Despite the good jobs news, unemployment is still a major crisis. The economy added 244k jobs last month. At that rate, employment will not return to its pre-recession level until 2017.
Fun Chart. Too big to include inline, it destroys hscroll.
This is the worst employment recession since the Great Depression. More jobs were lost than in any other post-Depression recession, and they’re taking longer to come back.
Despite this, our political system is obsessed with cutting the debt, despite the fact that there’s no evidence of inflation anywhere on the horizon. It should be noted that Great Britain adopted an austerity program similar to what it looks like we’re headed toward; the results are that it looks to be throwing their economy back into an outright recession.
edit: here is Niall Ferguson making the ridiculous claim that we’re actually suffering from double digit inflation.
Most economic prognosticators think that Britain will avoid recession, although it will experience a slowdown.
Not sure why America is obsessed with cutting debt right now, although a combined debt load (including states, munis, guaranteed pensions and social welfare obligations) of around 90% is a bit worrisome.
Still, last I checked the interest rate necessary for the economy to clear is something like -2%, so inflation would be a damned good thing.
Least we’re not saddled with Trichet and the ECB, as they’re more than willing to throw the periphery to the wolves to tamp down some slight inflation in Germany.
I keep thinking the only silver lining to an austerity program in a recession is that segment of the country behind it will learn of its futility. Thing is, I’m normally all for a trimmed federal government. The problem is that the states and local governments are getting on the same bandwagon either by choice or need, and they’re supposed to be the ones picking up the slack (in my perfect world).
American employment problems are structural and beyond the ability of government to deal with. Globalization and automation are going to continue eliminating jobs regardless of anything Obama or his successors do. It’s worse for you guys because of your imperial ambitions and the hubris that went with it since the fall of the USSR, but the same issues face us here in Canada. Spending on new projects to temporarily employ the otherwise unemployable might defer the crisis, but it’s not a cure. It’s just too easy to either outsource a North American job to some other part of the world where wages are a fraction of what they are here or to simply automate aspects of it and merge the remainder with an existing one.
Cloud computing, pay as you go counters at the grocery store…wonderful things, but keep in mind you’re looking at hundreds of thousands of jobs disappearing forever, just as completely as a factory moving from Michigan to Mexico. I’ve yet to see any evidence of a “new economy” that will replace all those jobs, just as our vanishing IT jobs were supposed to do back in the 1990s.
As the purchasing price of the dollar precipitously drops, it has increased the cost of most goods, as well as the cost of most natural resources (gasoline, natural gas, ect). Since most goods are imported, “real” inflation has increased by fairly substantial margin. I don’t know how anyone can claim that there is not inflation affecting purchasing power without taking the decline in the dollar into account. There are only a handful of categories - HDTVs, for ex., - that have continued to drop in price and increase in size and capacity.
Ferguson is correct in pointing out that the US dollar has been rapidly losing value due to the skyrocketing debt, and that gas prices have exploded as a result. Even higher prices are hardly conducive to an economic recovery, no?
Hilariously, we actually have a way of measuring inflation. That measure says that inflation is not going up appreciably. If you think there are better ways of measuring inflation you can certainly make the case for them - but you’re going to have to do better than picking an arbitrary list of stuff that’s increasing in price and using that to demonstrate that there’s general inflation.
If you want to tremble in terror, notice that the highest grossing Apple stores are all in China. There is little doubt that overall globalization has been a substantial net benefit to the world economy, and has beneficially improved the lives of hundreds of millions worldwide. There is also, imo, little doubt that because of this most Western economies have taken a not insubstantial hit to their unskilled and semi-skilled labor force that requires substantial policy to disentangle. Unlike in Europe, and because of the divided authority in the US (between Feds, States, and Cities) as well as other cultural and ethnic factors, the US has an extremely laggardly inability to shift resources into improving the lives of those most affected by globalization.
I had a whole post worked up, but I realized it boiled down to my last post: we have a way of measuring inflation, it’s a measure that everyone mostly agrees on (until they find it politically expedient otherwise, e.g., see Niall Ferguson). If you think that the CPI or core inflation aren’t valid measurements than that’s an argument you should make in more detail.
Not sure why you say there is no sign of inflation anywhere in sight. Current numbers are low, but raw materials are going through the roof for many if not most manufactured goods (coatings, plastics, just about all manufactured goods,) and the head of Walmart as well as other big companies have commented that they see significant price hikes and other forms of inflation coming in their markets.
There is not way to address this, unfortunately, without sounding like a Randian hack. How can one guy on the internet argue with the Fed? Especially without reams of links and studies to back him up?
I’m just telling you there is not doubt IMHO we have substantial inflation. I see it personally, and in work. You can argue with me that the increased price of goods i purchase in business isn’t predictive, or that the increased price of goods i see in stores isn’t anything, because of the Feds’ published numbers; and we’re at an impasse. Like i said, i suspect core inflation is being averaged out because of the decline in value of real estate, which (taken on the aggregate) would more than support bond valuations considering the enormous balance sheet value of real estate. But i’d like to see inflation figures with property not included.
No we really aren’t. Inflation has an agreed-upon definition. There are ways of measuring it. “How Enidigm feels on a particular day” is not amongst them. This is especially true when we’re talking about what kind of economic policies the US government should pursue.
If you feel like the measurements used aren’t accurate, viz, that they don’t represent actual changes in the overall purchasing power of a dollar, then make that case. Niall Ferguson at least tried (although his case was pretty poor, he at least put forth an effort).
Commodity Agricultural Raw Material Index is up over 44% over the last 12 months. Commodity Food Index is up 32%. Commodity Industrials Input Price Index is up 29% over the last 12 months. Most natural oils, used in both foods and material manufacture, are up over 50% over the last 12 months. The raw materials that go into things like acrylics, urethanes, epoxies, paints, etc. are up over 50% over the last 12 months and we’re getting quarterly price increases of 7-12% per quarter. Some basics like TiO2, used in everything from coatings to paper, are going up 10% per quarter, with projections of that happening through 2012.
Just some data. What we want to call it “officially” is semantics, but I will be extremely surprised if the people who “make stuff” don’t pass this on to consumers in a dramatic way in the coming months (this is why people like the top guys at WalMart and Target and Lowes and others are issuing price/inflation warnings from their perspectives.)
Commodity price spikes may be due to a bubble; see here and here. I’m not up to snuff on what’s going on in the commodity world though, so I can’t say that with confidence.
Increasing commodity prices are not inflation. They may lead to cost push inflation as manufacturers pass on the expense to consumers. If that’s happening, it’s not happening yet.
By some measures of inflation this is irrelevant. The Federal Reserve uses the PCEPI (core inflation), which iirc doesn’t include fuel and food because these items are subject to external supply shocks. From an economic policy perspective the price of oil going up because we’re bombing Libya doesn’t actually cause inflation (even though it spikes fuel prices).
The current indicators for inflation (CPI, PCEPI) show low to very low rates of inflation. The bond market doesn’t seem to expect anything out of the ordinary regarding inflation. Maybe this will change someday - lots of people sure seem to think so! But nobody that I’m aware of has made a compelling case for inflation other than “I feel like it might be happening.”
I’m still looking for the jobs creation initiative that my state legislature was supposed to tackle. Instead, they’ve been busy cutting funding to Planned Parenthood, approving a constitutional amendment to ban gay marriage, and outlawing abortions after the 20 week mark.
