Stop worrying about the “jobless recovery.” Start worrying about the recovery-less recovery.
Nearly four years after the recession officially ended, the unemployment rate remains elevated, at 7.5%.
The share of the population that’s working or looking for work is at a 30-year low.
More than 2.5 million fewer Americans are working today than when the recession began.
Such grim statistics have led many economists to ask whether there might be deep, “structural” factors holding back hiring. Various papers have attributed the slow pace of job growth to the weak housing market, the downturn in specific industries and the long-run decline in the share of the population that’s working....
Mr. Chinn and his colleagues find that slow growth accounts for the majority of the continued jobs gap — but not all of it. The U.S. has about 1.2 million fewer jobs than it should based on long-run trends.
The authors are careful not to say the entire gap is due to structural factors — some of it may be due to short-term issues, or to flaws in their economic model — but their findings do suggest the weak recovery alone doesn’t explain the weak job market....
In other words, both new papers suggest, it isn’t unemployment benefits or other specific factors that are holding back hiring. It’s the economy, stupid.
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Link: http://blogs.wsj.com/economics/2013/05/20/whats-holding-back-hiring/
Monday, May 20, 2013
Sunday, May 19, 2013
For Stock-Picking Advice, Don’t Ask an Economist - NYTimes.com
From Greg Mankiw:
OVER the last few weeks, as the stock market has reached new highs, my thoughts have turned to my 85-year-old mother.
“O.K. Mr. Smarty-Pants,” she often asks me, “what stock should I buy now?”
She first asked me this question when I was an undergraduate at Princeton, majoring in economics. She asked again when I was a graduate student at M.I.T., earning a Ph.D. in economics. And she has asked it regularly during the last three decades when I have been an economics professor at Harvard.
Unfortunately, she has never been happy with my answers, which are usually evasive. Nothing in the toolbox of economists makes us good stock pickers...
Which brings me back to my mother’s question: If I could pick just one stock for someone to buy, what would it be?
I would now suggest something like the Vanguard Total World Stock exchange-traded fund, which started trading in 2008. In one package, you can get low cost and maximal diversification. It may not be as exciting as trying to pick the next Apple or Google, but you’ll sleep better at night.
[NOTE: Click link near top at left for Vanguard ETFs]
N. Gregory Mankiw is a professor of economics at Harvard.
----
Link: http://www.nytimes.com/2013/05/19/business/for-stock-picking-advice-dont-ask-an-economist
OVER the last few weeks, as the stock market has reached new highs, my thoughts have turned to my 85-year-old mother.
“O.K. Mr. Smarty-Pants,” she often asks me, “what stock should I buy now?”
She first asked me this question when I was an undergraduate at Princeton, majoring in economics. She asked again when I was a graduate student at M.I.T., earning a Ph.D. in economics. And she has asked it regularly during the last three decades when I have been an economics professor at Harvard.
Unfortunately, she has never been happy with my answers, which are usually evasive. Nothing in the toolbox of economists makes us good stock pickers...
Which brings me back to my mother’s question: If I could pick just one stock for someone to buy, what would it be?
I would now suggest something like the Vanguard Total World Stock exchange-traded fund, which started trading in 2008. In one package, you can get low cost and maximal diversification. It may not be as exciting as trying to pick the next Apple or Google, but you’ll sleep better at night.
[NOTE: Click link near top at left for Vanguard ETFs]
N. Gregory Mankiw is a professor of economics at Harvard.
----
Link: http://www.nytimes.com/2013/05/19/business/for-stock-picking-advice-dont-ask-an-economist
CNBC: US Consumer Sentiment Surges; Leading Indicators Rise
U.S. consumer sentiment rebounded in early May to the highest level in nearly six years as Americans felt better about their financial and economic prospects. A gauge of future U.S. economic activity in April rose to its highest level in nearly five years.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 83.7 from 76.4 in April, topping economists' expectations for 78.
It was the highest level since July 2007.
----
Link: http://www.cnbc.com/id/100746068
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment rose to 83.7 from 76.4 in April, topping economists' expectations for 78.
It was the highest level since July 2007.
----
Link: http://www.cnbc.com/id/100746068
Thursday, May 16, 2013
Gallup Poll: Half of U.S. Small Businesses Think Health Law Bad for Them
Owners Already Responding to Healthcare Law
PRINCETON, NJ -- Forty-eight percent of U.S. small-business owners say the 2010 Affordable Care Act (ACA, or Obamacare) is going to be bad for their business, compared with 9% who say it is going to be good, and 39% who expect no impact...
When asked if they had taken any of five specific actions in response to the ACA, 41% of small-business owners say they have held off on hiring new employees and 38% have pulled back on plans to grow their business.
One in five (19%) have reduced their number of employees and essentially the same number (18%) have cut employee hours in response to the healthcare law.
