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Home Publications Blogs Beat the Press There Is No Mystery About Slow Job Growth in a Weak Recovery

There Is No Mystery About Slow Job Growth in a Weak Recovery

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Friday, 02 July 2010 05:33

Morning Edition implied that there is some mystery about the weak job growth in the recovery to date, at one point referring to it as a "jobless recovery." It then tried to blame the health care bill and other issues for the lack of jobs. There is actually no mystery whatsoever behind weak job growth.

The recovery is extremely weak, with GDP growth of just 2.7 percent in the first quarter. Final demand, which excludes the impact of inventory fluctuations, grew by just 1.0 percent. Given the severity of the downturn we should be expecting growth in the 7-8 percent range. With such weak growth, it would be a surprise if the economy was creating jobs at a rapid pace.

Comments (7)Add Comment
actually, it would be impossible
written by David Cay Johnston, July 02, 2010 6:24
"With such weak growth, it would be a surprise if the economy was creating jobs at a rapid pace."

Actually, it would be impossible to create jobs at three or four times the rate of economic growth over anything but an extremely brief period of time.
...
written by izzatzo, July 02, 2010 6:48
Given the severity of the downturn we should be expecting growth in the 7-8 percent range.


A new bipolar manic-depressive theory of economic welfare. The worse off you were, the better off you'll be. The lower the lows, the higher the highs. No matter how dark the downside, the upside comes with that much more light. The more you give the more you get. I have seen the mountain and it is higher than than the lowest valley.

Of course to be valid the theory has to work in reverse as well, which means the rich are in for some very deep doo doo once growth returns to full employment levels.
Restructuring
written by bakho, July 02, 2010 7:48
Do you think the slow growth is due to the need for restructuring?

If we are going to make cars at only 60 percent of the 2000 rate, then some other economic activity must replace it to get to full employment (one would think)?

If do need to restructure, government should be able to speed up the process of getting Structure A in place so B, C and D can have an investment opportunity.
...
written by Queen of Sheba, July 02, 2010 8:37
On MSNBC this morning a panel of four "talkers," none of whom were economists (although one, David Faber, works at CNBC and therefore considers himself an expert) spent about 10 minutes talking about the expected unemployment figures to be released later in the morning and why those figures weren't expected to show any improvement in hiring.

These talking heads first discussed the stock markets' latest downturns and agreed that they were due to concern over the government's "out of control" spending. The panel then went on to agree that companies (by which they meant large corporations) were hoarding their earnings and pushing their current employees to increase productivity instead of hiring new employees because of the uncertainty fostered in the business community by the government - what would new regulations look like? how much will our taxes rise? what will be the ramifications on business of new laws?

Not one member of the panel even mentioned demand - or the lack of it. There was no discussion of dropping demand for exports, not one syllable about the near-total lack of demand for anything but necessities from individual consumers and families; nothing about how austerity measures being implemented in Europe might be affecting future business plans, and not a whisper about how China's decision to slow down its economic growth might contribute to a wait-and-see attitude in corporate executive suites. The best thing about this panel's discussion was that it happened at 5:30am (CST), so not many people were witness to it.

From now on when I'm up that early I'll just watch the dog whisperer on "Animal Planet." It can't be any more surreal than what I saw on MSNBC this morning.
...
written by Min, July 02, 2010 8:57
It is not like long term high unemployment is a surprise. It has been predicted for a while. The question is, why has it been accepted?

The idea seems to be, get economic growth, and that wile, sooner or later, produce jobs. But in the complex human system that is our economy, can't it work the other way? Put people to work, and that will spur economic growth. Why don't we try that?
every dog has his day
written by frankenduf, July 02, 2010 12:45
hey Queen of Sheba, i got an idea- CNBC could have a prime time segment featuring David Faber talking about how bad the deficit is- the show could be called Dog Whistler for competitive and functional reasons
Why don't we try that?
written by cemmcs, July 02, 2010 3:35
Put people to work, and that will spur economic growth. Why don't we try that?

Our rulers will not do it for ideological reasons.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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