do I for a moment agree that “they have completely failed at their job and are responsible for prolonging this crisis.”

After the ‘Maestro’ Greenspan, the Fed acted fairly swiftly, cutting interest rates and by pumping cash into the banking system, as later followed by QE1 and QE2 bond and mortgage securities purchases; Bernanke has also made it clear that the policy of near-zero interest rates isn’t set in concrete. Should the economy start to falter again, the Fed will no doubt implement a QE3.

But tell me, who benefits the most from ‘quantitative easing’, and who the least?

Rick wrote:When I first wrote my ‘productivity growth’ explanation, GT2211, I qualified with the words ‘all things being equal’, only to delete them in the name of simplicity: I obviously should have left them!

Naturally there are sets of economic circumstances or periods where employment may increase simultaneously with, or despite greater productivity, including where the economy is growing rapidly, or where lower prices happen to spur demand to such a degree that producers find it appropriate to add new workers regardless.

You also note, again somewhat irrelevantly it seems, that the actual ‘natural’ rates of unemployment tends to vary across the board, and then as a result of any one of a number of factors What else would one expect, GT2211?

Bernanke is patently dealing with a complex set of problems, somewhat like trying to be sure-footed while standing in quicksand. It’s just not a case of, oh let’s just quickly and deliberately take care of this or that. Neither do I for a moment agree that “they have completely failed at their job and are responsible for prolonging this crisis.”

The Cleveland Fed's 10 year inflation projection is 1.39%. The Fed typically aims for 2%. They aren't close to hitting their inflation target. They aren't close to achieving their employment goals. On both counts they are undershooting considerably. By almost any indicator you look at monetary policy has been too tight. I do not see how that could possibly be judged as doing their job.

After the ‘Maestro’ Greenspan, the Fed acted fairly swiftly, cutting interest rates and by pumping cash into the banking system, as later followed by QE1 and QE2 bond and mortgage securities purchases; Bernanke has also made it clear that the policy of near-zero interest rates isn’t set in concrete. Should the economy start to falter again, the Fed will no doubt implement a QE3.

Which raises the question if they believe that they have more monetary tools that can boost the economy, why then they are not doing so? Do they actually believe that this is sufficient pace for recovery? Does anyone think that if inflation, instead of unemployment was way above it's goal at 5 or 6% that the Fed would release statements announcing they will monitor it closely? Passive tightening is still tightening.

But tell me, who benefits the most from ‘quantitative easing’, and who the least?

At this point, I would say everyone benefits more from QE.

GT2211 wrote:

fact-man-2 wrote:

GT2211 wrote:

fact-man-2 wrote:
But the truth is things are as bad if not worse than they've ever been. Unemployment in the 18-24 year age group remains well above 20 per cent, in the black community it's 30 per cent, and it's around 20 per cent in the Hispanic community. Those are Depression era numbers. We all read the report the other day about how a third of American families are living one financial hiccup away from going off the cliff. And American Airlines just announced it's laying off 10,000.

If we use more broad employment numbers for the G.D.(like you mentioned earlier for the US today) the US saw unemployment levels in upper 30's so we are certainly doing better now, then we were then.

A quick check at Wiki will show you that unemployment in the US never exceeded 25 per cent during the Great Depression.

The official rate peaked around 24%. The alternative (broader) measures of unemployment, that you mentioned earlier in your post which show unemployment today over 10+% back then were near 40% during the Great Depression.

Regardless, the rate of unemployment in minority communities remains more than twice that of the national average and are "depression era" numbers. And employment in these communities is the hardest area of job creation to deal with, which is why the rates in them remain persistently high.

GT2211 wrote:

fact-man-2 wrote:

GT2211 wrote:
Unemployment has fallen by 2-3% according to pretty much whatever indicator you look at, and wages have not grown as fast we would like(which tells me the Fed is not doing its job) but they are up 2% since Obama took office.

I'm not sure how you can say this when if those who have given up looking for work were counted the rate would jump to above ten per cent.

Because if you look at the link I posted earlier. There are alternative measures of unemployment done by the BLS that include those who are not in the labor force. The U-6, the broadest measure including "total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force" was at 17.3% at the beginning of last year. It is now at 15.1%

This difference is almost in the noise level that's inherent in the data. Sure, it shows a small improvement, but it's hardly a significant degree and is hardly anything to cheer about, methinks.

GT2211 wrote:

fact-man-2 wrote:

GT2211 wrote:

fact-man-2 wrote:
It takes a long time to climb out of a deep hole, and the US let itself plunge into a very deep hole, much deeper than many were led to think or believe. Remember how long the Great Depression of the 1930's lasted? Yeah, right, almost a decade. We may be just getting started.

