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  • Let's get cyclical!

    This is one of the more powerful dramatizations of the US business cycle I’ve come across.
    Anything above 100 is firing on all cylinders, or more.
    Credit to UC Berkeley Economics Professor Brad DeLong.

    http://www.bradford-delong.com/2017/....html#comments
    Attached Files
    Trust me?
    I'm an economist!

    Comment


    • For those obsessed with the U-6 unemployment rate, it was 8.3% in September, and 8.5% in the third quarter.
      That's the lowest rate in 10 years: the same rate as in Q-3 2007.

      https://fred.stlouisfed.org/series/U6RATE

      The actual unemployment rate was 4.22%, the lowest in 200 months, dating back to January 2001.
      Last edited by DOR; 09 Oct 17,, 16:45.
      Trust me?
      I'm an economist!

      Comment


      • See this is where I get the whole lies, damn lies and statistics feeling. From the economics I have read it is considered that 3-4% unemployment means virtually nobody who is looking for work is not working. There is a base minimum as it were at about 3%. If this is true then virtually nobody is looking for a job. So the labour market - people you can hire if you need them - is small. Why then are wages and salaries not increasing to reflect this? Because these numbers are rubbish? Do you count homeless people as "unemployed"? Pensioners? Who exactly is counted? Why is not rising pay reflecting the diminished employee market? The 'statistics' contradict each other so something is wrong.

        Comment


        • snapper,

          If this is true then virtually nobody is looking for a job. So the labour market - people you can hire if you need them - is small. Why then are wages and salaries not increasing to reflect this?
          wages ARE increasing, on track to recover to pre-crisis levels by 2018/2019.

          i agree that it's been slow relative to the overall economic growth. my guess is three-fold: re-structuring of the American labor market due to the Great Recession, continuing technological advances, and the immense downward wage pressure of the Recession itself.

          using one example: think of the number of people hired, excuse me, working as contractors for Uber-- a company that did not exist at the start of the Great Recession. their pay-rates are significantly lower than that earned by medallion taxi drivers, but the competition is such that there's a lot of leakage from the legacy industry into Uber.
          There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

          Comment


          • What also needs to be addressed is the skills gap. Not everyone needs to go to college. We need to restore our public trade high schools and/or expand trade education in high schools. Too much of this curriculum has been pushed into the community college systems causing needless student debt. A lot of this slack had been taken up in the past by the trade unions but since we have basically declared unions persona non grata they have shrunk.

            So those who remain outside the good wage zone is often due to lack of skills.
            “Loyalty to country ALWAYS. Loyalty to government, when it deserves it.”
            Mark Twain

            Comment


            • A cluch of statistics

              Percent change per annum _ _ _ 1990s _ _ 2000s _ _ 2010s _ last 12 months
              Population _ _ _ _ _ _ _ _ _ _ _ _ _ 1.2% _ _ 1.0% _ _ _ 0.7% _ _ _ 0.7%
              NIP over 20 * _ _ _ _ _ _ _ _ _ _ _ _ 1.1% _ _ 1.3% _ _ 1.1% _ _ _ 0.8%
              Labor Force _ _ _ _ _ _ _ _ _ _ _ _ _ 1.2% _ _ 1.0% _ _ 0.5% _ _ _ 0.9%
              Civilian Employment _ _ _ _ _ _ _ _ _ 1.3% _ _ 0.5% _ _ 1.2% _ _ _ 1.3%
              Unemployment rate _ _ _ _ _ _ _ _ _ 5.8% _ _ 5.9% _ _ 6.9% _ _ _4.5%
              U-6 unemployment rate _ _ _ _ _ _ _ 9.1% _ _9.7% _ _ 12.9% _ _ _ 8.9%
              NIP over 20: Non-institutionalized population over the age of 20 years.

              So, job growth this decade is right in line with the 1990s, and a whole lot better than in the 2000. That’s despite a slow-down in labor force growth, and most likely is mainly due to the marginal unemployed – the U-6ers – re-entering the labor force and getting jobs.

              = = = = =

              snapper,

              The definition of unemployment is (a) if you are actively looking for work in the previous week, you’re in the labor force statistics; and (b) if you are not employed at all, you're unemployed. Divide unemployed by labor force for the unemployment rate. Same definition as it's always been.

              Unemployment has been unusually low since 1995, except during the supply-side recession (2001) and the Great North Atlantic Financial Crisis Decade (2007-13).

              1950s _ 4.5%
              1960s _ 4.8%
              1970s _ 6.2%
              1980s _ 7.3%
              1990s _ 5.8%
              2000s _ 5.5%
              2010s _ 7.2%

              Wages

              In the 1970s, private production and non-supervisory (i.e., real workers) wages went down 1.9% a year after inflation. In the 1980s, they went up 0.5% p.a., in the 1990s, 0.2%.

              Then, in the 2000s, they went up 0.7% and in the 2010s 0.6%.
              Trust me?
              I'm an economist!

              Comment


              • i also don't think it's a coincidence that we're also in the era of record-setting corporate profits and wealth disparity. the current wave of tech innovation combined with globalization means that capital has a far greater advantage in being able to shift than labor. that's far more of an issue than fed distortion.
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • The balance between capital and labor shifts, time and again.
                  We get a certain mind set when labor has the upper hand, and then a different one when capital is on top.
                  The wheel will turn once again.

                  https://fred.stlouisfed.org/series/LABSHPUSA156NRUG

                  Here's a comparison between job openings and hiring:
                  https://screenshots.firefox.com/oYH7...stlouisfed.org
                  Last edited by DOR; 11 Oct 17,, 18:06.
                  Trust me?
                  I'm an economist!

