Archive for July 3, 2010

Current Recovery “Faster & Stronger” According to CNN Money’s Chris Isidor

A recent CNN Money piece was titled “7.9 Million Jobs Lost Forever” by senior writer Chris Isidore. First, let’s set aside the idea that anything is really “forever” or the idea the we have a totally inelastic work force that, being filled entirely with idiots, never adjusts to the economic realities that confront us. Let us unstead focus on his statement:

“Excluding temporary Census workers, the economy has added fewer than 100,000 jobs a month this year — a much faster and stronger jobs recovery than occurred following the last two recessions in 2001 and 1991.”

Let’s go ahead and check that statement. Let’s take the job number at the end of the recession (as defined by this Wikipedia piece on recessions) and see how each recession did with jobs from the end of the recession onward, which we’ll define as “the jobs recovery”. The below chart shows the number of jobs in the months following the end of each recession.

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As you can see, following the end of the recession, this “recovery” is vastly worse on the jobs recovery than previous recoveries. Now, it could be that what Mr. Chris Isidore meant to say is that “in the last 6 months, we’ve seen jobs growth much faster than the last two recessions”. That is the same as saying “See the growth between the two red arrows?”

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“It’s awesome. I would like you to infer that, based on this very limited view of jobs growth, President Obama is doing awesome on the jobs front.”

First of all, that kind of statement is why people think that reporters (even reporters who work for CNN Money) can’t do simple addition. Either Mr. Isidore is an idiot or he is deliberately mis-reporting the data.

Speaking of which, why would Mr. Isidore only use the last two recessions as an example? Let’s look at the last three recessions instead of the last two.

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As you can see, in a similar time frame, the improvement in jobs in the early 1980’s recession was heads and shoulders above any of the other recessions. In fact, in a comparable period, the early 1980’s jobs recovery was at a rate 4 times faster than this current one. And yet Mr. Isidore cherry picks a specific section of time within a specific set of recessions in order to make the claim that the jobs growth we’ve seen is “faster and stronger.”

Long Slow Recovery vs. Double Dip Recession

Interesting NYT Economix piece from Casey Mulligan on if we’re seeing long slow recovery out of the 08-09 recession or the beginning of a double dip recession. One thing he does is predict that national employment and work hours will be “a couple of percentage points higher at the end of 2010 than they are now.”

I think he’s kind of crazy, but I wanted to put it on the record so that we can look back at it at the end of the year.

First of all, the guidelines: Mulligan says that national employment will be “a couple of percentage points” higher. I’m going to assume that this means employment-population ratio as defined by the BLS which, as of this writing, is 58.7%. It is up .5% from its nadir at 58.2% last December. Let’s say that “a couple percentage points” means an increase of 1.0% in the employment-population ratio. This gives him quite the benefit of the doubt, I think.

Based on my very rough calculations, that would mean we’re looking at an increase of about 3.06 million jobs in the next couple of months, averaging 437,000 job increase per month. Keep in mind, this still puts us way below the height of the employment-population ratio of 64.7% in 2000 and nearly a full percentage below the employment ratio in place a year and a half ago.

No. Freaking. Way. Not happening. Honestly, I would be surprised if we saw another .5% increase (which is what we’ve seen in the last 6 months). I’ll stake my claim there, even though I have a feeling that we might not even make that number… I see this recovery being even flatter than that.

In any case, here’s a view of the predictions. We’ll revisit in a half a year. Or possibly in October or November when if it looks like one of us is on track.

Employment-Population Ratio 2006 – Present

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