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This puzzle has so many pieces now, that no amount of naval gazing is going provide a simple answer. History is a guide, but there are new puzzle pieces being added as decades pass. For example, as suggested, the retirement (or export) of higher valued skilled jobs, leaving those with lower productivity. What about currency manipulation? product dumping? Millions of illegal workers? Part-time workers? Those in “long-term” unemployment? The financial crisis? Fed asset inflation? I am sure these factors can all be “explained away” by the outdated blunt tools of the ivory tower economists. I would suggest that many new pieces are simply not being considered, due to politics or ignorance. And perhaps, we are already in the new long run.
You would be surprised how many households in the US are invested in equities through their employer. You can't pass up the employer matching benefit, many match 100% up to the 1st $5,000. Over a lifetime of working it's a real wealth effect.
Now if Trump could only get his administration up and running so we could reap the full benefit. Is that too much to ask almost 1 yr in? And of course impeachment proceedings aren't going to bode well for the steady state long term investor either. Hillary would have been a predictable Wall Street friendly President. Nobody likes surprises. I've never voted for change in my life, promised or otherwise.
Leave it alone, it's bad enough I'm underemployed, blow the whistle and my 401k will tank.
Wages haven't kept up with asset valuations, which is sort of fine if you own a house, but not quite. Even if your mortgage is paid off, the annual property taxes are equal to what mortgage payments were 25 years ago. There's inflation and plenty of it, it's just hidden. It boggles the mind why Greece is the only nation that is being forced to internally deflate. The only reason to deflate is to inflate again, timing is everything.
Here is news you can use.
Economic models at best have 4 or 5 key primary variables. Total jobs, etc.
Most of those numbers are estimated by local government officials - without using current primary data, and with considerable "influence" from above, in the form of "smoothing" functions in the estimates.
Example, there is no way the government can correlate local employment this month with actual annual earnings on tax forms.
So - by direct measure, all these flash estimates are at least 10% wrong every week, sometimes 20% wrong, and economic forecasts of major long-term economic changes are as much as 70% wrong all the time...
,,,,see the forecasts of economic variables and financial markets before, during and after the Great Recession. They were all over the map,
There is no puzzle here.
Economics is a gross practice, at best, in many ways.
Well high tech is doing quite well.
Not so sure about store clerk - will depend on the kind of store. The shift in spend to online channels seems to having an impact on many types of retail.
That's the theory, but it hasn't held true.
First, there are so many loopholes in the US tax system that some firms pay no income taxes at all, and end up with net negative tax liabilities in the future. In short, the US taxpayer owes THEM money. Go figure.
Second, interest rates are already at historical lows, and firms are not raising wages beyond marginally above inflation. So, the problem isn't lack of inexpensive capital.
And third, tax repatriations in the past have showed that US firms are most likely to the use the cash to increase share buy-backs or dividends, and not use it to raise worker wages.
Wages haven't grown because all the profits go to the CEOs. Skip the 4 year college, a construction job with the Teamsters is the way to go.
No, you want to wear a suit and tie? Good luck with the debt mountain.
Not sure I understand the point there about 3% quarterly growth for the first time since 2006?
You were not around in the US in Q4 of 2011, 2013 (Q3, Q4), or 2014 (Q2, Q3), or even the Q1 of 2015?
See chart from BEA:
GDP was jumping all over the place during the Obama years, but unless I hear how things are being measured, seems like there had not been an 11 year hiatus of such a result.
The economy is also growing in a narrow area. It's a hospitality, healthcare, and retail economy. If you work as a hotel receptionist or a nurse or a store clerk, you're going to have job security, albeit at low pay. If you work at a higher level profession where you make enough money for your employer to view you as a "cost center" you're liable to get booted as soon as they can find anybody who'll work cheaper.
It is obvious that the United States has enormous labour market slack. Consider the simple matter of employment. Only 78.3% of American adults aged 25-54 have jobs, compared with 78.9% in Romania, 80.0% in France, 81.3% in Poland, 83.3% in the UK, 83.8% in Japan, 84.5% in Germany, 86.0% in Switzerland, 86.3% in the Czech Republic, 86.5% in Sweden and 90.5% in Iceland.
The US has enormous capacity for raising employment rates among this core 25-54 age group. Moving just to German employment rates would boost the pool of available labour by 8%; and boost GDP by 8%, if output per worker were to increase in proportion. Furthermore, there is enormous potential to reduce underemployment in this age group - people could be better matched to jobs utilizing their skill sets more fully. People could be moved from less productive to more productive employers (there is wide heterogeneity in productivity of firms). People could move from part time to full time employment, or increase the number of hours they work (if they freely choose to do so when given options; at the margin, many would).
Beyond people aged 25-54, a higher pressure economy (with more abundant employment opportunities, with scarcer labour) would encourage older people to remain active in employment (beyond 54, beyond 65, in many cases beyond 70). Relatively simple adjustments can make jobs more attractive to people that could freely choose to retire; work can be fulfilling if people feel engaged, respected and appropriately remunerated.
