"Jobless Recovery" = Euphemism for "Continued Recession"?

[WhipperSnapper]

Lately the media has been tossing around the phrase "jobless recovery". This raises the question--is it really a "recovery" if it is jobless and should a "recovery" be measured by the well-being of wealthy stockholders and CEOs or by the well-being of the lower classes who need jobs and who suffer the most in recessions? Is "jobless recovery" really just a fancy euphemism for "prolonged recession" or "continued recession"? Might the term also be an attempt to put a happy face (the word "recovery") on the implication that the standard of living for much of the populace will have decreased permanently or at least long term?

I wish that the media and pundits would stop using the term "jobless recovery" and just tell it to us straight. I wish they would just come out and say that they forecast a prolonged recession.

 

[sandorski]

Krugman has been suggesting a Jobless Recovery since last year(IIRC---quite awhile anyway). He expects it to last 10 years or so, which is why he has been saying the Stimulus was too small.

 

[Moonbeam]

Who really cares if people are unemployed? Do we care about the homeless, the people on welfare? They didn't have the personal responsibility to get a position from which they couldn't be laid off. They are just buns like all the other people who don't work. Shit. They don't have health care either. Suckers! Who cares.

 

[brxndxn]

The Stimulus is going to companies that should have failed that overpay their employees. If it instead went to infrastructure, the jobless rate would shrink.

All that is happening is government digging us deeper and deeper into a hole..

If the government used the 'stimulus' money to promote NASA, build roads, speed up the Internet, push for renewable energy, build mass transit, improve our electrical grid, and build parks, we'd be doing a hell of a lot better right now..

Instead.. money goes to AIG to pay Goldmann Sachs to pay bonuses to the Goldmann Sachs employees.

 

[Vic]

The OP is just upset that his earlier predictions of economic Armageddon didn't come true.

Anyway, the term 'jobless recovery' is not new. I remember its use in the media clearly back in 2002. It's nonsense, but not for the reasons the OP cites. Employment is a trailing indicator. Probably the most trailing of all indicators I would say. That doesn't soften the blow, of course. Doing that means being smart enough to have a savings account.

 

[Vic]

Originally posted by: brxndxn
The Stimulus is going to companies that should have failed that overpay their employees. If it instead went to infrastructure, the jobless rate would shrink.

All that is happening is government digging us deeper and deeper into a hole..

If the government used the 'stimulus' money to promote NASA, build roads, speed up the Internet, push for renewable energy, build mass transit, improve our electrical grid, and build parks, we'd be doing a hell of a lot better right now..

Instead.. money goes to AIG to pay Goldmann Sachs to pay bonuses to the Goldmann Sachs employees.

Uhhh... I won't argue the point about GS, but the govt is using much of the stimulus to do all those things you say it's not doing.

 

[Special K]

Originally posted by: WhipperSnapper

Lately the media has been tossing around the phrase "jobless recovery". This raises the question--is it really a "recovery" if it is jobless and should a "recovery" be measured by the well-being of wealthy stockholders and CEOs or by the well-being of the lower classes who need jobs and who suffer the most in recessions? Is "jobless recovery" really just a fancy euphemism for "prolonged recession" or "continued recession"? Might the term also be an attempt to put a happy face (the word "recovery") on the implication that the standard of living for much of the populace will have decreased permanently or at least long term?

I wish that the media and pundits would stop using the term "jobless recovery" and just tell it to us straight. I wish they would just come out and say that they forecast a prolonged recession.

Given that 70% of GDP is consumer spending, can we really have a recovery if employment doesn't pick back up again? If the only people profiting are "CEOs and wealthy stockholders", as you phrase it, then it seems GDP wouldn't grow and the media wouldn't really be able to slap a pretty label on more quarters of zero or negative GDP.

 

[GrGr]

Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

 

[MovingTarget]

It is for those still stuck without jobs. "Recovery my ass...grumblegrumble...." I don't blame them.

