I have several labor economics text books from the 1970s that talk about 6% unemployment being the economy's natural rate, at which point the U.S. is at full employment. They were wrong then, and nothing I have seen since I took those classes indicates the alleged experts have any better ability to determine when we are at or near full employment.
Just how is it possible to a recession to start when the AP never signaled that the last recession ever ended.
Jim, I was taught the same thing studying economics in the late 1990s. It wasn't til 1999 or so that people began to think that maybe unemployment of under 6% just might kinda be sustainable. How quickly we forget.
That hardly stops TV (ABC WNT) types from mentioning the dire straights of 'average' Americans, painfully filling up their SUVs and making their own soap in the face of the "looming" recession.
Oy.
Just accept that without Obama we will all die.
Vote for Hopey Changey Audacity in 2008!
The 'Brotherhood/Sisterhood/Ithood of MSM Journalists and Editors' took an oath to avoid publishing any good news in the run-up to national elections. Wouldn't want to bias the masses...
As long as a Republican is President, we'll never have to worry about "Irrational Exuberence". The Democrats and the MSM will always put a negative spin on our economic situation and consumer's confidence ("jobless recovery) such that the market will never get way ahead of itself.
If Obama/Clinton gets elected, aside from selling Defense and Oil stocks, what other industries do you think will get hit?
Better yet, and more proof that economics really is a gloomy science, this from a CNN report:
"It's not good news, but it's not as bad as we thought it would be," said David Wyss, chief economist for Standard & Poor's."
Whaaa?..Unemployment dropping is "not good news"? Ordinary people might translate "not good" as "bad". So, a drop is bad news in his world? And an increase "good" (beings it's the opposite of bad, I think)
What is wrong with these people?
mike
"Even if that happens, economists predict the unemployment rate will climb higher, hitting 6 percent early next year."
Wording suggests that economists are unanimous in their forecasts, no?
Five percent unemployment is effectively zero unemployment because one out of twenty people are transferring between jobs at any time in an economy. What that means is that people quit on a Monday and don't start their new job until Thursday, for example. This is especially true of low wage labor who frequently job hop with gaps between.
If you have less than 5% unemployment, then you have a labor shortage. More than 5% means a labor surplus, ie unemployment.
The Democrats' attempt to portray 5% unemployment as a catastrophe is simply boob bait for economically illiterate lefties.
Clinton touted 5.4% unemployment when he ran for re-election in 1996, didn't he?
After the dot-com bust a few years ago, I did a quick calc of average unemployment since 1950. Looks like it was about 5.9% then, maybe a bit lower by now.
Many people will tell you unemployment goes down because people have simply given up looking for jobs. Those would be Democrats talking.
Consider, however, employment patterns have changed dramatically. Women were never counted as unemployed until relatively recently, so the numbers mean something slightly different over time.
Still, the establishment survey that gives us the "jobs" report, and the household survey that provides unemployment numbers are two quite different things.
Personally, I find the household survey to be more accurate, since the establishment survey won't include new businesses, and never considers self-employment. Lots of contractors and consultants these days.
A higher rate of unemployment will be driven by scheduled increases in the minimum wage. The most impacted will be teenagers and college students, who will bear the brunt of increased unemployment.
This is, by the way, exactly the same situation as we've had since the minimum wage began being increased in July 2007, and a number of state minimum wage increases in January 2008.
"Unemployment Dropping"
Lower unemployment rate can result from discouraged job-seekers dropping out of the labor force.
OTOH, higher unemployment can result from job seekers entering the labor force.
Whether it's good news or bad depends as much on the competence and honesty of the Press as it does on actual worker confidence or pessimism.
Oddly, the unemployment rate in the mid 90's was basically what it is now, and has been consistently while Bush was in office, yet the media would like to think we were all singing and dancing and lighting cigars with $20 bills then and we're all doomed now. What could be the reason...hmmmm...
"Lower unemployment rate can result from discouraged job-seekers dropping out of the labor force."
The big job-loss news is only a couple of months old. It is hard to imagine people giving up on jobs so easily. What, they just quit paying bills?
Another cause for reduction in unemployment is people actually finding jobs.
If a company outsources some function to a newly formed company, who then hires the employees of that function, this shows up as a loss of jobs. The new company is not even known to the Labor Department for a couple of years.
But, those same "job loss" people are not counted as unemployed, since they actually have jobs.
The measures of jobs and unemployment do not directly reconcile. Different things being measured, by different methods.
Why on Earth would oil stocks go down when a Democratic president, as Clinton did with ANWR, prevents competition by preventing new fields from coming into production? If you owned a vinyard, would your wine business be hurt by the govt preventing competition, or would your profits rise?
If Clinton or Obama tax them excessively, they will move offshore and keep raping us on the simple and valid grounds that we are too stupid to drill our own oil.
What you never see mentioned in any of these doom and gloom stories is that the Federal Reserve TRIES to keep unemployment between 5 and 6% to ward off inflation. So for the media to portray a 6% unemployment rate as some unforeseen disaster is disingenuous.
As usual.
"economists predict the unemployment rate will climb higher"
The worst forecast I have seen has been from Citi:
Economists at Citi expect the unemployment rate to spike to 6.1 percent by the end of the year and 6.9 percent by the end of 2009
Citi is notoriously wrong when it comes to economic projections a year in advance.
>>I....predict that [the unemployment rate] will go higher if a Democrat is elected to the White House in November.
Actually, economic growth is usually better under Democrats, something well-known among political economists. My colleague Alex Tabarrok has a chart with the data in the URL link, but just think back yourself:
Which Democrat presidents since WWII have had recessions on their watch? Carter and Truman.
How many Republicans have had recessions on their watch? Well, actually, every single one of them.
The big difference shows up in the second year, on average: Republicans have slumps the second year, Democrats have booms the second year. Other than that, there's little difference between the two parties when it comes to GDP growth.
Commenting by HaloScan
