Tag Archives: unemployment

News Roundup – Jobs Report, Egyptian pyramids, Stand Your Ground

From EPI:

Today’s jobs report was, to say the least, strange. The first look was exciting—288,000 payroll jobs added! Now that is the kind of job growth that would get us back to a healthy labor market relatively soon. If we were to keep up this pace, we would get back to pre-recession labor market conditions by the end of 2016. Even I could live with that.

The second look was good, too—the household survey showed the unemployment rate plunged to 6.3 percent. But I should have stopped looking there, because the rest was pretty bad. It turns out the drop in unemployment was entirely due to people dropping out of the labor force. Employment in the household survey actually declined, and the labor force participation rate fell back down to its lowest point of the recovery. Our estimate of the number of “missing workers” (workers who are not working or actively seeking work but who would be if job opportunities were strong) increased to an all-time high of 6.2 million. If those missing workers were in the labor force looking for work, the unemployment rate would be 9.9 percent instead of 6.3 percent.

Continue reading News Roundup – Jobs Report, Egyptian pyramids, Stand Your Ground

Austerity and Pro-Unemployment

jobs

As everyone should know by now conservatives have blocked almost every stimulus package that has been proposed over the last five years. No stimulus equals austerity. Austerity equals high unemployment. It is that simple. (European austerity failed.) We can argue about how long a stimulus should last or how low we should try to push unemployment (too low is bad), but the data is clear. Austerity has clearly slowed our economic growth.

From Krugman:

Jonathan Chait makes a good point about the deficit scolds: whatever they may say, they have in practice played a key role in promoting short-run fiscal austerity and therefore in keeping unemployment high. Continue reading Austerity and Pro-Unemployment

Cost of Government Shutdown

I don’t know. I just thought some data would helpful.

From Peter G. Peterson Foundation:

Even as Congressional leaders and the president discuss a potential temporary solution to the current stalemate over the government shutdown and the debt ceiling, the repeated cycle of lurching from crisis to crisis has significant and real costs to the U.S. economy.

A new report, prepared by Macroeconomic Advisers, LLC for the Peter G. Peterson Foundation, examines the cost of crisis-driven fiscal policy over the past few years by looking at indicators including GDP growth, the unemployment rate and the corporate credit spread. The paper considers recent policy and political battles including the sequester, the government shutdown and brinksmanship on the debt ceiling.

Top-level findings include:

A new report, prepared by Macroeconomic Advisers, LLC for the Peter G. Peterson Foundation, examines the cost of crisis-driven fiscal policy over the past few years by looking at indicators including GDP growth, the unemployment rate and the corporate credit spread. The paper considers recent policy and political battles including the sequester, the government shutdown and brinksmanship on the debt ceiling.

Top-level findings include:

  • Fiscal Policy Uncertainty: Since late 2009, fiscal policy uncertainty has raised the Baa corporate bond spread by 38 basis points, lowered GDP growth by 0.3 percentage points per year, and raised the unemployment rate in 2013 by 0.6 percentage points, equivalent to 900,000 lost jobs.
  • Government Shutdown: A 2-week partial government shutdown would directly trim about 0.3 percentage points from 4th-quarter growth.
  • The Debt Ceiling: The paper considers two scenarios. The first assumes a brief, technical default that is quickly resolved, and the second assumes an extended, two-month stalemate.

1. In scenario one, risk aversion rises, financing costs rise, prices of risk assets fall, and the economy enters a recession. Exacerbated by the Fed’s inability to lower short-term interest rates, growth only begins to rebound at end of 2014 and the unemployment rate rises to a peak of 8.5% before starting to decline. At its peak, 2.5 million jobs would be lost.

2. Scenario two implies a longer and deeper recession than in the first scenario, but one characterized by extreme volatility. Annualized GDP growth fluctuates rapidly between plus and minus 8% until the oscillations diminish in 2015. Unemployment rises to a peak of 8.9% — equivalent to 3.1 million lost jobs — before trending down.

  • Discretionary Spending: Reductions in discretionary spending have reduced annual GDP growth by 0.7 percentage points since 2010 and raised the unemployment rate 0.8 percentage points, representing a cost of 1.2 million jobs.

 

– See more at: http://pgpf.org/special-reports/the-cost-of-crisis-driven-fiscal-policy#sthash.h6Nphd83.dpuf