Please tell me the benefit of causing the same disaster today that might or might not happen in the future.Originally Posted by Being
Sorry, but just because a problem exists doesn't mean that any asinine solution is preferable to inaction. What you're proposing is the equivalent of gouging out the eyes of someone with worsening eyesight.
Hope is the denial of reality
Fine, I can accept your shortsightedness. It is not at all obvious that the U.S. is in decline so why take action?Please tell me the benefit of causing the same disaster today that might or might not happen in the future.
Faith is Hope (see Loki's sig for details)
If hindsight is 20-20, why is it so often ignored?
Reading comprehension isn't your specialty, is it?
I see as being a more extreme version of the import-substitution strategy employed by most Latin American states and Turkey a few decades back. It didn't work for them, and it sure as hell wouldn't work for us.
Hope is the denial of reality
If at first you don't succeed...
----------------------------------------------
Looks like the Fed has stolen my thoughts! Don't they have any original ideas??
'In fact, some Fed policymakers on Tuesday raised the specter of a permanently higher jobless rate for the U.S. economy, suggesting that many more workers will struggle to get back on their feet even as the economy continues to grow.'
...
'Some Fed policymakers said the long-term jobless rate might rise to nearly 6% from the historical figure of close to 5%, reflecting the view that some of the problems with high unemployment are structural in nature, in which worker skills and employer needs don't match up.
'With more robots, computers and foreign workers replacing them, "American workers are facing intense competition like they've never seen before," Leamer said.'
http://www.latimes.com/business/la-f...8.story?page=2
Gloomy Fed employment forecast overshadows upbeat GDP data
By Don Lee, Los Angeles Times
November 24, 2010
The Fed predicts unemployment will remain high for years. The pessimistic outlook comes shortly after the Commerce Department revised third-quarter growth to an annual rate of 2.5%, up from 2%.
The American economy grew faster in the third quarter this year than previously estimated, but that bit of encouraging news was overshadowed by a grim new forecast from the Federal Reserve that predicted unemployment would remain at about 9% next year and stay high for years to come.
The pessimistic long-term outlook underscored the possibility that the United States — after years of good times that cast a rosy glow over the American dream and raised personal expectations for the future — may now be headed for a grayer, more financially constricted decade or more.
Such a development not only carries major political implications but threatens the prospects for millions of ordinary Americans, from young people seeking to start careers and families to older people facing the prospect of seeing their golden years less golden.
In fact, some Fed policymakers on Tuesday raised the specter of a permanently higher jobless rate for the U.S. economy, suggesting that many more workers will struggle to get back on their feet even as the economy continues to grow.
The Fed's forecast is an acknowledgment that the "healing process in the economy has slowed to a crawl," said Ethan Harris, an economist at Bank of America Merrill Lynch.
The central bank's predictions were released Tuesday as part of the minutes of its early November meeting, when the institution also approved its controversial bond-buying program to spur economic growth.
The nation's unemployment rate has been stuck at 9.6% since August.
Just a few months ago, Fed officials were more optimistic about the road ahead — for jobs and the overall economy. But now they see the economy growing by about 2.5% this year, not enough to make a dent in unemployment.
And next year, policymakers said, the economy was likely to increase 3% to 3.6%; their previous forecast in June called for growth of as much as 4.2%.
The Fed's downgraded outlook was released hours after the government reported that economic growth in the third quarter was slightly higher than previously thought. The Commerce Department revised economic growth upward in the July-to-September period to an annual rate of 2.5%. The earlier estimate had been 2%.
The GDP revision was an encouraging sign, as gross domestic product, the broadest measure of economic activity, showed a marked improvement from the anemic 1.7% growth rate in the second quarter. Revisions showed stronger gains in consumer spending, exports and business investments.
Even so, analysts say GDP growth of at least 3% is needed to bring down the jobless figure — and many don't expect the economy to perform that well in the fourth quarter or early next year.
One major problem is the fading benefits from the Obama administration's $800-billion economic stimulus package passed nearly two years ago. Republicans have attacked the program ever since, and President Obama has avoided calling for a new one.
Economists also worry that consumer spending may weaken. Confidence remains low, and unemployment benefits, which have helped prop up spending, probably won't be extended by lawmakers, given the new political sensitivity to big government deficits. Hundreds of thousands of jobless workers will see their benefits expire this month.
But the biggest single drag on growth may be the state of the labor market. Even the more optimistic independent economists say unemployment will decline slowly, starting most likely in the second half of next year.
