The Employment Report in Brief
The WSJ RTE post title says it pretty clearly: Economists React: Jobs Report an ‘Unmitigated Disaster’. My two observations are:
It is looking unlikely that there will be more stimulus from either fiscal policy or monetary policy. Former President Bill Clinton has called for suggestions for other policy options that might be helpful. Here are a few ideas along those lines.
The Employment Situation release for May was not entirely a surprise, given Jim’s post yesterday, but contained unwelcome news nonetheless. WSJ RTE quotes Stephen Stanley of Pierpoint Securities thus: “…consider me worried”.
Incoming data over the last two weeks paint a consistent picture that the U.S. economy, which had been growing at a disappointingly slow rate, has weakened further.
Politics and Policy
Last Monday, I discussed some of the findings from the conference on causes and consequences of, and policy responses to, long term unemployment, which brought to UW Madison Prakash Loungani, an Advisor in IMF’s Research Department, Kenneth Scheve, Professor of Political Science at Yale, Phillip Swagel, Professor of Public Policy at the University of Maryland, and a former Assistant Secretary of Treasury for Economic Policy, Rob Valletta, Research Advisor at the Federal Reserve Bank of San Francisco, and Kenneth Troske, Professor of Economics from the University of Kentucky. In today’s post, I will discuss the presentations and papers by Ken Scheve and Phillip Swagel and Ken Troske.
On Thursday, we brought together an impressive array of scholars to discuss the causes and consequences of, and policy responses to, long term unemployment, including Prakash Loungani, Advisor in the IMF’s Research Department, Kenneth Scheve, Professor of Political Science at Yale, Phillip Swagel, Professor of Public Policy at the University of Maryland, and a former Assistant Secretary of Treasury for Economic Policy, Rob Valletta, Research Advisor at the Federal Reserve Bank of San Francisco, Dan Aaronson, Director of Microeconomic Research at the Chicago Fed, and Kenneth Troske, Professor of Economics from the University of Kentucky. And that was in addition to the researchers from the University of Wisconsin-Madison (more on them below). For me, this was a tremendous learning experience. But like all good conferences, by the end I understood that I knew less than I thought I knew about long term unemployment. In today’s post, I will discuss the presentations and papers by Prakash Loungani and Rob Valletta; in the next post, I’ll cover the findings of Ken Scheve and Phillip Swagel and Ken Troske.
This Thursday, the La Follette School and the UW Center for World Affairs and the Global Economy is holding a conference on “Long term unemployment in industrial countries: Causes, Consequences and Policy Responses”. In a timely report, the OECD last week released Persistence of High Unemployment: What Risks? What Policies?. From the report:
Following up on yesterday’s post on the Heritage Foundation’s assessment of the Ryan plan, I thought it would be useful to see how the labor and capital supply elasticities that are implied in the simulations compare with the literature, for the benefit of my macroeconomics class. Unfortunately, I come up with some really odd numbers, so I must either be making a mistake somewhere, or the simulation is very odd. Update 4/10, 4:50pm Pacific: I added two graphs illustrating exactly how odd these numbers are.
Last week’s new economic data began with a personal income and outlays report which suggested slower consumption growth. But the numbers released Friday are a little more encouraging.
From Reuters:
U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the economic recovery.