Imagine that job growth all over the world. Not non-existent but slow. Then consider the graph above. Based on that graph and slow job growth alone which countries would you conclude are in trouble?
The Economist uses that graph is a launching pad for a post suggesting that a good chunk of the slow growth in the United
States over the last half dozen years can be attributed to demographic factors:
All else being equal, a half percentage-point drop in the growth of the labour force will trim economic growth by a similar amount. Such an effect should be felt gradually. But the recession may have accelerated the process by encouraging many workers to take early retirement. In America the first baby boomers qualified for Social Security, the public pension, in 2008, on turning 62. According to several studies, this can probably explain about half the drop since then in the share of the working-age population either working or looking for work, from 66% to below 63%. (This echoes the experience of Japan, which slid into stagnation and deflation in the 1990s around the same time as its working-age population began to shrink.)
That certainly can’t be the sole reason that we’ve had slow growth since 2007 as some have suggested. For one thing the proportion of workers over age 60 who have continued to work is higher than was expected, i.e. workers who were able to have been holding on to their jobs longer than was anticipated. You would expect the Social Security Trustees Report to support the hypothesis and it doesn’t.
For another the question that should be asked of older workers is whether they’d planned to retire at 62 or not? I’m guessing that many are working longer than they’d expected to.
However, back to my original question. My interpretation of that graph is that a) if it’s true, the U. S. has already seen most of the slow growth you’d attribute to an aging workforce and b) we’re actually in better shape in that regard than Europe, Japan, or, particularly, China.
Another factor relating to Japan that I haven’t seen mentioned often enough. The biggest issue in Japan is not whether its population is aging (it is) or whether it has experienced slow, no, or negative growth over the last couple of decades (it has). The bigger questions are whether per capita GDP is continuing to increase and how evenly distributed it is. By those reckonings Japan isn’t in nearly as bad a shape as you might expect if you only looked at the working-age population as a percentage of the total.
As I pointed out recently, looking at Census Bureau and BLS stats one can determine that the percentage of people between the ages of 25 & 54 with full time jobs has dropped by about 3.8%* from the 2007 peak. Given that this is people in their prime working years, that is a HORRIBLE. I’m not seeing how demographic shifts account for THAT.
* I had mistakenly calculated that as 3.5% earlier. That’s going from 2007 to 2013 and looks at averages over the whole year. Sussing out the monthly numbers is considerably harder, as the BLS and FRED don’t make getting at THIS info terribly easy. I might work that out later, but that’s well behind many other priorities, including getting a cat fixed, cleaning the garage, and figuring out how to win more money in the sorta monthly nickel and dime poker game I play in with my friends.
Really, the amount of rationalizing being used to justify this economy as something other than an employment depression is incredible. Especially given that someone as apparently useless as myself (an ~$78 trillion per year economy has told me to fuck off to the point where I have finally done so) can find information like that above to show that the rationalizations are complete and utter crap.
What the fuck good are our leaders and academics? They’re no better than Putin & Kim. Fuck ’em all.
Viva la revolution, bitchez.
The 2007 peak was based upon a bubble from the real estate scam. Job growth in the 2000s was slow (it is actually much better now), but much of the growth was not real, if you will let me use that term. We have not done very well on the jobs front for a long time.
http://www.calculatedriskblog.com/2014/11/possible-headline-for-next-friday-best.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
Steve
steve, you’re full of shit. If it was bad before it is much worse now. I don’t see how saying that the other guys were frauds makes you guys fantastic for being even worse. You didn’t run on the platform that you’d just make things worse, but it would be an honest bad economy. You ran on the platform that you were going to fix things and make things better. And in 2010, 2012 and 2014, you all claimed you had fixed things and deserved re-election.
Guess what? The economy you voted for, repeatedly, and defended, repeatedly, and claimed was the best of all possible economies, repeatedly, sucks. Own it, you weaselly fucking rentier.
Ice
I think the better criticism of Steve’s rationalization is selectivity and what ifs. As a golfer how many times have I heard people say “well if I hadn’t bogeyed 3, 12 and 16 I’d have broken 80.” Well, you did bogey them dip wad.