"I think momentum will build gradually," said Ken Matheny, a senior economist at Macroeconomic Advisers, a forecasting firm based in St. Louis.
Analysts said they were encouraged by the continuing strong profits of American businesses. Tuesday's report showed corporate profits jumped 28% in the third quarter from a year earlier to an annualized total of $1.66 trillion. That's a record high and reflects deep cost cutting and increases in demand for goods and services.
With surging profits, businesses have built up mountains of cash on hand, and their spending for equipment and software rose an upwardly revised 16.8% in the third quarter.
But thus far, many companies have been reluctant to add workers.
"The problem is the corporate business leaders don't have a lot of confidence in the economy or in Washington," said Harris, noting that executives remained concerned about tax and other policy uncertainties in Washington.
Consumer spending, which accounts for about 70% of the American economy, may also be held back as people pay off debts and pull back after years of overconsumption.
Tuesday's report showed personal incomes and the savings rate were higher than earlier estimates. The U.S. personal saving rate — the share of after-tax income that isn't spent — was 5.8% in the third quarter, in contrast to rates approaching zero just a few years ago.
Unlike past recoveries, the current one isn't getting any help from the home-building industry, which remains depressed.
On Tuesday, the National Assn. of Realtors said existing home sales fell 2.2% in October from the prior month and were 26% below their level in October 2009, when sales were being fueled by a tax credit for buyers.
Michael D. Larson, a housing analyst at Weiss Research, said the figures indicate the market is stagnating because of the high level of unemployment and uncertainty over a jobs recovery.
The national median price for previously owned homes was $170,500 in October, down 1% from a year earlier. Foreclosures and other distressed properties accounted for 34% of the market last month, compared with 35% in September and 30% last year.
With the housing market limping along, UCLA economist Ed Leamer doesn't see the economy growing at a robust pace any time soon. He expects the unemployment rate to tick higher in the coming months and believes that even the Fed's more-pessimistic projections for unemployment may be too rosy.
Some Fed policymakers said the long-term jobless rate might rise to nearly 6% from the historical figure of close to 5%, reflecting the view that some of the problems with high unemployment are structural in nature, in which worker skills and employer needs don't match up.
With more robots, computers and foreign workers replacing them, "American workers are facing intense competition like they've
never seen before," Leamer said.
Growth in U.S. exports may help create more jobs, he said, but that means reversing a decades-long pattern of importing more than exporting.
In the third quarter, the nation's big trade deficit cut GDP growth by more than half.
"We're getting demand, but a lot of that demand leaks to foreign producers," he said.
don.lee@latimes.com
Times staff writer Alejandro Lazo in Los Angeles contributed to this report.
Last edited by agamemnus; 11-24-2010 at 04:42 AM.
You're hardly the first to predict higher structural unemployment.
I totally get the argument for structural employment being a serious problem here, but to be honest I think the data is pretty muddled on this one.
That being said, it's clear that the majority of the unemployment problem nowadays has little to do with structural issues and lots to do with cyclical issues. Of course, that's not a reason to ignore the potential structural problem and think about good reforms that will reduce any structural issues. But fixing cyclical unemployment is the low-hanging policy fruit that is a lot easier to address than nebulous structural issues. First things first, neh?
According to the Fed, the unemployment rate in 2012 should be around 8%. And every year that the unemployment rate stays up is a year of millions of people becoming less employable. So structural issues do seem to be the bigger concern. I don't really see a concerned effort to deal with it. We can't afford a long-term unemployment rate of 8%.
Hope is the denial of reality
8% is hardly likely to be the steady state value. We're just in one of the deepest bits of unemployment in recent memory, and we have a very slow recovery. The 8% projection for 2012 is still a cyclical factor. Obviously long-term unemployment is bad for worker skills and the like, but I see our most likely structural problems as being very different, largely having to do with changing skill sets rather than degenerating ones.
We only had 6 years between the last two recessions. By 2012, 3 years since the last recession would have passed. I wouldn't be surprised if we had another recession by 2015. What happens if the unemployment rate is 7% before the recession hits? 8% might be a reasonable unemployment rate during a recession; it's certainly not reasonable 3 years after one.
Hope is the denial of reality
And as I said before, U3 and U6 are diverging at an increasing rate. Discouraged workers should be counted.
Faith is Hope (see Loki's sig for details)
If hindsight is 20-20, why is it so often ignored?
Discouraged workers tend to reenter the labor force once the economy picks up (which is why the unemployment rate frequently goes up when the economy starts to heat up).
