- Oct 7, 2011
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Last night, at the State of the Union address, President Obama spoke of a recovery, but the evidence for such a recovery doesnt really exist.
The national unemployment is now 8.5% (Decembers), its lowest level since January 2009, but while some saw this welcome news as something to celebrate, it hides a much darker economic picture: the jobs report vastly undercounts the unemployment rate. Moreover, as of this writing, we dont know if Decembers jobs report is a trend, or if, as some economists predict, economic growth will slow in the first quarter of 2012, forestalling some of the gains made.
In November, the unemployment rate fell from 9% to 8.6%, but this was not due to an increase in jobs, but due to a decrease in the numbers of people actively seeking them. The 315,000 who dropped out of the labor market exceeded the 120,000 new jobs, notes Edward Luce, former speechwriter to then Treasury Secretary and Obama economic advisor Larry Summers in The Financial Times. If the same number of people were looking for work today as in 2007, the jobless rate would be 11%. In December 2007, the U.S. economy employed 146 million; today, four years later, it employs 140 million. The population has grown; the number of jobs has declined.
Part of the problem is the structure of our economy. To describe our rut economist Tyler Cowen titles his book, The Great Stagnation. Peter Thiel, PayPal founder and billionaire Facebook investor, calls it, The End of the Future. The pasts optimism is foundering on the rocks of our very rocky economic recovery. The economy is shifting in ways we cant begin to understand. Nobel Prize-winning economist Michael Spence and co-author Sandile Hlatshwayo estimate that from 1990 to 2008 all net job creation has been in the non-tradable sector, chief among them health care and government jobs. Alas these sectors arent known for their productivity and are hardly the jobs that can propel the growth necessary to accommodate a new workforce.
Read More:
» Myth of a ‘Recovery’: What the Numbers Really Say - Big Government
The national unemployment is now 8.5% (Decembers), its lowest level since January 2009, but while some saw this welcome news as something to celebrate, it hides a much darker economic picture: the jobs report vastly undercounts the unemployment rate. Moreover, as of this writing, we dont know if Decembers jobs report is a trend, or if, as some economists predict, economic growth will slow in the first quarter of 2012, forestalling some of the gains made.
In November, the unemployment rate fell from 9% to 8.6%, but this was not due to an increase in jobs, but due to a decrease in the numbers of people actively seeking them. The 315,000 who dropped out of the labor market exceeded the 120,000 new jobs, notes Edward Luce, former speechwriter to then Treasury Secretary and Obama economic advisor Larry Summers in The Financial Times. If the same number of people were looking for work today as in 2007, the jobless rate would be 11%. In December 2007, the U.S. economy employed 146 million; today, four years later, it employs 140 million. The population has grown; the number of jobs has declined.
Part of the problem is the structure of our economy. To describe our rut economist Tyler Cowen titles his book, The Great Stagnation. Peter Thiel, PayPal founder and billionaire Facebook investor, calls it, The End of the Future. The pasts optimism is foundering on the rocks of our very rocky economic recovery. The economy is shifting in ways we cant begin to understand. Nobel Prize-winning economist Michael Spence and co-author Sandile Hlatshwayo estimate that from 1990 to 2008 all net job creation has been in the non-tradable sector, chief among them health care and government jobs. Alas these sectors arent known for their productivity and are hardly the jobs that can propel the growth necessary to accommodate a new workforce.
Read More:
» Myth of a ‘Recovery’: What the Numbers Really Say - Big Government
