More economic recovery:

[underlankers.livejournal.com]

http://www.bbc.co.uk/news/business-12648347

 

The US unemployment rate fell slightly to 8.9% in February, down from 9% the month before.

It is the third month in a row that the jobless rate has fallen, with February's figure marking a near two-year low.

Employers added 192,000 jobs last month, the US Labor Department said, above market expectations.

Paul O'Neill, former US Treasury Secretary, described the data as "very positive".

A Labor Department statement said that most job gains were in manufacturing, construction, business services and transport.

State and local government slashed 30,000 jobs, the most since November as budget cuts continue to bite.

The data showed that the jobless rate for adult men was 8.7%, for adult women 8%, and for teenagers 23.9%.

The unemployment rate has come down from 9.8% in November.

____________________

I'll be the first to admit that this is not what the Obama Administration predicted or really wanted when they wanted unemployment to stay where it was when they were inaugurated. However looking at this, the unemployment figures appear to be showing more, and more effective, growth since the Administration's stimulus package has gone into effect. It makes me curious in fact whether or not a larger stimulus package would have had more effect. What do you guys think?

Comments

[rasilio.livejournal.com]

The problem is that there is no evidence of a causal link between the slight decline in unemployment and the stimulus spending. For example of the sectors which saw the best growth only Construction would have seen much of a direct benefit from the Stimulus program and so while it is possible that the job growth in manufacturing is a secondary effect of the stimulus package, it is FAR more likely that it was a result of the natural progression of the recession cycle. That is individuals and companies have held of engaging in capital expenditures for as long as they can and that pent up demand has begun to translate into actual orders.


IMO the Stimulus was 100% fail, it did not improve the economy at all, it did not create or save a single net job, and was little more than an opportunistic Democan party using a crisis to permanently alter the baseline Federal Budget by a significant margin under the guise of Stimulating the economy".

Unlike a lot of my free market advocate brethren I won't say that it is impossible that a stimulus package could have provided some benefit, however I will argue that a stimulus package such as this one could never possibly have helped because it produced nothing and even in the areas where the money was directed were generally speaking not the areas where the unemployment was.

In the long term the Tax Cuts, because of their temporary nature will turn out to be beneficial because Americans largely did what was expected and used them to pay down debt, not buy new big screen TV's. However that benefit is one which will only be noticed a decade from now, if anything it is more of a drain on GDP and employment today.

The spending however was pretty much all waste and pork with absolutely no stimulative benefit present.

[underlankers.livejournal.com]

Sure, there's the question of whether or not correlation is causation. However I think it's fair to point out that with the economic recession, too, it doesn't help that a lot of corporations prefer to maximize profits and minimize any kind of accountability by finding new outposts in dictatorships that want to rake in the dough, not giving a damn about the workers.

[surferelf.livejournal.com]

IMO the Stimulus was 100% fail, it did not improve the economy at all, it did not create or save a single net job, and was little more than an opportunistic Democan party using a crisis to permanently alter the baseline Federal Budget by a significant margin under the guise of Stimulating the economy".

I was going to jump all over this one, but then I saw all the qualifiers you put in there. What do you mean by "net" jobs?

[yes-justice.livejournal.com]

The problem is that there is no evidence of a causal link between the slight decline in unemployment and the stimulus spending.

Would you doubt any link if there was an increase in unemployment?

[underlankers.livejournal.com]

Some debt is inevitable with a modern economy, the idea that it could or should be eliminated altogether may have been valid in Andrew Jackson's day but there's a lot of time that's passed since the 1830s.

[nevermind6794.livejournal.com]

Economies don't die, they just lose tons of productivity and wealth as a result of depressions/devaluation/deflation. So there is a cost to not having a stimulus, too.

[speciesofspaces.livejournal.com]

I don't see any evidence that the figures show more effective growth.

I think a larger stimulus package could have had more effect, and that the stimulus generally could have been carried out more effectively.

There is hell to pay in the future if we do not raise taxes. The current "plan" seems to be to leave much of the deficit bridging to the states, many of which are planning to close their gaps not with graduated income taxes on Americans who can afford to pay, but with cuts to higher education, Medicaid, and mass layoffs of public employees. I anticipate that the ripples of the state-level crises will also force many private sector employers to cut jobs, cut hours, cut wages, or shutter their doors altogether.

[underlankers.livejournal.com]

Thing is you'd need people willing to bite the bullet and do that to avert those problems. Unfortunately those people are few and far between everywhere but at least in appearance are moreso than usual these days.

[rasilio.livejournal.com]

"There is hell to pay in the future if we do not raise taxes. "


And there is bigger hell to pay if we do.


Fact is we do not have a revenue problem with government, we have a spending problem and it is simply impossible to raise enough money in taxes to meet all of our obligations over the next 75 years.
If we fixed Federal Spending at Inflation + Population growth at the same level that we spent in 2010 minus the expenses for the wars and the Stimulus we would need to raise ~30% more revenue that we do today.
Of course since nearly half of the population pays no income taxes and around 30% of the population pays no federal taxes at all it could not simply be a blanket increase of 30% in the effective tax rate because 30% of 0 = 0 new revenues, so those who do pay taxes would need to see their effective Federal Tax Rates increase by at least 42%.