Agreed. And what concerns me is that we saw a decent recovery once FDR took office, but that took place with a huge monetary stimulus and some fiscal policy help. We have no chance of getting that help from the fiscal side of things(in fact tax hikes will start any day now) and I fully expect the Fed will bypass its obligation to maintain full employment and announce it will maintain its current policy of keeping money too tight to prevent inflation. So any recovery we will see will likely have to come in spite of fiscal and monetary policy instead of being accommodated by it.

The Fed doesn't have any responsibility to maintain full employment.

Wrong:
In 1977, Congress passed a law requiring the Federal Reserve to promote both maximum employment and price stability. This is often called the "dual mandate" and guides the Fed's decision-making in conducting national monetary policy.

http://www.chicagofed.org/webpages/publ ... andate.cfm

But this isn't really a mandate to act in specific ways to curb unemployment. It's more of a general policy guideline. My comment was that "The Fed doesn't have any responsibility to maintain full employment," with the word "maintain" being the key to my assertion.

I would have thought the Fed had a general interest in behaving itself in a manner that would be consistent with the idea of "full employment" without the need of Congress having to enact some bullshit Bill to that effect. What does "promote both maximum employment and price stability" actually mean within the Fed's mandate? It certainly doesn't mean they can do any damned thing they choose or please. I sorta think the Fed probably just brushed this law off because there's nothing specific they can do toward job creation and they already keep things as liquid as they feel is appropriate for the economy as a whole, e.g., QE.

GT2211 wrote:

fact-man-2 wrote:
The Fed controls the supply of money and lends money to fed banks and sets interest rates. As low as they've held their rates one would think that'd aid the employment situation but it's by no means any sort of direct boost. To keep up with ever growing numbers of people flowing into the work force and to replace the millions of jobs that have been lost over the past four years, the economy would have to create a net gain of 200K jobs a month for several years, and the likelihood of that happening is not good.

I think this chart would of interest to you and gives some perspective on the numbers I posted in the OP

This graph illustrates just how long the climb out of the hole is going to be and it's longer or shorter depending upon what rate of job creation might be expected to occur. So it becomes a matter of probabilities. The ten-year history shows that things won't get back to "normal" for more than a decade, clear out to the year 2023. Do we think more jobs can be created 2012-2022 than were created in 2000-2010? I don't.

I don't see much happening in the economy right now that would support the idea that it's probably going to happen any time soon and I'd still expect it's going to be many years before we ever get back to where we were in 2005-2006. And there are significant risk factors out there that pose serious obstacles, e.g., the Euro situation, oil price volatility, war with Iran, to name three.

Economy usually doesn't return to previous conditions, it usually proceeds toward new conditions and right now it's anyone's guess as to what those new conditions might turn out to be. Income inequality, which is severe right and and growing worse by the day, will have an impact on what any new equilibrium might turn out to be, and I don't think we can expect consumer debt to drive any great new surge in consumption, people have been scared right off that one, as shown by increasing rates of savings.

Guys like Paul Krugman and Robert Reich keep screaming for huge stimulus spending and they're dreaming if they think anything like that's going to happen. But I think they have a point, the economy does need a huge boost if it's to ever get going again at any kind of buoyant pace, yet those days are probably gone. So I expect it's just going to keep dribbling along, and that's not going to be satisfactory to those in the 18-24 age bracket, who may just swell the OWS protest lines when they find there are no jobs for them.

Which raises the question if they believe that they have more monetary tools that can boost the economy, why then they are not doing so, GT2211?

Given what scenario? An improving or worsening economy?

The latter would again leave the Fed between a rock and a hard place, with ‘quantitative easing’ (printing money) only a last resort option. A better economy would facilitate rising interest rates, apart from providing an opportunity to offload some of those excess Fed securities.

Do they actually believe that this is sufficient pace for recovery, GT2211?

I think the Fed simply wants to see some more numbers before committing itself to more QE stimulus.

Passive tightening is still tightening, GT2211?

Translation: The Fed should print more money?

At this point, you would say everyone benefits more from QE, GT2211?

A mite nonsensical, I feel!

You seem a tad fixated on quantitative easing, to the exclusion of all else.

Forget about US national debt (with that fine Republican aspirant and economics professor, Larry Kotlikoff, via ‘generational accounting’, fixing government debt – including non-funded future commitments - at a staggering $ 211 trillion!), forget about political gridlock, forget about ongoing trillion dollar deficits, forget about the sky-rocketing healthcare costs, forget about Europe’s problems or China’s escalating economic strength . . . print money!