And then we go to quality of jobs etc. People ought to step back and ask a question – is the economy generating jobs of sufficient quality and quantity to satisfy the vast majority of its citizens. Defining that would take some work but the current answer is a resounding no. Then your suite of policies should be altered to that end.
Right now this airplane has so much crap hanging off of it that it’s laboring to fly. And the politicians have staked out positions that almost guarantee it won’t be rectified. I don’t think my daughter will enter the workforce with the same opportunities I did.
“and claimed was the best of all possible economies”
Never said that. Ever. What I have always said is that we have not done well at creating jobs for a long time. The dot com bubble in the 90s fueled a lot of jobs, that disappeared when the bubble was over. The 2000s was a real estate bubble. Growth now is slower than what we need, but if we are siting on top of some bubble, as was obvious in the 2000s, I am not sure what it is (yes, interest rates have been held low). We do need more employment, but I don’t think either party really has an answer.
The reason to vote for the Dems, which is actually voting against the GOP, as I have also said, is on foreign policy. We really don’t need more elective wars costing us trillions of dollars and thousands of lives that destabilize whole areas of the world.
Steve
@steve
… the real estate scam. …
I am still pissed off about this other matter, but I did not miss this. This was fueled in a large part by the GSE’s. Had the government not been distorting the market, the “real estate scam” would not have had as large an impact.
I think we all know that I have issues with the financial sector, but a lot of those issues originate with the government.
At the end of six years of the Obama Administration, U. S. forces are still in Afghanistan and planning to stay longer, U. S. forces are returning to Iraq, and the president has declared war on ISIS(L). If you’re voting solely based on foreign policy, there isn’t much to choose from these days.
In addition the drone wars have been expanded exponentially. There’s no clear U. S. interest in any of these actions. Foreign policy realism was never like this.
Did you catch the NYT editorial this morning? They want to revive the “ownership society” notion that was the basis of the push towards extending credit to the uncreditworthy.
@Dave Schuler
It is a social class issue that can be turned into a racial issue, but the truth is that some people should not own their homes. This is a harsh statement, and it sounds elitist.
It will end the same way. There is no way to devise a program or scheme to keep it from occurring. The way that the financial system works it MUST occur. In a perfect world, with perfect people acting perfectly, the outcome will be exactly the same.
The thing that gripes me about it as a social policy is that from the point-of-view of a wealthy New Yorker it’s practically perfect. Not only do you appear to be supporting the poor and downtrodden but you’re the actual beneficiary of the policy (since so much of the financial industry is concentrated in New York).
” If you’re voting solely based on foreign policy, there isn’t much to choose from these days.”
Seriously? The cost in lives and money is not even remotely close. Then, add in the probability of bombing Iran and escalating the conflict with Russia.
“I think we all know that I have issues with the financial sector, but a lot of those issues originate with the government.”
Completely eliminate GSEs, which I think is a good idea anyway, and you still have all of the parts you need to replicate the last crisis. Remember that Wallison and Pinto were the ones going to Congress in the early 2000s complaining that the GSEs were not giving out enough loans, and were lauding the shadow banks and loan initiators who were giving out the subprime loans. Which is not to say that played no part, just not a key part.
Steve
@steve
Shadow banking is private banking, and it has been going on ever since people began lending money. I have been through this numerous times, and I am tired of it. When private institutions have virtually unlimited access to government backed currency and that currency is treated as money, you will have a problem.
Glass-Steagall tried to solve this problem. It was designed to separate the public and private banking sectors, and while the public sector would be heavily regulated, the private sector would be lightly regulated. The benefit to the public sector banking was that they would have access to government backed currency that was treated as money.
When G-S was repealed, the financial system was fated to collapse. The cowboys of Wall Street were allowed to run wild up and down Main Street. They were looking for something to put a little money into, and then, use that asset to leverage into a bigger something. With the push for an “Ownership Society”, mortgages provided the perfect vehicle.
GSE’s were one of the most insidious because they attempted to straddle both the public and private sectors, and they did it by buying as many MBS’s as possible. The MBS’s they bought had an implied government guarantee, and this was done at the behest of Congress.
This is one of the main reasons the financial collapse was based upon a housing bubble. Without the GSE’s, there would have been a financial collapse, but it might not have been housing based. It could have been stock based or tulip bulb based.
