Wondering how to process the shocking headlines about December job-shedding? Economists and their econo-blogger brethren agree the numbers look bad, and disagree about almost everything else. Some say the job losses--which are unexpectedly high but lower than the previous month--signal a stabilizing economy, while others contend that this is yet more evidence the doomsayers were right, and we're headed toward a jobless recovery.
- Don't Worry, Everything's Under Control "Today's employment report," begins Chair of the Council of Economic Advisers Christina Romer on the White House blog, "though a setback from November, is consistent with the gradual labor market stabilization we have been seeing over the last several months." Her numbers: "Payroll employment declined 85,000 in December. To put this number in perspective, employment declined 139,000 in September and 127,000 in October. So, in a broad sense the trend toward moderating job loss is continuing."
- No It's Not--This Is Bad, wails economist Brad DeLong, who declares himself "a very unhappy camper." He says he's "looking at the employment-to-population ratio, which continues to crash ... Can you say: 'jobless recovery'?" He asks readers, the Mr. Rogers tone belieing the grim tidings. "And recall that a bunch of stimulative measures--from Federal Reserve quantitative easing via mortgage purchases to the ARRA are currently scheduled to be cut back over the next twelve months, putting downward pressure on the economy. And recall that state budgets are about to inflict more drag as the fifty little Herbert Hoovers wreak their will on state and local and state- and local-funded employment."
- And It's Worse Than You've Heard Investment adviser Mike Shedlock rips into official modes of unemployment counting, pointing out that "there are now a whopping 2.5 million people without a job but want one, yet are not counted as unemployed." Thus, he argues, "the announced unchanged unemployment rate holding steady at 10% is a brutal distortion of reality at best." Time's Justin Fox fills in the blanks: "The broadest unemployment measure, U-6, which tries to account for those who want jobs but have been too discouraged to look lately, came in at 17.3% in December, up from 17.2% the month before." He points out, though, that "the household survey results tend to be pretty volatile, which is why markets usually focus more on the payroll numbers."
- I Was Right "From the beginning," writes economist and New York Times columnist Paul Krugman, "one school--strongly represented among Wall Street economists--said that the 2008-2009 recession should be compared with other deep US recessions ... These recessions were followed by rapid, V-shaped recoveries ... The other school of thought said that this was a postmodern recession, very different in character from those prior deep recessions, and that it was likely to be followed by a prolonged 'jobless recovery.'" So? "Each successive bad jobs report adds to the evidence that the pessimists were right."
- Job Numbers Don't Matter The Wall Street Journal's Phil Izzo digs up a startling quote from Dan Greenhaus, chief economist at Miller Tabak:
Despite the negative reading in December, we are almost assuredly at the very end of the current cycle of firing and we repeat our belief that the number of people that lose their job from here on out is irrelevant. With over 8 million jobs shed in this recession, another 85,000 or 25,000 has no bearing. The only thing that matters is how quickly these people find a new job.