The effective Federal tax rate for the top quintile is somewhere in the ballpark of 25% right now, so a 42% increase would give them an effective tax rate of over 35.5% but practical matters would probably mean having to increase the effective tax rate for the top quintile by at least 60% because as is so often noted, there is simply no more money to be extracted from the bottom 3 quintiles leaving them with an effective rate of over 40% at the Federal Level.

Then we need to add in the State and Local Taxes and the increases needed to actually pay for those expenses without creating further growth in debt or unfunded liabilities.

By the time your done you end up with a top effective tax rate across all levels of government approaching 70%, this would put us right up there with the highest taxing Social Democracies in Europe for tax rates but we would not be getting anywhere near the services for that same money as they are and most importantly it would still not be enough money.

See if we *COULD* hold spending constant in real terms then this 70% tax rate would be fine, the problem is that we have somewhere around 120 trillion dollars in unfunded liabilities that will have to be paid for over the next 75 years and without major reform Social Security and Medicare spending will eat up more money per year than the government currently spends leaving literally NOTHING left to pay for anything else without raising even more money and therefore raising taxes even higher.

And to make matters worse, all of this assumes that increasing effective tax rates overall by more than 40% and by as much as 200% on the top earners while not actually spending any additional government money will have absolutely no detrimental impact on the economy and GDP growth. This is a patently absurd assumption and so even under the most optimistic assumption you end up needing to raise the effective tax rates on the top quintile to over 90%, and the next 2 quintiles will need to have their effective tax rates up over 70% in order to actually raise the more than $4 Trillion a year the government spends.

[pastorlenny.livejournal.com]

Do these numbers take into account those who have removed themselves from actively seeking employment?

[underlankers.livejournal.com]

I do not know the answer to that question, as these kind of articles in my experience do not go into the methodology of how these numbers are arrived at.

[rasilio.livejournal.com]

The numbers in the snippet lankers pasted do not but in another part of the article there is the following...


"The Labor Department estimated that, when factoring in the number of part-time workers who would rather be working full time and those who have given up looking for work, the percentage of "underemployed" Americans dropped to 15.9% in February."

Now of course there are other estimates of underemployment that produce higher numbers (I've heard as high as 22% reported in the last month) using different methodologies but that is probably a good starting point for the issue.

[surferelf.livejournal.com]

They do not. It's awfully hard to count them, so most don't bother.

[nevermind6794.livejournal.com]

A big issue is that the jobs being created are lower-paying than the jobs that were lost. That's a ton of people who start at lower salaries than they used to, and a lower base that permanently cripples lifetime earnings - in addition to taxes paid over time.

[underlankers.livejournal.com]

How much of that could be affected by anything the Administration does and how much of it could not?

[mijopo.livejournal.com]

Nice post, I think there are good reasons to think that more stimulus would have got us a real recovery instead of one that keeps seeming to be on the verge of toppling backwards, so does Goldman-Sachs, but I'm one of those people who doesn't cry in dismay whenever I read Krugman.

[underlankers.livejournal.com]

It does make you wonder given that Krugman's one of the few to advocate Keynesianism of anything like the old school. There are a few EU countries that have been unaffected and I don't recall this as having hit Canada very hard. What exactly does Canada do differently than what we do?

[badlydrawnjeff.livejournal.com]

the unemployment figures appear to be showing more, and more effective, growth since the Administration's stimulus package has gone into effect.

Don't you mean after the stimulus ended?

It doesn't seem surprising to me at all that the stimulus spending itself is essentially done, and now we're seeing hiring now that those projects aren't getting in the way anymore.

[underlankers.livejournal.com]

I forget that in your world both Hoover and FDR are Bolsheviks fresh from the Gulag.

[whoasksfinds.livejournal.com]

the unemployment rate is a phantom number. its recent decline has not been due to job growth, but rather, people leaving the work force. the latest job numbers are a positive sign, particularly when we see that the government is cuttings its payrolls. but the job growth is not related to stimulus spending that already ended. the extension of the bush tax cuts didn't hurt though.

[anfalicious.livejournal.com]

In Australia our stimulus was proportionally larger and it worked a treat. We didn't even have a recession. We should have a balanced budget again in a few years and have paid off the debt within a few years of that. Of course, we had a budget in surplus and money in the bank for the rainy day that came.

Another country worth looking at is Brasil, their stimulus worked pretty well too.

I think the GFC has shown Keynesian economics to work pretty well. The reason it's gone so epically wrong in the US is that the Chicago schoolers running economic policy ran the economy in a good time the way you should in a bad time (things like 0% interest rates in a growing economy are just retarded), so there was no give in monetary policy to stimulate the economy when the shit hit the fan, requiring all the stimulus to come from fiscal policy, which has proved to have not been enough.

[gunslnger.livejournal.com]

We should have a balanced budget again in a few years and have paid off the debt within a few years of that.

That's hilarious. I'll believe it when I see it.

[kylinrouge.livejournal.com]

If there were not things like misuse or non-use of stimulus funds, people in Congress actively killing jobs through legislation to stagnate the economic recovery, and massive deregulation after it was shown that lack of regulation is what caused this mess, then we'd be seeing a much bigger effect from the stimulus.

[eracerhead.livejournal.com]

Dang, ya beat me to it.

[allhatnocattle.livejournal.com]

However there is huge growth in dead-end jobs.