Patterico's Pontifications

4/17/2010

The “New Normal” Unemployment

Filed under: Economics,Obama — DRJ @ 1:45 pm



[Guest post by DRJ]

Unemployment during the Obama Administration:

Obama economic adviser Christina Romer’s explanation:

“While acknowledging serious concern that some Americans face long-term unemployment, Romer pushed back against economists who have asserted that high joblessness is now built into the economy and has become the “new normal.”

“The overwhelming weight of the evidence is that current very high and very disturbing levels of overall and long-term unemployment are not a separate structural problem but largely a cyclical one,” Romer said in her speech. “That is far from being the ‘new normal,’ it is the ‘old cyclical,'” Romer said.”

It look like the new normal to me, and one side effect may be that IRS tax receipts will continue to decline.

H/T Hot Air.

— DRJ

11 Responses to “The “New Normal” Unemployment”

  1. I read recently a reminder that the media and Democrats called the 2004 economy figures a “Jobless Recovery” because unemployment was at six percent.

    I guess we won’t hear that phrase from them this time at 10 percent unemployment.

    Alta Bob (e8af2b)

  2. > I guess we won’t hear that phrase from them this time at 10 percent unemployment.

    Unfortunately, it appears to me that this one seems to be more of a “Recoveryless Recovery”… LOL (ha-ha-only-serious…)

    IgotBupkis (79d71d)

  3. P.S. — This kind of thing reminds me of an old saw…

    Q: If you call a tail a leg, how many legs does a dog have?

    A: Four. Calling a tail “a leg” doesn’t make it a leg.

    Calling what we’ve got a “recovery” doesn’t make it a recovery. :/

    IgotBupkis (79d71d)

  4. Whew, the Dems and their media spinners are going to have to engage in some serious verbal gymnastics to make all of this work out. Here Prof. Romer says that high unemployment — despite the Obama Administration’s stimulus/stabilization spending orgy — is simply “cyclical” and a regular feature of the economy. When the economy recovers (what can I say, I’m an optimist), however, you can bet your bottom dollar that there will be no more talk of our cyclical economy and it will be entirely due to the policies of this (and only this) Administration.

    JVW (08e86a)

  5. Calling what we’ve got a government doesn’t make it one, either.

    AD - RtR/OS! (df7269)

  6. How can anyone in their right mind think that the unemployment problem is not a systemic problem of a failed economic policy from the previous administration? Or that ANYONE can turn around an entire country in a year? You all seem to be ignoring the WSJ report Friday showing evidence that the economy is rebounding.

    Anita Busch (a025dd)

  7. Anita, I know you are desperately clinging to the “it’s all Bush’s fault” meme, but that doesn’t give you license to invent happy facts to make Dear Leader’s policies look better than they are. Are you referring to the report from the Fed that says that though production and spending is up (which is obviously a positive development), the outlook for jobs and the housing market remains precarious (which is much less positive)? It’s customary to link to articles that you cite as proof for your arguments; that is how blogging works.

    And please do tell us that if and when we pull out of this economic slump, how are we going to restore fiscal sanity to the Federal budget? I suppose you are of the “we can tax our way out of this mess” or you want to cut the defense budget down to nothing, but any way you slice it, your man Obama has left us with a fiscal nightmare that will take years to fix.

    JVW (08e86a)

  8. You all seem to be ignoring the WSJ report Friday showing evidence that the economy is rebounding.

    having spent twenty years in the Army, i always ignore bullsh1t, no matter who is trying to pass it off.

    redc1c4 (fb8750)

  9. Anita Busch:

    You all seem to be ignoring the WSJ report Friday showing evidence that the economy is rebounding.

    You mean this WSJ article in which some economists speculate the rebound could come faster than expected based on one month of increased consumer spending? The same article that explains the recovery may occur faster because consumers are defaulting and banks are forgiving debt?

    Since the economy turned toward growth in mid-2009, economists have offered a litany of reasons that the recovery should be exceedingly sluggish. Heavy debt burdens would weigh on consumer spending, wounded banks would pull back on lending, and a glut of foreclosed homes would keep house prices and construction activity down.

    Many of those factors are still in play—and even the most optimistic estimates of U.S. growth remain well below the 7% to 8% level seen in the wake of previous deep recessions. Bank lending has been shrinking at the fastest rate in more than six decades, the supply of foreclosed homes turned up in early 2010 and construction activity remains subdued.

    What’s different, though, is that those headwinds aren’t holding back U.S. consumers. Economists now expect inflation-adjusted consumer spending to grow at an annualized rate of more than 3% in the first quarter, up from earlier estimates of less than 2%. As consumers shed an increasing amount of debt through defaults, and as the government implements new incentives for banks to forgive mortgage principal, the added relief could help keep the spending going.

    That’s not my idea of a recovery, and it’s not the WSJ’s either. That’s probably why the article ends with this cautionary note:

    A consumer-led recovery could present problems of its own. If the spending isn’t supported by income growth, economists worry the U.S. could find itself back in the same pattern of vast trade deficits and heavy borrowing that helped set the stage for the financial crisis. In one ominous sign, the U.S. trade deficit expanded in March to $39.7 billion, driven in part by a sharp increase in imports of consumer goods.

    Common sense and economic reality tell us where this road is leading.

    DRJ (09fa6c)

  10. Back in the 70’s 6 or 7% unemployment was thought of as “full employment.” When Reagan drove that down to 3% with companies still begging for workers amid low inflation, they called it “luck.”

    Now, they’re back to 10% unemployed and they want to call it normal. I guess they figured “bad luck” wouldn’t cut it.

    Wonder what they say when inflation picks up and they finally cannot hide it.

    Kevin Murphy (5ae73e)

  11. When the inflation curve crosses the unemployment curve, all Hell is going to break loose – particularly when interest rates double that crossing point.
    This generation is due to suffer their very own “Misery Index”.

    AD - RtR/OS! (df7269)


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