It is probably very easy to sound like Chicken Little with how bad the economy is these days and how concerned everyone should be about new numbers coming out. But it needs to be said again and again: Friday’s BEA numbers should have everyone worried. As Scott Sumner notes, No more jobs mystery. Period. End of story. “The new GDP numbers are the final nail in the coffin.”
There also shouldn’t be any mystery of long-term unemployment either. Every month the average and median duration of unemployment goes up, reflecting a large share of the unemployed being unemployed longer. Commentators are surprised. Right-wing economists come up with all kinds of convoluted theories about how the long-term unemployed are taking a year off to coach junior’s baseball team (instead of suffering high rates of mental illness and suicide from the shock that comes with being out of the workforce for an extended period of time). But the simple answer is that there was a period in 2009 when the economy shoved 7 million people out of the workforce and then stopped creating jobs.
Here’s a graph that shows the change in unemployment from month to month:
Meanwhile, job hires are way down:
A lot of people were thrown out of the labor force in 2008-2009 and then our economy adds little-to-no jobs for 2 years – of course there are a lot of long-term unemployed out there! To the extent that people are dropping out of the labor force it is likely juking the duration statistics down. But the long-term unemployed aren’t a mystery with the GDP numbers we’ve seen; it is exactly as it should be given how depressed the economy is.
There’s a lot of talk about “hysteresis”, about what happens to the wages and employability of the long-term unemployed the longer they are unemployed. Maybe that will be an issue and maybe it won’t. We won’t know until the economy actually picks up again, and we’ll know even less if we don’t stop the possibility of a double-dip recession. It’s a serious danger, and it reflects the awful things our economy is doing to our country’s citizens, but it doesn’t show up as an aggregate check on our economy yet.
Rortybomb 
Regretfully, the long-term unemployed in the US will probably never work again in the US during their lifetimes — emigration to foreign countries with their families in search of work and a new life may be the only alternative to desititution — the US employment to population ratio has been trending steeply downwards since 2000 — more at:
http://wjmc.blogspot.com/2011/07/us-employment-to-population-ratio.html
The situation for the long-term unemployed in the US may very well be close to hopeless at this point…
Since long-term DISemployment is the preferred policy option of the elite, we should congratulate them on achieving it. I imagine the next round of hand-wringing will be about a mysterious drop in life expectancy. Oh, wait, that’s already happening:
http://www.correntewire.com/culling_herd
http://www.correntewire.com/10_years_us_slips_24th_49th_life_expectancy
Increasing the age of Medicare eligibility to 67 will accelerate this trend.
These are not bugs. They are features. The feral elite hate us and want us to die.
Since long-term DISemployment is the preferred policy option of the elite, we should congratulate them on achieving it. I imagine the next round of hand-wringing will be about a mysterious drop in life expectancy. Oh, wait, that’s already happening:
http://www.correntewire.com/culling_herd
http://www.correntewire.com/10_years_us_slips_24th_49th_life_expectancy
Increasing the age of Medicare eligibility to 67 will accelerate this trend.
These are not bugs. They are features. The feral elite hate us and want us to die.
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Several years ago, my friend in CA warned me that all this – from the dumbing down of public schools to off-shoring jobs, etc., was not some randomness, but a deliberate plan to make the working class (and apparently the middle class), so stupid and desperate we would accept any terms they doled out. I thought she was excessively cynical bordering on paranoid; now I think she was prescient.
Questions:
1) What has Casey Mulligan ever written that makes him even a single step above a random right-wing internet commenter?
2) Why don’t economists just tell him to STFU?
Only real mystery out there is why the administration doesn’t go ahead and make those Fed appointments!
The economy is terrible, the admin just agreed to (slightly) more fiscal contraction, added to the large fiscal contraction already baked in, and the Fed has just been awful. Core PCE inflation last month up .1 percent. Unemployment at 9.2. And an admin that can’t bother itself to even announce two Fed appointments, much less put up a fight or horsetrade for them…
Why don’t they put up a Republican for Commerce in exchange for a Fed seat? Or agree to another $300 billion of (meaningless) cuts in 2020?
I hope you’ll excuse the vulgarity but I think it is called for. Casey Mulligan really is a bastard. Even before the revised GDP data came out, the problem was clear, there aren’t enough jobs. The unemployment rate has been above 9% for over 2 years and would be substantially higher if people hadn’t dropped out of the workforce. The underemployment rate is substantially higher than in previous periods, giving lie to the idea that this high rate of unemployment is voluntary. Unemployment has spiked up across all industries and nearly all cities proving that it is a lie that our unemployment is structural in natural.
Yet Mulligan still claims unemployment is voluntary or structural and cyclical unemployment doesn’t exist. Casey Mulligan is a bastard.