When I saw the graph in this post of Bill McBride’s of the post-recession resurgence in retail sales, the first thought that occurred to me was &147;How in the world is it possible to claim there is no structural component in the persistent high rate of unemployment?”
The “not inflation adjusted” parentheticals explain some of it. But I’m just not buying that retail activity is up that much over the recent peak. Or even off the lows, for that matter. Why are some many stores closed, closing, or mostly empty if we’re doing that well?
@Dave Schuler
Structural unemployment is the result of (theoretical) mismatches between labor and employer demand. The post you reference does nothing to reinforce the idea that this is correct. All it shows is that spending increased. You’re looking into the gaps and arguing it must be sturctural when we still have nothing resembling conclusive evidence of the phenomenon.
Additional consumer spending doesn’t mean much if the money is being lost to current account deficits:
http://www.bea.gov/newsreleases/international/transactions/transnewsrelease.htm
Just as Godley’s work indicates, budget deficits exacerbate trade deficits; in other words public spending has a built-in pro-cyclical component during a downturn because we as a country have decided to do nothing about the problem. We just pretend a $600 billion per year drain on net financial assets is macroeconomically irrelevant.
There are all sorts of ways in which additional spending won’t result in increased employment. Say, for example, that Michael received a federal grant for a billion dollars and he spent the money buying an estate in the south France (I suspect that Michael would endorse this plan).
I strongly suspect that the billion in additional spending would do little it anything to reduce domestic U. S. unemployment.
That’s my gripe against the folk Keynesians. How you spend the money matters. The preference you’ve expressed, just divvying the money up among the population generally, would in all likelihood effect more stimulus than divvying the money up among the top 1% of income earners. But those are the plans that the folk Keynesians typically propose.
The preference you’ve expressed, just divvying the money up among the population generally, would in all likelihood effect more stimulus than divvying the money up among the top 1% of income earners. But those are the plans that the folk Keynesians typically propose.
Hey, they’re all for increased food stamp usage! And they’ve been successful at extending the program’s reach, too. HOPE AND CHANGE!