One in four owners (24%) have thought about eliminating healthcare coverage for their employees....
----
Link: http://www.gallup.com/poll/162386/half-small-businesses-think-health-law-bad.aspx
PRINCETON, NJ -- Forty-eight percent of U.S. small-business owners say the 2010 Affordable Care Act (ACA, or Obamacare) is going to be bad for their business, compared with 9% who say it is going to be good, and 39% who expect no impact...
When asked if they had taken any of five specific actions in response to the ACA, 41% of small-business owners say they have held off on hiring new employees and 38% have pulled back on plans to grow their business.
One in five (19%) have reduced their number of employees and essentially the same number (18%) have cut employee hours in response to the healthcare law.
One in four owners (24%) have thought about eliminating healthcare coverage for their employees....
----
Link: http://www.gallup.com/poll/162386/half-small-businesses-think-health-law-bad.aspx
Tuesday, May 14, 2013
Insurers predict 100% to 400% Obamacare rate explosion
...health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent, crushing the administration's goal of affordability.
New regulations, policies, taxes, fees and mandates are the reason for the unexpected "rate shock," according to the House Energy and Commerce Committee, which released a report Monday based on internal documents provided by the insurance companies. The 17 companies include Aetna, Blue Cross Blue Shield and Kaiser Foundation.
The report found that individuals will face "premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent."
----
Link: http://washingtonexaminer.com/insurers-predict-100-400-obamacare-rate-explosion
New regulations, policies, taxes, fees and mandates are the reason for the unexpected "rate shock," according to the House Energy and Commerce Committee, which released a report Monday based on internal documents provided by the insurance companies. The 17 companies include Aetna, Blue Cross Blue Shield and Kaiser Foundation.
The report found that individuals will face "premium increases of nearly 100 percent on average, with potential highs eclipsing 400 percent. Meanwhile, small businesses can expect average premium increases in the small group market of up to 50 percent, with potential highs over 100 percent."
----
Link: http://washingtonexaminer.com/insurers-predict-100-400-obamacare-rate-explosion
Saturday, May 11, 2013
The Jobs Crisis: Bigger Than You Think
From Walter Russell Mead at the American Interest:
Of the Big Five questions facing America today, the most pressing and urgent is the question of jobs. This is more than the problem of recovering from the last economic slump; it is more than the impact of globalization and automation on manufacturing jobs.
The American economy is shedding jobs, especially long-term, well-paying jobs with good benefits, and the jobs that replace them are often less secure and less well paid.
The relentless transformation of the American labor market is changing the nature of American life, calling into question some of the basic assumptions and building blocks of the last fifty years, and generating a complex mix of political and social pressures that will shake the country to its foundations.
Essentially, the problem is this: automation and IT are moving routine processing, whether that being processed is information or matter, out of the realm of human work and into the realm of machines. Factory floors are increasingly automated places where fewer and fewer human beings are needed to transform raw materials into finished products; clerical work and many forms of mass employment in business, government and management are also increasingly performed more economically by computers than by trained human beings.
The transformation is only beginning to kick in...
It is impossible to say now how far and how fast this process will move, but more and more Americans are experiencing the kind of upheaval that blue collar workers in manufacturing began to experience in the last generation and white collar workers and journalists have felt more recently.
We are seeing the greatest wave of economic transition since the mechanization of agriculture reduced the percentage of the labor force engaged in farming from more than half the American labor force in 1890 to less than two percent today.
The old engines of job growth, especially in manufacturing, aren’t working, and the competition for good jobs keeps getting tighter. With the entry of billions of Asians and others beyond the old industrial economies of North America, Europe and Japan into the modern economy, the competition is global. And if low wage workers can’t do the job cheaper than you, computers and, increasingly, robots mean that you can still lose your job.
Under the circumstances it is not surprising that many American families and workers see bleak prospects before them. Even workers who are doing relatively well have to work hard to keep their skills sharp and live with anxiety about the future....
-----
Link: http://blogs.the-american-interest.com/wrm/2013/05/10/the-jobs-crisis-bigger-than-you-think/
Of the Big Five questions facing America today, the most pressing and urgent is the question of jobs. This is more than the problem of recovering from the last economic slump; it is more than the impact of globalization and automation on manufacturing jobs.
The American economy is shedding jobs, especially long-term, well-paying jobs with good benefits, and the jobs that replace them are often less secure and less well paid.
The relentless transformation of the American labor market is changing the nature of American life, calling into question some of the basic assumptions and building blocks of the last fifty years, and generating a complex mix of political and social pressures that will shake the country to its foundations.
Essentially, the problem is this: automation and IT are moving routine processing, whether that being processed is information or matter, out of the realm of human work and into the realm of machines. Factory floors are increasingly automated places where fewer and fewer human beings are needed to transform raw materials into finished products; clerical work and many forms of mass employment in business, government and management are also increasingly performed more economically by computers than by trained human beings.
