Economic conditions are bad. No one except a political lackey would attempt to argue otherwise. A post in American Thinker by Randall Hoven dealing with unemployment is reproduced below. The numbers are shocking and tragic.
Most accounts believe that the current employment situation is long-term or “structural.” That is, high unemployment rates are expected to continue well into the future. Some estimates indicate that the problem will not correct until 2013 or 2014. Few attempt to explain why or how this can be “structural.”
The chart below is the Average Duration of Unemployment. It is at a post WWII high. It is likely that the current record number was exceeded during the Great Depression, but the data series does not go back that far.
There are several interesting visual observations that can be made from this chart. First, the peaks of the curves occur almost immediately after the recession has ended. This indicator might be a better marker for an economic recovery than a collection of economists declaring “the recession has ended.”
Second, the general shape of the curve rises from the lower left to the upper right. That is, if one were to apply regression analysis, the line would slope upward. The period from the 1970s forward is especially pronounced. When coupled with other, unrelated data like wages, median incomes, rates of growth, etc. it is just another datum that suggests that something happened to our economy in the 1970s. To the extent that something “structural” happened, I would argue that it did not start recently, but back in the 1970s. A case for that will be made in a subsequent post.
Third, it should be noted that extending unemployment benefits always produces a lengthening effect on unemployment. There have been extensions in this recession. How much they have contributed to the extreme rise is moot, as it was in previous periods.
Graph of the Day for February 18, 2010
Randall Hoven
“The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.” Don Peck in The Atlantic Monthly.
Source: St. Louis Fed, UEMPMEAN series.
Hoven’s Index for February 18, 2010
Number of civilians unemployed 27 weeks or more, as of December 2007: 1,325,000
As of December 2008: 2,612,000
As of December 2009: 6,130,000
Civilian participation rate, as of December 2007: 66.0%
As of December 2008: 65.8%
As of December 2009: 64.6%
the Fed that significantly contributed to the severity of the great depression in the 30’s as well. 1) before the Fed (1913) larger banks had always supported smaller banks to control any panics out of self interest (nip it in the bud). But they deferred to the Fed in 1929 and after. The Fed took a “darwinian” position, believing that there were too many banks, and that some should fail. The resulting bank runs were devastating. 2) The Fed contracted the actual money supply by 1/3 during the bank failures. Many regions, for example parts of Utah and Wisconsin actually printed their own money
Comments are closed.