Hope is the denial of reality
Just because we've had a bad cyclical bit of unemployment that is not being adequately addressed (IMO, ideally by some combination of increasing AD and incentive schemes a la payroll tax holidays) doesn't mean it isn't cyclical. Your argument just means our current policies to deal with the unprecedented level of joblessness as a result of the recession are inadequate, not that there's suddenly some deep structural problem that jacked up the trend rate by 2 or 3 percent in the space of a couple of years.
Aren't trade imbalance and debt structural?
Faith is Hope (see Loki's sig for details)
If hindsight is 20-20, why is it so often ignored?
Two issues here:
A) A lot of the newly unemployed worked for industries that were dying. The recession killed them off. These people aren't going to get new jobs unless they retrain. Most aren't.
B) Even someone from a good industry who is out of a job for several years becomes virtually unemployable. If you get enough people like that, then you're effectively adding to structural unemployment. I.E. These people will not get jobs even if the economy improves.
Hope is the denial of reality
I would add to that to say that the structural part of this comes from the fact (?) that being "unemployable" is more about how your resume looks rather than your skills "atrophying" or nonsense like that. I would even further add that this is because of a recent trend -- computer-bots (and human bots) taking over human resources in major companies -- many of those companies that only survive because of their own weight.
Whose "recent memory" are you guys talking about? I'm older than most of you, lived through the 80s as a young adult, oil embargoes with gas rationing, high inflation, even stagflation. Watched steel turn to rust, grain belt turn to energy belt, the whole nine yards. But we never had unemployment numbers like we do now.
I'm sure globalization, the information age, and our aging baby boomers has a lot to do with this, but I wouldn't call this a "business cycle". This is structural on the face of it all, and the zits are showing to be more like acne instead of just teen pimples.
http://www.miseryindex.us/urbymonth.asp
Between July 1982 and June 1983, the unemployment rate was higher than it is now.
Hope is the denial of reality
Cool visual graph, I'd not seen a vertical visual quite like that one before.
Anyway, are you trying to say that one year in the 80's compares to our last two, on the MISERY INDEX?
FYI, in the early 80's a home mortgage carried around a 12% interest rate, often more. A savings account would yield at least 5% compounded interest. A credit card's interest was tax deductible. Buying undeveloped land was pretty cheap, but farmers were selling acreage like it was candy. That was around when Big Ag started to take off and the family farm couldn't keep up. Building a house was a pretty good "investment". A doctor's office visit was very affordable as cash OOP, penicillin still worked for most bacterial infections, and you could deliver a baby in the hospital with an affordable bill. Those things wouldn't drag you into medical bankruptcy. You could also fill your car with a tank of gas and it didn't mean spending 30 minutes of work at minimum wage.
All things being relative, it was cheaper to live in the 80's than it is now. You could work at the Galleria Mall as a cashier and still find a nice apartment without a roommate. You could have a modest used car and buy gas, even when cars weren't very fuel efficient. You could pay the phone bill and energy bill, even when energy consumption wasn't very efficient. You could take night college classes and not have to skip meals or seeing the doctor for a malady. The trade-offs weren't so severe.
But that was then, and this is now.
I think the same argument applies here as it does to the college diploma one. HR people assume that there's a good reason why someone didn't work for so long, and that reason is that they weren't good enough. If they're not good enough for other companies, why would they be good enough for this one? Again, HR people don't actually have the time to go through each resume and judge it on its merits. It's certainly unfair, but I'm not sure how this problem can be resolved.
Hope is the denial of reality
I think it's reasonable to look much less at those people without a college degree, but this other practice is not reasonable or efficient, from a global economic viewpoint. There are two things that could reduce the practice. One is lower unemployment, making the application pool smaller. (a catch-22, there) The other is for governments around the world to encourage small and mid-sized business over larger ones.
The fundamental problem is that large businesses have economies of scale -- those are sometimes made via marketing or manufacturing, but it seems that more and more companies achieve this by limiting competition in a variety of ways -- buying suppliers or buying buyers, for instance. (brings to mind Comcast buying 51% of NBC) So, when there are few players in a market, HR practices are done on the basis of what is easiest to the HR people, not what brings the company more money. This goes to two facets that the government can regulate -- (1) stock owner rights (forced granting of more rights to minority stock owners), so that the stock owners demand efficiency, and (2) anti-trust regulation.
Changes in anti-trust aggressiveness by the Obama administration and (if I remember correctly) recently enacted legislation in stock ownership voting rights (or some-such thing) did address both of these issues, but they may both be too weak to be effective in causing any real change.
Posting Permissions
Reply With Quote