The transformation is only beginning to kick in...
It is impossible to say now how far and how fast this process will move, but more and more Americans are experiencing the kind of upheaval that blue collar workers in manufacturing began to experience in the last generation and white collar workers and journalists have felt more recently.
We are seeing the greatest wave of economic transition since the mechanization of agriculture reduced the percentage of the labor force engaged in farming from more than half the American labor force in 1890 to less than two percent today.
The old engines of job growth, especially in manufacturing, aren’t working, and the competition for good jobs keeps getting tighter. With the entry of billions of Asians and others beyond the old industrial economies of North America, Europe and Japan into the modern economy, the competition is global. And if low wage workers can’t do the job cheaper than you, computers and, increasingly, robots mean that you can still lose your job.
Under the circumstances it is not surprising that many American families and workers see bleak prospects before them. Even workers who are doing relatively well have to work hard to keep their skills sharp and live with anxiety about the future....
-----
Link: http://blogs.the-american-interest.com/wrm/2013/05/10/the-jobs-crisis-bigger-than-you-think/
Friday, May 10, 2013
Is the real US unemployment rate 11.3% or 7.5%?
The 7.5% US unemployment rate, at its lowest level since 2008, seems to be telling a story of slow-but-steady recovery after the Great Recession and Financial Crisis.
Unfortunately, the bulk of evidence suggests the “real” jobless rate is far higher.
As the U-3 rate has fallen, so has the labor force participation rate, or LFPR. If the LFPR were at the same level as when the downturn began, the unemployment rate would be a stunning 11.3%.
Two critical questions: First, how much of the 2.7 percentage point drop in labor force participation since 2007 reflects structural forces rather than weak demand discouraging workers? Second, is the key structural element mostly the aging of the US population or is it the shift of the workforce into Social Security disability?
A new study by Goldman Sachs, partly based on recent Federal Reserve research, offers some reasonable answers.
The real jobless rate is probably more like 9%, still dreadful.
----
Link: http://www.aei-ideas.org/2013/05/is-the-real-us-unemployment-rate-11-3-or-7-5-a-new-goldman-sachs-study-offers-an-answer/
Unfortunately, the bulk of evidence suggests the “real” jobless rate is far higher.
As the U-3 rate has fallen, so has the labor force participation rate, or LFPR. If the LFPR were at the same level as when the downturn began, the unemployment rate would be a stunning 11.3%.
Two critical questions: First, how much of the 2.7 percentage point drop in labor force participation since 2007 reflects structural forces rather than weak demand discouraging workers? Second, is the key structural element mostly the aging of the US population or is it the shift of the workforce into Social Security disability?
A new study by Goldman Sachs, partly based on recent Federal Reserve research, offers some reasonable answers.
The real jobless rate is probably more like 9%, still dreadful.
----
Link: http://www.aei-ideas.org/2013/05/is-the-real-us-unemployment-rate-11-3-or-7-5-a-new-goldman-sachs-study-offers-an-answer/
Time Mag.: On Jobs Tour In Texas, Obama Offers Little New Hope For Jobs Progress In Washington
President Barack Obama’s campaign-style, jobs-focused swing through the Texas technology core on Thursday was notable mainly for what it left out—any plan for putting his proposals into law.
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Link: http://swampland.time.com/2013/05/10/on-jobs-tour-in-texas-obama-offers-little-new-hope-for-jobs-progress-in-washington
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Link: http://swampland.time.com/2013/05/10/on-jobs-tour-in-texas-obama-offers-little-new-hope-for-jobs-progress-in-washington
Thursday, May 9, 2013
Accelerate economic growth... job creation!
President Barack
Obama pledged on a trip to Texas on Thursday to take steps to accelerate
economic growth, turning his attention to job creation after
concentrating on gun-control legislation and immigration reform in
recent months....
A Gallup poll released on Tuesday found 86 percent of those surveyed this month ranked creating jobs as their top priority for action by Congress and Obama, tied at 86 percent with helping the economy grow.
Lower on the priority list were reducing the federal deficit at 69 percent, reforming the tax code at 59 percent, reducing gun violence at 55 percent and reforming immigration at 50 percent.
----
Link: http://www.reuters.com/article/2013/05/09/us-usa-obama-jobs-idUSBRE9480DZ20130509
A Gallup poll released on Tuesday found 86 percent of those surveyed this month ranked creating jobs as their top priority for action by Congress and Obama, tied at 86 percent with helping the economy grow.
Lower on the priority list were reducing the federal deficit at 69 percent, reforming the tax code at 59 percent, reducing gun violence at 55 percent and reforming immigration at 50 percent.
