James Joyner takes Paul Krugman to task:
Now, Krugman is a Nobel Prize winning economist whose claim to fame is research on the Great Depression. I have neither of those credentials. Still, words mean things and depression is not simply a period of high unemployment. Indeed, according to the National Bureau of Economic Research–the US government agency that officially declares these things–the recent recession lasted from December 2007 to June 2009. So, not only are we not in a depression, we’re not even in a recession but rather in a period of slow expansion that’s lasted more than two years.
The late economic downturn was not a depression. It was a sharp recession. We are now in a recovery, not a recession. Those are facts as facts are reckoned in economics which is rather more like a game than the deadly serious matter that it is. The umpire has made his call and that’s that.
In the real world of humans, loss of jobs, few jobs to take, and struggling to pay bills that may be hard to stomach and the truth of the matter is that some areas might reasonably be deemed to have had a depression and, possibly, in some areas no recovery may be in sight.
Now for the opinion part of this post. In my opinion as in the aftermath of so many economic crises the effects of the economic downturn might actually be less problematic than the adverse effects of the policy response.
There’s no consensual definition of what constitutes an economic depression, only that they comprise some mixture of:
An unusually severe or lengthy recession
High unemployment
Falling international trade
Lack of credit
Bank failures
The NBER isn’t empowered to determine whether we are in a depression, and the U-2 unemployment figure showing 8.6% is utterly discredited, a PR stunt used to make people think things are better than they are. People stop looking for work and the unemployment rate goes down: beautiful spin work from our politicians and from ideologically driven economists.
The late recession was no lengthier than those in the early 70s and early 80s. GDP certainly didn’t decline more than in recessions of the early 70s and 80s. International trade has been increasing since the trough in 2009. The number of bank failures has actually been quite modest compared to the situation in the late 80s.
The issue of lack of credit seems to be a matter of some dispute. Heretofore my position is that the lack of credit is largely due to policy decisions: if banks can make more money at lower risk by not lending than they can by lending why lend? Basically, I think that the present cost of borrowing is above the market clearing price although I gather that you don’t believe in such things.
The measure that most clearly suggests a depression is employment. However, as I’ve posted here before at some length, no matter how you measure it unemployment was rather clearly significantly much more severe in the 1930s than it is now.
To the best of my knowledge nobody is but the NBER is the consensual arbiter. That’s close enough.
IMO claiming either that we’re in a depression or a recession is demagoguery. We’re in a weak recovery which, depending on the idiots across the pond and in DC, may continue for a while or end within the year.
The open question is whether the next recession will be mild or severe. I think you can argue both ways on that.
As I noted over at OTB, if this is a depression then we need a new word for what happened in the 1930’s.
We’re in a weak recovery ….
What you mean “WE”, paleface? Everyone I know who lost their jobs are STILL unemployed, with no sign of anything happening anytime soon. Everyone I know whose hours got cut still have diminished hours. The people that haven’t been getting pay raises for YEARS now are still being told they won’t get raises for at least another year. Meanwhile, despite the bullshit from the economists, everything we need to buy keeps getting more expensive. What kind of fucking recovery is it when things keep getting worse and not one single thing gets better?
This is a bit misleading. Are we to include everyone who is not working or actively looking for a job as unemployed? If so, then the standard unemployment rate is well above 25% almost all of the time. So even if we accept this criticism at face value we’d have to modify what levels of unemployment signify recession, recovery, and even depression.
One that is so weak it wont reduce the unemployment rate and the slack in the labor market means that wages are not likely to go up. In fact, it is so weak I’d say that we are teetering on the verge of another recession. If things go badly in Europe that could push things over the edge.
According to the BLS in your state, which I believe is Florida, the labor force has remained roughly the same size while the unemployment rate has declined somewhat since 2009. I interpret this to mean that some people have found new jobs there rather than just given up.
I don’t mean by this to dismiss the problems you or those you know or experiencing. And conditions can differ from county to county within a state or even in different areas within counties. It may be that some areas have gained jobs while others have added no jobs or continued to decline. Or there may be differences from sector to sector.
However, I think that what is being seen overall and in general is a very weak recovery, probably made weaker by bad policy.
And don’t think I’m not sympathetic. My largest client has been downsizing substantially for the last few years and that process will continue dramatically in the coming year. My billing there is already declining sharply and I estimate that next year it will be a third what it has been this year. That means a major drop in my total income. If I’m to offset it I’ve got to potentialize some of my other clients as well as go out looking for new business. I have been extraordinarily fortunate in that regard.
