Sunday, December 11, 2011

Don't believe the hype on US jobless numbers | Dean Baker

2:27 AM | Posted by Free Game Zone | | Edit Post

We softened with stories of the recession "double dip" so that the latest report of employment seems less serious than it is

September employment report showed the U.S. economy has created 103,000 jobs during the month, 45,000 jobs were Verizon workers returning from a strike in August. The economy created 99,000 jobs per month over the last three months, about 9,000 more than needed to keep pace with the growth of the labor force. At this rate, will be about 80 years until the economy returns to normal levels of unemployment.

However, the mainstream press that the number of jobs were better than expected. After all, less the number of jobs increases. The economy sank into recession

course, the slow growth is better than a recession. But this means that we are better off with a hurricane striking the East Coast instead of two. This is true, but why do we expect two major hurricanes that hit the East Coast, in the same year?

The same logic to a relapse into recession in history. In recent months, many analysts have been running around the horror stories about a double dip recession. While the stories were of fear, never made much sense.

every recession in the United States has had since the Great Depression was caused by a fall in sales of houses and cars. It is very difficult to imagine that the sharp fall in any of these areas at this time - especially because the current levels of sales are already very low. The worst case, we could see a slight decrease in one or two sectors, which have a limited impact on the economy.

However, other sectors of the economy is growing, albeit very modestly. Consumption, which is 70% of GDP seems to be a growth path of 3.2% in the second half of 2011. Investment in hardware and software is likely to increase by about 10%. Government is to reduce, but only an annual rate of 2.1%, slowing growth, but as this sector represents only 20% of GDP, the decline in government is not nearly large enough to convert the negative GDP.
  • With one exception, is not really a plausible story in which the U.S. economy into a second recession. The exception, of course, is the crisis in the euro area, due to the failure of one or more of the heavily indebted countries messy. However, this result will be determined by the greed and incompetence of the IMF, the European Central Bank and the European Commission, the troika negotiations with the management of government with debt problems. The current strength of the U.S. economy has little direct impact on the willingness and ability of the troika to achieve an orderly resolution of the crisis.
  • The spread of relapse in questions of meaning, as it provides a framework in which politicians and the media can say that somehow we should be happy with very bad economic news. Enough to lower expectations, even the pathetic employment numbers in September can be done to look good.
This is not the first time the media has played this game. At the beginning of the crisis, we had a number of politicians and "experts" tell us who were at risk of a second Great Depression. This line is repeated constantly by what the majority of the public think that's probably true. In fact, Ben Bernanke, who, after Alan Greenspan, the main cause of the collapse of the economy, in fact, named Time magazine person of the Year in 2009, precisely because it avoided a second Great Depression. Of course, it also prevents the return of the Black Death.

In fact, we never had any reason to fear a second Great Depression. The first Great Depression was caused not only by errors in the response to the financial crisis at the beginning, but also by the lack of sufficient momentum to the demand of the economy on its feet. The economic stimulus provided by the Second World War, which eventually restored the economy to full employment as easily have happened in 1931 and 1941, but there was no political will.


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