----
Link: http://www.reuters.com/article/2013/05/09/us-usa-obama-jobs-idUSBRE9480DZ20130509
Saturday, May 4, 2013
National Journal: Forget the Unemployment Rate: The Alarming Stat Is the Number of 'Missing Workers'
The federal government’s latest snapshot of the unemployment rate offered few bright spots Friday. The economy added 165,000 jobs in April—slightly better than March’s revised number of 138,000 jobs...
The glaring caveat to this jobs report is the huge number of Americans who remain out of the workforce. Called the "labor force participation rate" in wonkspeak, that number held steady in April at 63.3 percent—the lowest level since 1979...
Demographics and retirements certainly played some role, though economists cannot agree on the extent. About 6.7 million people have stopped looking for work since late 2007, says Heidi Shierholz, an economist with the left-leaning think tank Economic Policy Institute. Roughly 3 million to 5 million of them left because they could not find jobs, economists estimate.
Mind you, these are not people who collect unemployment insurance and send out resumes in search of their next gig. These are people who—at least, temporarily—have exited the workforce. In March, the jobs report showed that 496,000 had dropped out.
So, who are these “missing workers?” Frustratingly, no one knows exactly who they are, why they left, and if they’ll ever return. “The size of the pool there and the gap between the potential labor force and the actual working force represents a huge loss of potential productivity,” Shierholz says.
----
Link: http://www.nationaljournal.com/domesticpolicy/forget-the-unemployment-rate-the-alarming-stat-is-the-number-of-missing-workers-20130503
The federal government’s latest snapshot of the unemployment rate offered few bright spots Friday. The economy added 165,000 jobs in April—slightly better than March’s revised number of 138,000 jobs...
The glaring caveat to this jobs report is the huge number of Americans who remain out of the workforce. Called the "labor force participation rate" in wonkspeak, that number held steady in April at 63.3 percent—the lowest level since 1979...
Demographics and retirements certainly played some role, though economists cannot agree on the extent. About 6.7 million people have stopped looking for work since late 2007, says Heidi Shierholz, an economist with the left-leaning think tank Economic Policy Institute. Roughly 3 million to 5 million of them left because they could not find jobs, economists estimate.
Mind you, these are not people who collect unemployment insurance and send out resumes in search of their next gig. These are people who—at least, temporarily—have exited the workforce. In March, the jobs report showed that 496,000 had dropped out.
So, who are these “missing workers?” Frustratingly, no one knows exactly who they are, why they left, and if they’ll ever return. “The size of the pool there and the gap between the potential labor force and the actual working force represents a huge loss of potential productivity,” Shierholz says.
----
Link: http://www.nationaljournal.com/domesticpolicy/forget-the-unemployment-rate-the-alarming-stat-is-the-number-of-missing-workers-20130503
NYT: Where Have All the Jobs Gone?
By Jared Bernstein
THOUGH yesterday’s employment report revealed a slowly improving job market, the jobless rate is still elevated, at 7.5 percent, with 11.7 million people looking for work, including 4.4 million who have been doing so for at least half a year.
About eight million more were stuck in underemployment (“involuntary” part-timers) last month, unable to find the hours of work they sought...
----
Link: http://www.nytimes.com/2013/05/04/opinion/where-have-all-the-jobs-gone.html?
By Jared Bernstein
THOUGH yesterday’s employment report revealed a slowly improving job market, the jobless rate is still elevated, at 7.5 percent, with 11.7 million people looking for work, including 4.4 million who have been doing so for at least half a year.
About eight million more were stuck in underemployment (“involuntary” part-timers) last month, unable to find the hours of work they sought...
----
Link: http://www.nytimes.com/2013/05/04/opinion/where-have-all-the-jobs-gone.html?
Friday, May 3, 2013
WSJ: Broader Unemployment Rate Ticks Up
The unemployment rate dropped for all the right reasons in April, but a broader rate that includes underemployed and discouraged workers rose, underlining concerns about the types of jobs being created.
...an area of concern in the report as a broader rate, known as the “U-6″ for its data classification by the Labor Department, increased to 13.9% from 13.8% a month earlier. That includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.
----
Link: http://blogs.wsj.com/economics/2013/05/03/broader-unemployment-rate-ticks-up-2/
The unemployment rate dropped for all the right reasons in April, but a broader rate that includes underemployed and discouraged workers rose, underlining concerns about the types of jobs being created.
...an area of concern in the report as a broader rate, known as the “U-6″ for its data classification by the Labor Department, increased to 13.9% from 13.8% a month earlier. That includes everyone in the official rate plus “marginally attached workers” — those who are neither working nor looking for work, but say they want a job and have looked for work recently; and people who are employed part-time for economic reasons, meaning they want full-time work but took a part-time schedule instead because that’s all they could find.
----
Link: http://blogs.wsj.com/economics/2013/05/03/broader-unemployment-rate-ticks-up-2/
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