Just as those in the middle class who had been squeezed for years said that we were in economic trouble years ago when the DOW hit nearly 14k....something is wrong here. The middle class is much more sensitive to the realities of the economy than those at the top making policy decisions. That being said, employment *is* a trailing indicator as far as macroeconomic data goes. We have no choice but to ride it out...

 

[woodie1]

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

Yes, I read an article about this awhile back but cannot find it now. Wikipedia had this to say: "The Nikkei average hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. Its high for the 21st century stands just above 18,300 points."
Today (yesterday?) the benchmark Nikkei 225 stock index closed up 144.11 points, or 1.5 percent, to 10,088.66.

So 20 years after their market peaked they have not returned to their record high. Will the US suffer the same fate.

 

[Special K]

Originally posted by: woodie1

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

Yes, I read an article about this awhile back but cannot find it now. Wikipedia had this to say: "The Nikkei average hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. Its high for the 21st century stands just above 18,300 points."
Today (yesterday?) the benchmark Nikkei 225 stock index closed up 144.11 points, or 1.5 percent, to 10,088.66.

So 20 years after their market peaked they have not returned to their record high. Will the US suffer the same fate.

The Nikkei was a bubble during the 80's - it's value wasn't supported by fundamentals. I'm sure it will be a long time before our NASDAQ reaches a new all time high, or our housing market reaches its previous 2006 highs.

 

[WhipperSnapper]

Originally posted by: Vic
The OP is just upset that his earlier predictions of economic Armageddon didn't come true.

"Doom! Gloom! Do you want America to fail?"

I'm not upset that my predictions for an Economic Holocaust have not yet come to pass nor do I want an Economic Holocaust (which would make me upset). Rather, I'm upset that the media wants to use terms like "jobless recovery" in an attempt to mislead the public.

 

[WhipperSnapper]

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

I've also come across stories reporting about how the Japanese Communist Party has become increasingly popular. I wonder if that trend and the state of the Japanese economy might be connected. (Apparently, though, according to the Wikipedia entry, it's steadily lost votes over the last couple of years.)

 

[StageLeft]

It's kind of euphemism for that. Technically recovery begins when GDP goes positive. So:

Example 1: Economy contracts at 1% for three years straight; 36 months of recession.
Example 2: Economy contracts at 20% for one year and then starts to recover; 12 months of recession.

Example 2 sucks a lot more than 1. Once we hit bottom the recession is over, but this has been a pretty huge hit, so it's still going to smart.

--

I have thought for a while that the US will look very Japan-like, as GrGr mentioned. I've been wrong before. This will not, cannot be a quick recovery, though. With unemployment so high, that is a direct to the heart shot against consumer spending, and the economy is nothing without that. Even among the employed, there is fear and saving, so I cannot imagine how recovery back to pre-bust levels will possibly happen quickly.

So 20 years after their market peaked they have not returned to their record high. Will the US suffer the same fate.

Not to the same extent. Their commercial real estate was the same. The US won't hit it as hard because its bubble was not as hysterical, but Japan still has lessons to offer. Imagine if you had bought in at nikkei 38k, though and 20 years later you're "happy" to see it at 10k. Sucks!

 

[Jaskalas]

Originally posted by: Moonbeam
Who really cares if people are unemployed? Do we care about the homeless, the people on welfare? They didn't have the personal responsibility to get a position from which they couldn't be laid off. They are just buns like all the other people who don't work. Shit. They don't have health care either. Suckers! Who cares.

I suppose that is how the Democrats are playing this, seeing as they're in super majority status and have done nothing about it.

 

[TheSkinsFan]

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

How many "stimulus packages" is Japan up to now? I believe the answer is TEN, and counting... :Q

Has their Debt to GDP broken 180% yet, or is it still hovering around a measly 175%? :Q

Economic stagnation FTL. And yet, we're following right along in their footsteps. :|

 

[Moonbeam]

Originally posted by: Jaskalas

Originally posted by: Moonbeam
Who really cares if people are unemployed? Do we care about the homeless, the people on welfare? They didn't have the personal responsibility to get a position from which they couldn't be laid off. They are just buns like all the other people who don't work. Shit. They don't have health care either. Suckers! Who cares.