Many younger people would also aspire to more hours of employment - especially if this is well matched to training and areas of study, for building better future career prospects. In a higher pressure economy, with scarce labour, more businesses would likely take simple steps to provide more such opportunities (building their own future recruitment pools).
The US has far lower employment rates than other developed countries. That at a minimum (but not just that) makes clear: if the US could only boost aggregate demand, it would likely enjoy higher rates of employment.
Caveat: it might be argued that the lower US employment rate is structural, associated with the US system of employer healthcare funding (imposing the lump sum cost of full health insurance on a business taking on any new recruit); perhaps made worse by its large population of people with criminal records (largely excluded from employment). Perhaps structural factors such as this might result in persistently lower employment in the US, viz-a-viz the UK, Germany, Japan, Scandinavia or ex-communist Central Europe. Possibly. Yet it would be worth putting that to test, with more expansive monetary policy (certainly with no move towards tightening in the next few years).
Actually the relevant question is "WHY" should governments be in the business of gathering such micro, ever-changing data?
Local "micro economies" all over the world serve their local communities very well, without any government "help".
This is not a political opinion.
It is a truth that has allowed the world population to grow from 3 billion people to 7 billion people in a relatively short time.
The big driver of this is that governments stopped having "world wars" and "social cleansing" that killed hundreds of millions of people. Mao killed 90 million alone.
This allowed the largest "social innovators" - business - to bring prosperity to 2 billion poverty stricken individuals in less than 40 years.
I have worked all over the world following the expansion of autos, electronics, food, healthcare into "Third World".
The big winners in these movements - Toyota, Amazon, Alibaba, Zongshen, etc - have ALL been successful because they build their economic systems from the communities upward.....
.....not from biased government planners downward.
Actually this is not correct.
I have been following Amazon since the day it went online.
Amazon has literally millions, and perhaps now billions of SKU's.
If you examine the price of many individual SKU's, Amazon offers them at BOTH high and low prices.
Amazon is winning because their LOGISTICS are far better than old "drive 12 miles to and 12 miles from the store" logistics behavior.
Amazon brings to your doorstep millions of things that started their journey thousands of miles from your house, or office.
Prices have declined mainly owing to cheap Chinese manufacturing.
Amazon is still making money because it charges high and low prices for the same object.
Because the way unemployment numbers are constructed in United States, there is no connection to reality and the actual unemployment rate. There are vast numbers of people that are simply not included in the official numbers; consequently when jobs are added it doesn't seem that's the appropriate reactions in the economy are actually happening. The powers that be, know this, and so have to dance around the issue; they can't admit that the official numbers are basically lies that have no connection to reality, and they can't use those numbers to get accurate calculations, so things that should work seem like they're not when they are but not in the way that expresses an actual reaction to the official numbers. The powers that be, may have a very good idea of what the real unemployment numbers are, but they can't discuss that, so they continue with the policy that wouldn't make sense unless they're operating with a completely different perspective on what the facts are. I think they know exactly what the real unemployment numbers are, far worse than the official numbers, and monetary policy is currently reflecting that secret reality; everything else they say is just keeping the secret.
I think one factor at play is the lingering psychological effect of the abrupt high unemployment coming out of the financial crisis.
Its the same factor that has the common man continuing to gripe about how bad the job market is, even when unemployment is bumping along all time lows.
Workers, although gainfully employed, remain anxious. As such, they are not confident enough to push for raises - they are still just thankful they got a job back! Basically, given the labor market statistics, workers have the power to press for raises, but are choosing not to exercise it.
How long does this effect last? Don't know.
"unemployment might also temporarily fell below its natural rate, a concept whose history I recently wrote about": fell is the past tense in the United Kingdom also, and so your sentence becomes nonsense.
The real nonsense is the master of the universe idea that the Fed controls anything useful. The Fed changes the rate the USG charges banks to print money (sometimes its free!).
But your flame war with an actual economist (who's opinions are as misguided as yours) would be fun to watch should he care enough to rebut.
I've always enjoyed reading columnists lose it.
I think there is a psychological element here. The Great Recession was rough, and on an ongoing basis (from the early 2000s) there has been constant offshoring and cost optimization to account for separately too (people can still prettily easily lose their jobs and benefits in better paying firms).
Maybe I got this wrong, but isn't that chart just substituting the labor force participation rate for the unemployment rate? Labor force participation is still low because lots of low wage, no benefit jobs (the kind America produces in vast numbers in service industries) don't pay enough to justify the incremental cost. Cheap public transit is non existent, so therefore a low wage worker has to have a car that works and is insured and has gas in the tank. Also a low wage worker if he or she is a parent has to have child care, which is very expensive and often unavailable. Many employers in food service and retail now utilize flexible scheduling, and who wants to spend hours commuting to and from work for a 4 hour shift, or be forced to find child care in the evening or on weekends? In the 1970s, low wage work was more often 9-5, Monday-Friday, just like everyone else. All reasons not to go to work until the pay and benefits are better.
Has anyone looked at whether other forms of compensation like healthcare benefits may be crowding out what otherwise would be conventional wage increases? As we all know, healthcare cost inflation has outpaced CPI by quite a spread over the last 15 years or so.