I generally find Jeffrey Snider’s posts at RealClearMarkets dense and prolix but I generally learn something, if only how certain kinds of investors think. I found his most recent offering quite interesting. The gist of it is that all of the blithe reassurances we’ve been receiving from the BLS for the last seven years or so have been bogus and there really hasn’t been much of any recovery at all:
A recession is a temporary deviation from trend, which is why the Census Bureau spent a lot of time and effort in determining trend-cycle components as the largest potential source of variation. The trend is supposed to remain dominant even for each given cycle. What we see here after the Great Recession is nothing like a cycle. Instead of a temporary drop below trend, even if that “temporary” was somewhat longer than usual, we increasingly find that the overall trend itself has been suppressed. Given that the trough of the Great Recession occurred in the middle of 2009, seven years is more than enough time to make such a momentous declaration: the economy didn’t fall into a recession great or otherwise, it shrunk.
That’s quite consistent with Keynesian theory. If the shortfall in aggregate demand persists, it becomes structural, i.e. results in a permanent contraction in aggregate product.
All of this highlights my frustration with economists, generally, and government economists in particular. When you’re going to build a bridge across a river, you use ordinary surveying methods to measure the span. When your measurements tell you that the bridge needs to be 800 meters long, you can fudge that with centimeters here and there or even a couple of meters but you don’t try to fudge it so that your bridge is a third of the length your measurements suggest it is or three times what they’re telling you.
But that’s exactly what’s being done in employment. The fudge factors are so much larger than the measured changes they’re reporting there’s really got to be something wrong.
I honestly don’t see any way what we’ve seen in employment or industrial production fits with the explanations we’re being given.
At what point will you concede that the people running the numbers aren’t merely clueless, but dishonest?
Ice, dishonest and convincing, at least to those who want to believe that their political party’s policies are valid and sound.
I assume you are referring to the birth/death adjustment, now inoperative by historical standards, and the labor participation rate, pawned off on demographics, but an explanation that does not hold up after the data is sliced by age. Add in the GDP revision for intellectual property and you have a trifecta of bogus advertised economic performance. I’ll take pity and not mention job quality.
The facts are clear. However, I find two other issues more interesting and annoying. How can a media be so disinterested in probing these issues, and how can a party and its supporters (oh, I already referenced the media), who profess to care, be so callous about actual economic reality?
Drew, Dems do better with poor minorities and single mothers. Therefore it is the economic interests of the Democratic Party to insure there are ever increasing numbers of poor minorities and single mothers. That’s pretty straightforward naked self-interest at work.
Ice, dishonest and convincing, at least to those who want to believe that their political party’s policies are valid and sound.
Which party is that?
President Barack Obama declared to an audience of Argentinian youth that the differences between socialism and capitalism make interesting discussions but, ultimately, they should just do whatever works.
“So often in the past there has been a division between left and right, between capitalists and communists or socialists, and especially in the Americas, that’s been a big debate,†Obama said during a town hall meeting in Buenos Ares.
“Those are interesting intellectual arguments, but I think for your generation, you should be practical, and just choose from what works,†Obama continued. “You don’t have to worry about whether it neatly fits into socialist theory or capitalist theory. You should just decide what works.â€
That sounds nice, but for instant gratification, socialism is the obvious choice, and a poor one for the long term. Supporting capitalism with all it’s warts is the right intellectual choice for improving a society for the long haul.
Hard for me to believe those words came out of the mouth of a constitutional law professor.
Obamas’ economic policy has been almost entirely borrowed money cronyism. (except of course, for the genius cash for clunkers program)