Are you better off today than you were eight years ago? If you are the top of the food chain, the answer is yes, but for everyone else the answer is generally no. And today's news doesn't help. The unemployment rate rose from 5.7 to 6.1 percent in August, and the broadest measure of unemployment (U6) now stands at 10.7%. That's up from 10.4% a month ago, and 8.4% a year ago.
When you look further into the numbers and break them down into groups who generally struggle economically, conditions are much worse. If you are a woman trying to maintain a household, your unemployment rate rose from 8.5% to 9.6%. The unemployment rate for blacks rose from 9.7% to 10.6%, and for Hispanics from 7.4% to 8.0%. Teen unemployment actually fell by 1.6% as compared to last month, but it still stands at 18.9%. And for the slightly older age group, ages 20-24, the rate stands at 10.5%. And those are all the narrow measure of unemployment, U3. The broader measures such as U6 would, of course, show conditions to be much worse.
Have Republicans devoted enough attention to these issues? No. This brings us to an important point.
Republicans have been targeting Community Organizers this week, but one of the important things Community Organizers do is clean up after Republicans. Without their help, and given Republicans blindness to these issues and the needs of these communities, and given that their trickle down economic policies have not, in fact, trickled down, conditions would be much worse.
Here's more discussion of the report:
- Yep, This Is Definitely a Recession..., Brad DeLong
- More Bad News from the Labor Front, Angry Bear
- Employment Report, Angry Bear
- Economic doldrums, ataxingmatter
- The un-recession, Paul Krugman
- How Bad Will The Recession Get?, Michael Mandel
- What Do You Call This?, Andrew Samwick
- The August Employment Report, CBPP
- Jobs_and_wage_insurance, Andrew Leonard
- Today's Jobs Report, and What it Means, Robert Reich
- Recession? It's starting to look like it, but it's a very odd one, William Polley
- Negative Jobs Report Not Game Changer for the Fed, Real Time Economics
Gas Prices, Exports and the "Jobs Recession" Thing, Paul Kedrosky: This morning off the top of The Call on CNBC I was chatting about jobs and the economy with Larry Kudlow and Robert Reich. It was, as you might expect, highly amusing, with noisy positions taken all around, and little time to expand on things.
So, three quick points:
- First, Larry kept saying we may "technically" be in a "jobs recession". I tried to point out that I have no idea what that is, that it must be some sort of Larry-ism, but don't think it came through in the cross-talk. But here's the main take-away: Whatever a jobs recession is (and I'll defer to Barry's Kudlow-to-English dictionary on that one), we have never had eight months of job losses without being in a recession, so splitting things this way is semantic at best.
- Lower gas prices are good, as Larry said, but we are only back to prices that eight months people, ahem, were were calling outrageously high and economically damaging. So, while some of the pressure is off, let's be clear about relative versus absolute effects of lower gas prices. Transportation and manufacturing generally are still being pounded, and that isn't stopping.
- Finally, with respect to exports, it is true that Europe and Japan haven't accounted for the bulk of the growth in U.S. overseas exports in recent years, so weakness in those markets is, while not a wash, less dire than weakness elsewhere. That said, the BRIC countries aren't currently headed into a recession, but they are all weakening materially, as I have been saying they would for some time. So, from a U.S. export standpoint, a 300 basis-point across the board cut in GDP growth in BRICs, which is what we are currently looking at, is highly damaging, even if you stay well away from recession.
On the last point, an important factor going forward will be the strength of exports, and that will depend in part upon whether the rest of the world has "decoupled". If decoupling has occurred, a slowdown here will not substantially alter the demand for our exported goods. But if the economies are coupled, a slowdown here will cause a slowdown elsewhere, and that will feedback through to the U.S. as a lowered demand for exported goods (lowering GDP).On that issue:
Whither De-coupling?, Kids Prefer Cheese: One the one hand the global economy seems more integrated than ever, but on the other, it is claimed that the BRICs are growing right through rich country cycles, so what is up with the de-coupling hypothesis?
A new paper by Kose Otruk & Prasad addresses this question empirically using a large dataset of over 100 countries from 1960-2005. They divide the countries into Industrial, Emerging, & Other and use Bayesian methods (Gibbs sampling with data augmentation) to estimate a dynamic factor model of what shocks drive cycles in these countries. When comparing the 1960-84 period with 1985-2005, they find that the global factor has declined in importance in all three groups, while the group factor has become more important in the Industrial and Emerging groups.
So globally, decoupling but within two of the three regions, increased syncronization while in the dreaded "Other" group (developing but not emerging!) idiosyncratic factors have become more important.
Very nice paper, but it seems to me that Tolstoy should get a shout out in the acknowledgements! After all, he said it first.