Ben, small correction: You mean the U-3 rate, not the U-2.
As for what that rate should be, consider this. Dropping people off the list just because they’re discouraged doesn’t seem terribly accurate.
And I’ll ask again, has anyone here ever been a part of a BLS poll? Do you know anyone who has been?
, the labor force has remained roughly the same size while the unemployment rate has declined somewhat since 2009. I interpret this to mean that some people have found new jobs there rather than just given up.
One friend did find work temporarily a while back. He had to drive up to the Gulf Coast (450 miles) to work on clean up after the oil spill. When that was over, he was out of work again.
The # of people in the state is hard to believe. People do continue to move here. Would you rather be homeless in Michigan in January, or FLA? But with the collapse of the housing industry, lots of Mexicans left the state. That happened and is visible. The state is increasingly full of poor people. (See recent stories on 60 Minutes.)
But it’s impossible to believe that things are going well, or that the population is growing overall, when one sees more and more abandoned houses. I can find a dozen within a short walk of my house, and we’re in an area that’s sucking up everyone that’s fallinig back into the lower classes.
I know people that are employed that are lookiing for new jobs too, because they can’t get ahead in their current positions. Guess what? They can’t find jobs either. Can’t even get interviews. There are very few opening, and there is very little movement in the employment market. Everyone is defending what they’ve got, businesses and employees alike. The employment market is immobilized. There is no fucking recovery.
And I have yet to hear of an area of Florida where things are going well. Central Florida is in the tank. The Tampa Bay area is worse. Jacksonville is in the toilet. Miami-Dade is a disaster. I guess maybe Tallahassee and Naples are doing well, as I don’t have any knowledge of those areas. Anyway, they’re smaller than any of the other areas I mentioned, save possibly that the Naples area might be comparable to Jacksonville. (Lots of people love to live near a swamp by a big stagnant body of water.) The whole state is in the toilet. The few advantages we have are all negative: We’re not California, we’re not Michigan, we’re not Nevada. Hell, we don’t even have the illegal drug trade now, and they’re shutting down the pill mills. We’ve plowed under most of the orange groves, and that leaves Disney and the beaches. They’re already mucking up beaches in the Gulf, and now they want to drill in Cuba and in the Bahamas. We’re going to get all the pollution of oil wells with none of the economic benefits. Fucking brilliant way to run a state.
RMA.
And don’t think I’m not sympathetic. My largest client has been downsizing substantially for the last few years and that process will continue dramatically in the coming year. My billing there is already declining sharply and I estimate that next year it will be a third what it has been this year.
When your income goes to zero for several years you may get the point.
“This is a bit misleading. Are we to include everyone who is not working or actively looking for a job as unemployed?”
I believe it would be better to track unemployment by job offers, which at least has the benefit of being less subjective, than by BLS survey questions of whether people SAY they want to work. If every person has an offer then we know definitively whether they are voluntarily unemployed. In fact I would argue full employment, rather than being a mythical percentage of the workforce, should be determined by every person of working age having a job offer.
From a Financial Times article on the American labor market:
Implies we have a long way to go to reach the bottom.
I’m not seeing how this is going to be operationally all that different.
Are you suggesting that if a person does not have a job offer then…what?
We have three people:
1. Unemployed has a job offer.
2. Unemployed is looking but has no job offer.
3. Is “unemployed” but is not looking and has no job offer.
How will your method distinguish between 2 & 3 except by asking if they are looking for a job/want to work?
You can go ahead and count unemployment this way, counting both 2 & 3 as unemployed, but you’ll have to adjust what it means for there to be 15% unemployment vs. 25% unemployment. The former, under the new scheme might be “full employment” while the latter is not.
AJStrata has an interesting metric.
Is America Awakening To The Real Jobs Picture (11% Unemployment)?
“For the Snark was a Boojum, you see.”
Let’s just keep track of the raw data: How many people have full-time jobs? How many have part-time jobs? How many had each in the past? How many adults Americans are there, and how many in each age range? Show ’em that and they’lll see when things are and are not improving.
TastyBits, don’t you know that your betters, such as Debbie Wasserman-Schultz, are telling you that you have it all wrong? Why won’t you just admit that everything is peachy-keen? Did you forget your rose-tinted glasses or something?
/ snark