Even as Bernanke is receiving his last minute briefing on what to say (everything, EVERYTHING, is good) and what to play dumb on (explaining the price of gold for example), a new report by the Center for Economic and Policy Research concludes that digging ourselves out of the current unemployment hole, which is 7.5 million less people having jobs than did in December 2007, will take at least 4 years, and not occur prior to March 2014. However, this assumes a flat working-age population, something the Fed would love to be the case. Alas, the country is growing: and if one incorporates the effects of labor force growth into the above analysis, as the CEPR authors have done using CBO projections, then we may have a much larger problem on our hands: the study concludes that taking into account the approximately 14 million new job seekers in the future, then the December 2007 unemployment rate will not be met until April 2021! Welcome to the new normal. Of course, both of these analyses assume that the economy will immediately commence growing and generating jobs at the recovery rate seen in the 2000s, when about 166,000 jobs per month were being added. With every month that this does not happen the 2021 date will continue being pushed out further into the future. Perhaps one of the Senators today can ask a question of Bernanke just how he plans on reconciling this glaringly simple explanation for why the US economy will be underwater for a period of over a decade.
However, it would not be inconceivable for birth rates to go down and infant deaths to increase over this period. That would warm the hearts of Malthusians. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
As you can see, a straightforward short window differential linear extrapolation leads to the much more promising recovery in just a few years.
you are the media you consume.
One of the problems has been that the "real" unemployment rate and official figures have diverged because the labor force has basically held steady, being down 125,000 since December of 2007, while the civilian non-institutional population has increased by 4,534,000 in the same period.
If we assume that the same number of people want a job, but just aren't being counted, that means that there are 19,157,000 unemployed in the US instead of 14,623,000. And the unemployment rate grows from 9.5% to 12.1%.
Why actually worry about getting people employed when you can just stop counting the unemployed? And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
You could put up the pretense that you are including the stochastic element by throwing some wiggle into them, but in the end projections are estimate of what can happen no predictions of what will....... And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
The Federal reserve, BLS and CBO haven't graduated from point estimates to confidence intervals? Can I fail them undergraduate statistics retroactively and throw them out of their jobs? By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
Of course it's still a constant coefficient term, but a better one?
Of course with month based statistics, won't the n be small producing explosive standard errors?
I think that these guys (the report is from the CEPR,not BLS or CBO) are working with the data that they have, which isn't granular enough to produce detailed estimates. Plus, I don't see who you can escape the linear extrapalation problem when you are are looking at the future. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
I can get down with that. And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
This next view shows 3 of those dimensions (excluding government spending), and the 2 dimensional view of the previous simulation is shown as a shadow below the 3D shape): So the output of non-equilibrium models can be "pretty"-it's just the picture they craft of capitalism that isn't pretty.
In the long term, economists may be reliable as long as they don't try to pretend they can forecast sharply. Like weathermen. By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
The upward slope is good comedy - I presume it's unintentional, but it's not always easy to tell.