I suppose that is how the Democrats are playing this, seeing as they're in super majority status and have done nothing about it.

Doing nothing about it, that's a good one.

 

[JS80]

Originally posted by: Skoorb
It's kind of euphemism for that. Technically recovery begins when GDP goes positive. So:

Example 1: Economy contracts at 1% for three years straight; 36 months of recession.
Example 2: Economy contracts at 20% for one year and then starts to recover; 12 months of recession.

Example 2 sucks a lot more than 1. Once we hit bottom the recession is over, but this has been a pretty huge hit, so it's still going to smart.

--

I have thought for a while that the US will look very Japan-like, as GrGr mentioned. I've been wrong before. This will not, cannot be a quick recovery, though. With unemployment so high, that is a direct to the heart shot against consumer spending, and the economy is nothing without that. Even among the employed, there is fear and saving, so I cannot imagine how recovery back to pre-bust levels will possibly happen quickly.

So 20 years after their market peaked they have not returned to their record high. Will the US suffer the same fate.

Not to the same extent. Their commercial real estate was the same. The US won't hit it as hard because its bubble was not as hysterical, but Japan still has lessons to offer. Imagine if you had bought in at nikkei 38k, though and 20 years later you're "happy" to see it at 10k. Sucks!

I could not disagree more. A short term spike down to flush out the bullshit is much more effective than bloodletting endlessly. The problem this time is that we are using leverage to achieve example 1 so there is a huge risk that when we have another leg down, the spike down will be magnified due to the leverage.

 

[yllus]

Is it an euphemism or just the way things work? The market always seems to lead job creation and losses.

The Jobless Recovery Has Begun

Back in the 1960s one of President Johnson's economic advisers, Brookings Institution economist Arthur Okun, established a rule of thumb quickly named "Okun's Law." Here is the gist: if GDP (production and incomes, that is) rises or falls two percent due to the business cycle, the unemployment rate will rise or fall by one percent. The magnitude of swings in unemployment will always be half or nearly half the magnitude of swings in GDP.

Why?

Four reasons: (a) businesses will tend to "hoard labor" in recessions, keeping useful workers around and on the payroll even when there is temporarily nothing for them to do; (b) businesses will cut back hours when unemployment rises, reducing output more than proportionately because total hours worked will fall by more than total bodies employed; (c) plant and equipment will run less efficiently when hours are artificially shortened; and (d) some workers who lose their jobs won't show up in the unemployment statistics, choosing instead to retire or drop out of the labor force.

For all four of these reasons, the rise in the unemployment rate during a recession should be a fraction of the decline we see in GDP relative to trend. According to Okun's Law, the unexpected extra 1.2 percent decline in real GDP in 2009 should have been accompanied by a 0.5 or 0.6 percentage-point rise in the unemployment rate. Instead, we experienced a 1.5 percentage point rise in the unemployment rate. I confess this comes as a surprise to me, but it shouldn't. Because evidence has been mounting that Okun's Law is broken?especially with regard to the retention of workers in a downturn.

In 1993?two full years after the National Bureau of Economic Research said that the 1990-1991 recession had ended?the unemployment rate was still higher, and the employment-to-population ratio lower, than it had been at the recession's trough. We saw this same kind of "jobless recovery" after the recession of 2001. It wasn't until 55 months after that recession ended that a greater share of Americans were working than had been working before the contraction.

Now in 2009, we are poised once again for economic recovery. But as the old Texas Ranger George W. Bush liked to say: "Fool me once, shame on you. Fool me twice?we won't get fooled again!"

So get ready for another jobless recovery.

