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Saturday, November 08, 2003
So is This a Real Recovery Now?
Posted by DavidNYCA lot of the analysis on this site is predicated on a state of affairs which I acknowledge could change dramatically at any time: our slumping economy. But last week, we learned of a dramatic GDP spike, and by now, you've probably caught wind of the revised employment numbers, which show substantial growth dating back to August. I'm not a hardcore number-cruncher - when I look at things like unemployment figures, I do so with an eye to what I think the political consequences of presiding over a lousy economy will be. So are we in a genuine recovery now, and if so, should we consider chucking out the "angry unemployed voter" thesis?
Billmon, for one, says not so fast. He asks a pair of crucial questions: "If growth downshifts to a 3-4% rate" from its current giddy high of 7.2%, "will the job-killing recovery return? And if it does, will growth continue to downshift?" I'm not about to a hazard a guess here, but it goes without saying that one quarter of good growth does not a full recovery make. As the New York Times reminds us, there was a four-month period of consecutive job gains late in 2002, which only wound up fizzling early this year.
I want to look at things from a different perspective, though: Even if we are now in a sustained, genuine, jobs-adding recovery, will it be enough by election day? At least one person in Congress is thinking along these lines:
Representative Pete Stark of California, the ranking Democrat on the Joint Economic Committee of Congress, noted that the current pace of job growth would need to continue for 19 months for the country to return to the peak employment level reached in early 2001.
So if we keep adding jobs at the October rate (126K/month), around 900,000 people who had jobs when Bush took office will still be jobless come November, 2004. (We've lost 2.4 million jobs since the peak in Feb. of 2001.) And if job creation follows the more conservative three-month trend (286K in Aug-Sep-Oct), 1.25 million people will be, as the saying goes, worse off than they were four years ago. Though I'm hesitant to invoke Hirdt's Law - because something hasn't ever happened in the past, it can't happen in the future - I am mindful that the last President who oversaw over four years of net job losses won a grand total of six states in his re-election bid. (Hoover.)
In any event, we clearly aren't out of the economic woods yet, though we may be on the right path out of the woods. Until we start seeing conclusive, continued signs of job growth, I'm going to hold off on revisiting my economic-related analysis.
UPDATE: Another nugget, again from the NYT:
Gene Sperling, a top economic adviser in the Clinton White House, encouraged Democratic candidates to use his calculations showing that even if the number of jobs increased every month between now and the election at last month's pace of 126,000 new jobs, it would still be the slowest recovery in terms of job creation since World War II.
Posted at 01:11 AM in Economy | Technorati
Comments
Our favorite, Mr. Krugman in the NYT, covered this issue this week. The point is that while good things might happen now and then, the economy is still trending down, and the increased debt will dictate how future budgets are structured (with much less services for the citizenry).
Of course, it's hard enough to campaign on what's going on now, let alone the next twenty years. Perhaps the thing for the Dem nominee to do is to use Krugman-like arguments to convince donors, rather than voters, and just spend his or her way into the White House. Funny to say that.
Posted by: Pliny the Elder at November 8, 2003 01:01 PM | Permalink | Edit Comment | Delete Comment