Thank you President Bush, thank you President Obama, thank you Congress---its been a bipartisan effort and I have to say... the new normal sucks.
The Labor Department reported the economy added 195,000 jobs in June. With upward revisions to the prior two months data, this brings the average gain over the last three months to 196,000. While the unemployment rate was unchanged at 7.6 percent, the employment-to-population ratio (EPOP) edged up to 58.7 percent, the highest since last November.
Job growth was again heavily concentrated, with restaurants (51,700), retail trade (37,100) and employment services (18,600) accounting for more than half of the job growth in June. Total job growth in these sectors has averaged 105,000 over the last three months. These are all low-paying sectors to which workers turn when better-paying jobs are not available....
....This job report was somewhat better than had generally been expected, especially with the upward revisions to the prior two months’ data. There are still serious grounds for concern about the strength of the economy going forward. Job growth is unusually highly concentrated in low-paying sectors. This is not a sign of a healthy labor market. In this respect, it is striking that we continue to see a respectable rate of job creation in an economy that is growing at less than a 2.0 percent annual rate. The trend rate of growth is usually estimated at 2.2 to 2.4 percent. The other point worth remembering is that even at the 195,000 job pace of the last three months, it would take us to the end of the decade to make up the economy 8.5 million job deficit.
A GOOD EMPLOYMENT REPORT BY OUR CURRENT LOW BAR OF DIMINISHED EXPECTATIONSSince mid-2011, the U.S. economy has only been creating jobs at a pace fast enough to raise the employment to population ratio by half a percentage point.
And mass unemployment goes on.
So how does this end? Here’s a depressing thought: maybe it doesn’t.
True, something could come along — a new technology that induces lots of investment, a war, or maybe just a sufficient accumulation of “use, decay, and obsolescence”, as Keynes put it. But at this point I have real doubts about whether there will be events that force policy action.
First of all, I think many of us used to believe that sustained high unemployment would lead to substantial, perhaps accelerating deflation — and that this would push policymakers into doing something forceful. It’s now clear, however, that the relationship between inflation and unemployment flattens out at low inflation rates. We can probably have high unemployment and stable prices in Europe and America for a very long time — and all the wise heads will insist that it’s all structural, and nothing can be done until the public accepts drastic cuts in the safety net.
But won’t there be an ever-growing demand from the public for action? Actually, that’s not at all clear. While there is growing “austerity fatigue” in Europe, and this might provoke a crisis, the overwhelming result from U.S. political studies is that the level of unemployment matters hardly at all for elections; all that matters is the rate of change in the months leading up to the election. In other words, high unemployment could become accepted as the new normal, politically as well as in economic analysis.
I guess what I’m saying is that I worry that a more or less permanent depression could end up simply becoming accepted as the way things are, that we could suffer endless, gratuitous suffering, yet the political and policy elite would feel no need to change its ways.
When do people start picking up their pitchforks? I mean seriously...