I'm guessing there is another set of factors at work. Manufacturing firms used to think that their most important asset was skilled workers. Hence they hung onto them, "hoarding labor" in recessions. And they especially did not want to let go of their prime productive asset when the recovery began. Skilled workers were the franchise. Now, by contrast, it looks as though firms think that their workers are much more disposable?that it's their brands or their machines or their procedures and organizations that are key assets. They still want to keep their workers happy in general, they just don't care as much about these particular workers.

The hypothesis is that firms believe that their remaining workers will forgive them if they fire large numbers of workers during a recession out of economic necessity, but not at other times. Hence the start of the recovery is a business's last moment to slim down its labor force and become more efficient and profitable in the coming boom.

 

[SacrosanctFiend]

More companies are adding jobs rather than conducting layoffs now.

26.4% increasing headcount vs. 19.0% decreasing headcount in manufacturing
29.6% increasing headcount vs. 12.4% decreasing headcount in service.

It may not be a huge swing, but it's the first time since November of last year that the hiring rate exceeded the layoff rate in the manufacturing sector.

 

[Jaskalas]

Originally posted by: Moonbeam
Doing nothing about it, that's a good one.

I'll give you something they have done. They've lined the golden pockets of bank CEOs and other such people. Yay for bailouts, eh?

 

[heyheybooboo]

Originally posted by: TheSkinsFan

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

How many "stimulus packages" is Japan up to now? I believe the answer is TEN, and counting... :Q

Has their Debt to GDP broken 180% yet, or is it still hovering around a measly 175%? :Q

Economic stagnation FTL. And yet, we're following right along in their footsteps. :|

You Fail.

Publicly held Federal debt in the USA: $7.3 trillion

Current dollar GDP of the USA / Q109: $14.1 trillion

Care to link your 'Ass-Facts' ?

Personal outlays, savings and disposable income are trending upward over the last 3 months. Q209 GDP numbers are due Friday. Inflation is currently running at -.2%. The unorthodox monetary policy measures to address this fiscal crisis are being dialed back and will start to be phased out next year.

I'm not trying to project Ms. Rosey Scenario but for the most part you are little more than 'swing and a miss'.

 

[TheSkinsFan]

Originally posted by: heyheybooboo

Originally posted by: TheSkinsFan

Originally posted by: GrGr
Some of us here have been saying for some time that the way to look is Japan. The "recovery" in the US will be along the lines Japan has lived with for two decades now. The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits... And there is little point voting because there is for all intents and purposes a one party system in Japan as well.

How many "stimulus packages" is Japan up to now? I believe the answer is TEN, and counting... :Q

Has their Debt to GDP broken 180% yet, or is it still hovering around a measly 175%? :Q

Economic stagnation FTL. And yet, we're following right along in their footsteps. :|

You Fail.

Publicly held Federal debt in the USA: $7.3 trillion

Current dollar GDP of the USA / Q109: $14.1 trillion

Care to link your 'Ass-Facts' ?

Personal outlays, savings and disposable income are trending upward over the last 3 months. Q209 GDP numbers are due Friday. Inflation is currently running at -.2%. The unorthodox monetary policy measures to address this fiscal crisis are being dialed back and will start to be phased out next year.

I'm not trying to project Ms. Rosey Scenario but for the most part you are little more than 'swing and a miss'.

Our own Debt to GDP ratio is estimated to rise above 100% by 2012, even without a healthcare plan speeding that along.

Those stats I provided above were for Japan, which just passed their 10th "stimulus package," and their Debt to GDP ratio is at least 175%, and climbing. Their entire economy is stagnant, and has been for nearly two decades.

My point was that we're headed in the same direction if we continue to believe we can spend our way out of this mess.

 

[dmcowen674]

Originally posted by: GrGr

The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits...

Pretty much sums up the U.S. now. All done by design.

 

[Jaskalas]

Originally posted by: dmcowen674

Originally posted by: GrGr

The Japanese middle class and workers have been living in a severe depression while the ruling elite have been making out like bandits...

Pretty much sums up the U.S. now. All done by design.

So I ask, what has been done about it?