I have been preaching this since 2006+, and I do not need lessons from whatever political hack you have gotten your info from. All the people you have read are the same ones who claimed that this could not happen, and who have been wrong for the past 8 years.
I get tired of arguing with people like you. In order to be able to make a point, I have to educate you first, and you do not want to be educated. You want to be able to whine about “liar’s loans” without having a clue about what they are, and with sub-prime lending, you are not interested in knowing the reason for it.
If the political hacks told you the reason was “blue soup cans”, we would hear about the horrors of “blue soup cans”.
The problem is that you are wrong, not your failure to educate. Go through the steps you really need to create this kind of crisis. Russ Roberts did a nice job of this a few years ago in his analysis. Anyway, eliminate the GSEs and you still get this exact kind of crisis. (I primarily read libertarian economists, mostly non-partisan. Anyway, virtually no one really predicted this the way it actually happened. Many thought we were in a housing bubble. Few knew the details of how the finance sector was creating it. Finally, in nearly every scam, and this one is really no different, you mostly need to follow the money trail. Who made the big bucks?)
Steve
You have much greater faith in our ability to predict and control the eventualities of war than I do, steve. If there’s one thing we should have learned over the last half century, it’s that you can’t predict what’s going to happen in war.
We now can be confident that we have two interventionist parties. The Democrats have made it clear that they’re not interested in saying “No” to a Democratic president who’s willing to intervene. And we already knew that they wouldn’t say “No” to a Republican president who wanted to intervene.
@steve
I do not know which hacks you have been reading, but they are idiots. A lot of people knew there was a housing bubble in 2006, and by 2007, a lot of people knew it was getting really bad. Once you know how MBS’s, CDS’s, CDO’s, and the financial sector works, it is real easy to predict the result of a housing bust.
There is no reason why anybody cannot know how the financial system or any of these instruments work. It is all open source knowledge. Apparently, they were too lazy to learn how things worked then, but now, they have become hard working. Just because you have to work to learn something does not mean it is a deep dark secret.
The financial industry creates credit. Some of this credit becomes consumer debt, but a lot of it is leveraged instruments and other securities. They need assets as collateral to leverage, and real estate is one asset. Stocks, tulip bulbs, baseball cards, beanie babies, etc. are others.
In the 1920’s, stocks were the asset, and without the dotcom bust and Enron, it might have been stocks again. The government pushing home ownership, the Fed pumping out money, and the GSE’s buying up MBS’s made real estate the asset to build the bubble upon.
This distorted the real estate market by introducing artificial demand. The artificial demand began an asset inflation cycle that eventually became a bubble. The GSE’s were purchasing a large number of MBS’s, but they were also distorting the market because the artificial demand was drowning out any negative feedback signals
Unless you understand the difference between creating credit and debt, you really cannot understand the financial industry. In the financial industry, the real money is in the private banking sector. The public baking sector is chump change, but it provides the initial assets to leverage into real money. (The real money does not exist, but that is another story.)
I am going to guess that your experts have no idea of how any of this works, but as their expert opinion turns out to be wrong, they will evolve into a new expert opinion. Eventually, this will be their expert opinion, and you will be spouting it back to me.
However you want to look at economical growth, employment/unemployment, or the housing market,
interpretations can vary depending on the shuffle of words and stats, here and there. For instance, I’ve heard people in the know predicting a great shopping season because of how well the economy is rebounding. But, then we have this stark little piece of news saying sales over the 4-day Thanksgiving weekend, declined 11%.
However, as such data goes through the roto-rooter of politico-speak and economical rationalizations, it is summed up as having the following root causes:
So, Steve, you’re saying that things are bad now, but that they’ve been bad for a ling time, but that now things are better than they’ve been in 15 years, and that no one other than Black Jesus could ever do a better job.
How is that not Panglossian?
…
Also, I’ll note that Calculated Risk skipped a point, in what can only be intentionally misleading fashion. Job growth doesn’t have to be so great to achieve satisfactory results when employment levels are already high. Given that 25-54 yos had millions more full time jobs seven years agobthan they do now, they didn’t need to same kind of growth needed NOW just to get back to status quo.
But assholes like you are fine with this, ass the government is pushing trillions of dollars in YOUR direction. Fuck every last one of you rentiers with rusty chainsaws.