Okun's law

You Can't Blame The Economy On The Weather

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The pathetic jobs report has ushered in a whole new blame game on the weather. January through March 2012 had the warmest temperatures on record for the United States.

Most economic data, including the employment report, is seasonally adjusted. The algorithm is called X-12-ARIMA and is maintained by the Census. Without going into the mathematics, this algorithm takes past cyclical patterns that are predictable and adjusts those spikes, attributed to the seasons. The algorithm takes out of an economic data series those wild swings, so one can more easily compare real growth instead of, say, fall harvesting or Christmas hiring. Construction employment, for example, is highly cyclical due to the nature of the work. Below is a graph of not seasonally adjusted construction employment.

construction nsa

Outsourcing Is Not Good For America

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Who can forget that infamous declaration by Greg Manikiw, Outsourcing is good for America, backed up by fictional economics from an an offshore outsourcing group. gechina Despite the never ending alarming U.S. unemployment rate, the jobs crisis and the stagnant wages, it seems Obama is touting the same philosophy. Economists, on the other hand, refuse to dare challenge this corporate party line and mention the O word, outsourcing.

Where are the jobs? John Bougearel really nails it on fictional CBO and BLS future employment projections.

American policies must take steps to stop the bleeding of jobs overseas, Obama’s new Council on Jobs and Competitiveness should be enacting policies and proposing legislation that repatriates US jobs and disincentivizes further outsourcing of US jobs. These policies would of course be hugely unpopular with Corporate America, but that is the crossroads where we now stand.

Bougearel lists the never ending fiction BLS job growth projections and now similar delusional numbers by the CBO for 2011-2015.

The CBO is projecting 2.5 million jobs will be created annually from 2011 to 2015. From the CBO: “As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period.”

Let's Chat Labor Productivity

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One might notice the comment, Woe to the U.S. worker when productivity metrics are reported. Over and over again, I note that offshore outsourcing is the taboo word among mainstream economists, regardless of the numbers.

Well, it seems I am not alone in that assessment. A New York Times op-ed drives home the point:

There’s a problem: labor productivity figures, which are calculated by the Labor Department, count only worker hours in America, even though American-owned factories and labs have been steadily transplanted overseas, and foreign workers have contributed significantly to the final products counted in productivity measures.

Unemployment during the "Great Recession": a Continuing Structural Change in the Economy

In both the academic and political blogospheres, there are parallel but different discussions going on about the same point: this recession is far more severe in terms of unemployment than the 2.8% loss of GDP from peak would predict. At 9.5% and increasing the unemployment rate is approaching rates only seen once since the 1930s, as almost 8 million jobs have been lost in the last year and 7 months.

A graph illustrating the uniquely bad job losses during this recession has appeared frequently in the blogosphere, and is not a stranger to this blog: