What Recovery? Part IV

The Bureau of Labor Statistics reports that private sector net employment grew by just 54,000 jobs in May (100,000 lower than the number required to keep up with the “natural increase”, the number of people coming into the jobs market in the normal course of events) and the unemployment rate was “substantially unchanged” at 9.1%. The private sector added just 89,000 jobs while the public sector shed jobs.

Roughly a third of that (17,000 jobs) was in healthcare. Since two-thirds of healthcare spending comes from tax dollars, that cannot be an engine of growth. The balance of the increase came primarily from professional and business services which I interpret as temps and mining. My guess on the increase in mining is that more workers have been hired as commodity prices have risen. Since commodity prices have risen, along with other assets, largely due to the Fed’s policy of quantitative easing the latest round of which is drawing to a close, it will be interesting to see if the trend persists.

Here’s an analysis of the last three years of government policy that finds that we spent $7 for every $1 of additional GDP. Since the recession ended in July of 2009 I find it terribly difficult to accept the case that the ARRA (which had spent little if anything by that point) either ended the recession or prevented it from being deeper.

Can we stop pretending that we’re not following Japan down the “lost decade” path? Largely by doing the same things the Japanese did.

7 comments… add one
  • john personna Link

    I really thought I was diss’d here, and elsewhere, for talking about lost decades …

  • Not by me. I’ve been saying L since 2009.

  • Sam Link

    that private sector employment grew by just 54,000 jobs in May

    I think private sector grew 83k offset by 29k public sector losses.

  • Can we stop pretending that we’re not following Japan down the “lost decade” path? Largely by doing the same things the Japanese did.

    I double dog dare you to post that on OTB.

    Ponce, mantis and Tano would have a complete fit and fall in it.

  • steve Link

    I assume the link is for comic relief?

    Steve

  • I assume the link is for comic relief?

    I thought his methodology was a mite suspect but I thought it was an interesting take and not particularly funny.

  • Drew Link

    “I really thought I was diss’d here, and elsewhere, for talking about lost decades …”

    Really? Not here. I know that Dave was one of the first bloggers I knew of to invoke the “L” and that I’ve written essays for other blogs making the same point.

    Verdon is correct. Go over to OTB and make the point and you’ll get called a jackel.

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