                  Comment


                  • DOR,

                    kinda, sorta. you'll note the overall trend has been steadily downward against labor, with only the period of 1998-2000 being the only real exception. the wheel turns, but i seriously doubt labor's highs will be anywhere like what it was in the 1960s-70s.

                    the balance will be against labor for quite some time to come-- that's just the nature of technology as it stands. there's a few aspects where I can see labor getting some respite-- 3-d printing, places like China getting "expensive" leading to some re-shoring-- but that's balanced against the prospect of AI, robotics, etc.
                    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                    Comment


                    • Originally posted by astralis View Post
                      DOR,

                      kinda, sorta. you'll note the overall trend has been steadily downward against labor, with only the period of 1998-2000 being the only real exception. the wheel turns, but i seriously doubt labor's highs will be anywhere like what it was in the 1960s-70s.

                      the balance will be against labor for quite some time to come-- that's just the nature of technology as it stands. there's a few aspects where I can see labor getting some respite-- 3-d printing, places like China getting "expensive" leading to some re-shoring-- but that's balanced against the prospect of AI, robotics, etc.
                      You're probably right.

                      The data's limited; we really don't know much about the 100 years or so prior to WWII, let alone the previous 1,000 years. Demographics suggest that sometime in this century there will be a bit of an upswing, particularly in Europe and Japan.
                      Trust me?
                      I'm an economist!

                      Comment


                      • the coming AI car + EV technology double punch will upend the US labor market. first the trucking industry, then the taxi industry (along with all those Uber/Lyft contractors).

                        in the long-run it'll probably depress the car/gas industries as well, by completely remodeling how people buy/use cars.

                        that's why a lot of Silicon Valley types are talking about universal basic income; given these advances, we may see a pretty big upswing in structural unemployment.
                        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                        Comment


                        • I would take SV predictions about economics, and optimistic projections about their tech, with huge grains of salt. They are venture capitalists and engineers, not economists.

                          Capital deepening almost always leads to an increase in living standards for people. The last several decades has seen a decrease in structural unemployment in the US, despite massive numbers of new workers and despite the economy requiring significant upskilling in that time period. The nations that have higher unemployment rates in the West have them because of poor labor market design, not because of fundamental economics.

                          It's important to note that while the last few decades saw a billion new workers, it also saw a HUGE wash in capital. Capital hasn't become scarcer, it's become plentiful. You can see that in trend of real interest rates, and we've hit ZLB several times in the last 20 years. Shortages of capital lead to increases in interest rates, not decreases.
                          "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

                          Comment


                          • GVChamp,

                            I would take SV predictions about economics, and optimistic projections about their tech, with huge grains of salt. They are venture capitalists and engineers, not economists.
                            certainly, i remember well the predictions on THE SINGULARITY. on the other hand, these predictions aren't enormously optimistic IMHO, they're just a deepening of existing trends.

                            Capital deepening almost always leads to an increase in living standards for people. The last several decades has seen a decrease in structural unemployment in the US, despite massive numbers of new workers and despite the economy requiring significant upskilling in that time period.
                            kinda, sorta. there's the standard increase in living standards due to technological growth, but on the other hand median income hasn't budged much since the 1990s. i referenced the shift in type of work, from middle-class manufacturing into lower-middle service sector jobs. one middle-class breadwinner will be hard put to buy a house in their mid-20s, and put 2.5 kids through college.

                            It's important to note that while the last few decades saw a billion new workers, it also saw a HUGE wash in capital. Capital hasn't become scarcer, it's become plentiful.
                            i don't think this is a "while" statement, though. the massive increase in the labor pool-- from women entering the workforce, globalization, and technology-- directly means depressed wages for workers, which in turn means more profit and resources for capital investment.
                            There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                            Comment


                            • I am not that familiar with US 'statistical manipulation' but I used to be regarding the UK. For starters since 2008 there was productivity freeze almost - though the UK is currently (apparently) employing more people than ever before they are producing less per person I have read. Second they things called 'zero hour contracts' and alot of part time employees. The 'zero hour contracts' means you may not work at all for weeks but have to be ready to work for this supposed employer at a moments notice from what I gather - never had one and would refuse to sign such an agreement myself. So these zero hours and part time - if you work 2hrs per week you are "employed" etc - are frankly rubbish. Much of this I considered in the UK situation was due to subsidies to companies taking on "apprenticeships" - kids who flunked at school and they can pay (and get the Government to pay half the wages for) and who are employed to make tea or coffee mostly I was told by a friend. When the 'apprenticeship' (low wage) deal ends of course the tea boy/girl is discarded and the next kid comes in to learn the valuable art of tea/coffee making. Of course I am sure this is not always the case but you see how some may and do abuse the system and though genuine apprenticeships I am sure a positive thing the abuse of the system decreases wages to my mind manipulated the unemployment figures.

                              In Ukraine it is a very different story; most people do work - some two or three jobs but just do not declare it.

                              Comment


                              • Originally posted by astralis View Post
                                the coming AI car + EV technology double punch will upend the US labor market. first the trucking industry, then the taxi industry (along with all those Uber/Lyft contractors).

                                in the long-run it'll probably depress the car/gas industries as well, by completely remodeling how people buy/use cars.

                                that's why a lot of Silicon Valley types are talking about universal basic income; given these advances, we may see a pretty big upswing in structural unemployment.

                                The subject of universal basic income raises tons of questions. Seems we're heading in that direction simply because we can. The larger question--whether humanity would benefit from sitting on its ass collecting a check while robots do all the work--appears to be lost on Silicon Valley techies and big business. How, for example, can replacing a truck driver with a self-driving truck be justified inasmuch as the truck will surely cost a lot more and be vulnerable to hacker hijacking.
                                To be Truly ignorant, Man requires an Education - Plato

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