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Another San Jose Job Killer

There is indeed a “crisis of underemployment.” But Mr. Field does not understand the source of the crisis. Failing to diagnose it correctly, he offers a solution that will, in reality, make the problem worse. The negative effects of Mr. Field’s proposal include slower business growth, companies moving to neighboring towns, and, possibly, much higher costs. One benefit is likely to be a proliferation of new businesses (which, presumably, can hire all the part-time workers they want). Continue Reading →

The Other Cliff — Regulations

To summarize, there is more to fiscal policy than G, TA, and TR (government spending, taxes, and transfer payments for those a little rusty on their macroeconomics). Government regulations also have a significant impact on the economy. Continue Reading →

The September Jobs Report

Did the U.S. economy really gain 873,000 jobs in September, 2012? Was the unemployment rate really 7.8%? Economists have reacted to these numbers with a peculiar mixture of disbelief and defensiveness. No sane economist believes these numbers represent the current state of the U.S. economy. A quick-and-dirty estimate says that real GDP would have to grow at a 4 – 5% annual rate to add that many jobs. Actual GDP growth in recent quarters has been below 2.5%. … there’s a good chance that the 873,000 increase in jobs is simply a statistical fluke. Remember, total employment is estimated using a sample of 60,000 households. There is a large margin of error.
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January Unemployment

That means the gyrations between employment, unemployment, and labor force dropouts are just about offsetting each other.
When the unemployment rate drops mainly because an additional million people have left the labor force and population estimates are revised … well, let’s just say this report is not the sign of a healthy economy.
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December Unemployment Rate

A good part of this drop was caused by the ongoing decline of the number of workers in the labor force. The labor force participation rate dropped sharply to 64.1%. This is the lowest participation rate since 1983’s 64.0%. Anyone who argues that the drop in the unemployment rate signals an improving economy should be forced to recycle their Ph.D. in economics into aluminum beer cans. Continue Reading →

Unemployment Drops to 8.6% — Can the News Really Be That Good?

The current increases in U.S. output are largely being fueled by huge productivity increases. As the U.S. moves increasingly toward a service producing information economy, the productivity of educated people will continue to soar. The question of what happens to the rest of the population remains unanswered. Continue Reading →

Nine Point Eight! Are You Convinced Yet?

“President Obama had scheduled a speech about the economy this morning, but instead he went to Afghanistan.”[1] No wonder. If I was president I wouldn’t want to be in the country today either.

Today the November labor market report was released. The, um, highlight was the unemployment rate: 9.8%. Corporate profits are soaring and the economy is growing, albeit slowly. So where are the jobs? Continue Reading →