Great Depression II?
Great Depression II? We're still a long, long way away, see chart above of monthly unemployment rates, from 2007.1 to 2008.11 and 1931.12 to 1935.12.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Sunday, December 28, 2008
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Great Depression II?
- $1 Billion Daily Savings From Tumbling Gas Prices
- Quote of the Day: Government Can't Create New Jobs...
- Markets In Everything: Hostel in A Jumbo Jet
- David Friedman on $70 Per Hour UAW Labor Cost
- Happy Holidays From Sunny Florida
- Fierce Competition + Invisible Hand = $1B Savings
- Real Gas Prices Hit 6-Year Low = $350B Savings
- Top 10 Reasons 'Bama is Better Off Than Michigan
- Why Bubbles Are Perfectly Rational & Unavoidable
9 Comments:
BLS website discloses that total unemployment is now 12.5 percent. Why are you reporting only the "headline " number?
Here's the link:
http://tinyurl.com/6duc94
In U6 column, check "Seasonally Adjusted" then "Retrieve Data"
The BLS stopped counting as unemployed workers who have been out of work so long that they have run out of unemployment benefits and are considered to have stopped actively looking for work, despite the fact that those workers are ready and willing to work. Before the Carter Administration, those long-term unemployed were counted in the headline figure -- and it became an embarassment to the Carter Administration when unemployment soared due to the Oil Crisis and rolling recessions. Once they removed these "discouraged" workers from the count, succeeding administrations found that this statistical "trick" worked very well and it has been retained ever since then.
I am very surprised that you would publish a chart such as that without informing readers how misleading it is.
What proof do you have "before the Carter Administration, those long-term unemployed were counted in the headline figure." Under Carter, the unemployment rate was much higher.
The U.S. created 17.6 million jobs between 1993-98, and created only 3.7 million jobs between 2001-06. However, U.S. real GDP growth was only slightly higher from 1993-98 than from 2001-06. So, the U.S. became much more productive in the 2000s, i.e. using fewer inputs to produce more output.
Of course, that doesn't include the consumption side, where the U.S. captured enormous gains in the global economy. Also, I may add, currently, Americans are stocked-up with assets and goods. So, the U.S. is in the best position to weather this recession.
Basically, export-led countries overproduced by large margins and underconsumed by large margins, while the U.S. underproduced by a small margin and overconsumed by a large margin. In the 2010s, the U.S. will overproduce slightly and overconsume less, while export-led countries will underconsume less and overproduce less.
You really should overlay the Carter Wonder Years or the 75 to 85 decade on this chart to give it some perspective.
Mark
Job Title: 1934 Wichita Lineman.
Job Title: 2008 Pentagon Paperclip Pusher.
The 1934 wichita lineman electrifying rural Kansas under the Work Progress Administration was considered unemployed.
The 2008 pentagon paperclip pusher democratizing Afghanistan is considered employed.
Another one. Perry, the NBER dates are at http://www.nber.org/cycles/cyclesmain.html Please sync your charts to months-from-peak.
If you were a student and I grading this chart, you'd get a D. Finding some data and slapping together a plot is not enough for full credit.
Long-term unemployed persons are NOT excluded from the official unemployment rate, which BLS lists as 6.5 percent.
The notion that long-term unemployed workers are excluded from unemployment numbers is an urban myth. The official unemployment rate has nothing to do with unemployment benefits.
Snopes: Unemployment
So, if the unemployment rate is calculated on the basis of Current Population Survey (CPS) surveys, does the outcome depend on which of the nine people at my house answers the door when Census comes a-knocking?
west coast whiner whines: "Please sync your charts to months-from-peak"...
Hmmm, is your arm broke west coast whiner because you could've done that yourself and presented us with your work?
"If you were a student and I grading this chart, you'd get a D"...
Well if I was a teacher I'd give you an 'F' for this comment since you aren't making any sense as ususal since you didn't offer anything credible or substantial to back your point...
From the NBER FAQ: Q: How do the movements of unemployment claims inform the Bureau�s thinking?
A: A bulge in jobless claims would appear to forecast declining employment and rising unemployment, but we do not use the initial claims numbers in our discussions, partly because there is a lot of week-to-week noise in the series.
Q: What about the unemployment rate?
A: Unemployment is generally a lagging indicator, particularly after the trough in economic activity determined by the NBER.� For instance, the unemployment rate peaked 15 months after the NBER trough month in the 1990-91 recession and 19 months after the NBER trough month in the 2001 recession. The unemployment rate (which the committee does not use) tends to lag behind employment (which the committee does use) on account of variations in labor-force participation.
Oh, 1, you little scamp. If you can't tell the difference between the 28th month of a recession and the negative 11th month, I can't help you.
Maybe you shouldn't play with the big boys just yet. You don't want to picked last again, do you?
Post a Comment
<< Home