Mercury Rising 鳯女

Politics, life, and other things that matter

Unemployment Recovery Similar To Previous Recent Recessions

Posted by Phoenix Woman on December 22, 2010

Bonddad discusses why all of the ideological camps discussing the current state of the economy have an interest in poor-mouthing it.

By way of backing up his argument, he cites the fact that the unemployment rate recovery has been so far quite similar to those of past recession recoveries.

Something to ponder.

7 Responses to “Unemployment Recovery Similar To Previous Recent Recessions”

  1. jo6pac said

    I find this hard to believe that this is the same as other recoveries. I don’t see this turning around in 12yrs or less as companies keep the outsourcing going to other countries that now manufacture the goods we us to. All large Amerikan companies are investing in Asia for lower wages and be closer to an emerging market they hope. The new jobs here are service, retail, and health and there is not enough of those to employ 175,000 per month just to stay even. Jobs will only come back when corp. have beaten down wages so they are cheap enough to compete with 3rd world nations and by then the education system in this nation will be in shambles and very few smart enough to do the jobs needed. To me this just more happy talk.

  2. Charles II said

    I’ve basically stopped posting at Bonddad’s place because they do nothing to build community …like, say, discuss contradictory points of view.

    I think he’s misunderstanding the data on several different levels. First, to concede what I think he has right, there does seem to be some sort of maximum rate at which unemployment can fall, roughly 1% per year, and sometimes it seems to be biphasic (go in two spurts). That’s about what FDR achieved, and it may have to do with how rapidly people can be trained for jobs. Initially, it’s relatively easy to re-hire people who were laid off. But after years, people lose their skills, take other employment, or simply give up all hope for getting a job. Only when employers get desperate do they start in-house training.

    Also, I do credit the Obama Administration for keeping things from getting worse. Absent any intervention, unemployment would have gone much higher.

    But that’s as much credit as I’ll give Bonddad. There’s a reason that the two recent recoveries have seemed slower, namely that the Federal government has done relatively little on the fiscal side. Policy does affect outcomes, and policy for the last 20 years has been conservative, sacrificing the well-being of the unemployed for the sake of keeping benefits miserly. In 1980, unemployment benefits were somewhere around three quarters of pay (and medical care was relatively cheap). Now UE is something like one-third of pay, and medical insurance is through the roof. Demand from the unemployed drops more sharply (cet. par.) under these conditions.

    Second, initial claims in part reflects how many people are covered by unemployment. If you don’t qualify, you don’t claim. Take a look at this graph, which shows rate of rise and fall of unemployment. This shows how atypical the fall in unemployment of the last three recessions has been, with the return of full employment being slower and slower. While we don’t know how this recession will play out, the actions taken in Washington this December make it far more likely that unemployment will stay high as state budget crises continue and the unresolved mortgage mess threatens to revive the financial meltdown.

    I would love to feel confident about the economy. Investing in this environment is extremely difficult. There are unanticipated crises, like the Flash Crash. Insider dealings and the abrogation of settled mortgage law on the banks make it impossible to predict anything except that someday, there must be a reckoning. And the fact that the market appears to be range-bound encourages speculation. But despite my desire to praise the economy of 2009-10, I cannot. It sucks, and the fact that it could suck a whole lot worse is not particularly comforting.

    • jo6pac said

      Yes, I like the fact that you try to have positive out look and this will work out. I’m some one that’s been blue collar all my life and if I was even looking for a job at 62 in my field it wouldn’t happen. I have friends that highly skilled trades people and for the first time they are without work and nothing in sight. We could always find something during other recessions but not this one it’s to long and too deep for a normal recovery. When my 99 weeks run out I can move to SS hopefully. I just hope some how in this next congress the 99ers that will drop off now can be given another 13 months or better yet money until the economy improves like they did in the 70s. I don’t know anything about this site and thanks for the graph from my favorite maker of all things that have lines. I’m a reader of the doom/gloom sites trying to figure out to protect myself form wall street.

  3. Wege said

    I’d like to see the numbers on the percentage of Americans with jobs over the past few decades. The unemployment rate only measures those who’ve been in the workforce recently, but completely misses all those forced into self-employment or who get paid in cash.

    • Charles II said

      Here you go, ‘Wege. This comes from Dr Housing Bubble and is pretty recent (August). I suggest reading through that latter link, because it makes the counter-case to recovery.

      FWIW, Nouriel Roubini is slightly more optimistic than he was three months ago. Basically, not repealing the tax cuts reduced the expected drag of the ending of the stimulus, the payroll tax holiday somewhat increased the stimulus, but ending Making Work Pay will mean that the poor actually pay higher taxes.

    • jo6pac said

      completely misses all those forced into self-employment or who get paid in cash.

      That would be a number to find, sure see a lot of names in the paper for factious lic. and these people are looking for something to earn a living I know I’m

      • Charles II said

        Granting that it has limitations, it shows trends, Jo. The worst limitations go in opposite diretions: people who are out of the workforce voluntarily to go to school and people who are working far fewer hours than we would consider employed. It does count cash employment, assuming people are willing to answer the survey. But the fact that it has fallen as far as it has is a worrying sign.

        It’s about the best measure with have. That and U-6.

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