America’s job market has been down so long, today’s mediocre report looked like up.
The headline figures — payrolls up 117,000, unemployment rate down a tic to 9.1% — were better than most forecasters anticipated. That’s a relief.
And many details moved in the right direction as well. Revisions to May and June added another 56,000 jobs, the U-6 measure of underemployment ticked down to 16.1%, and hourly earnings were up 0.4%.
But we still need much stronger job growth if we are ever going to get America back to work. Both unemployment and underemployment remain stubbornly high:
(The U-6 measures includes the officially unemployed, marginally attached workers, and those who are working part-time but want full-time work.)
Tim Kane at the Kauffman Foundation is out with his latest survey of economics bloggers (full disclosure: I am both an adviser to the survey and a participant in it).
In light of today’s abysmal GDP report, the results for one question are particularly relevant:
The latest revisions shows that GDP growth in recent quarters was much lower than previously reported (e.g., only 0.4% in the first quarter versus the prior estimate of 1.9%). So score this one for the 44% of economics bloggers who answered “worse”. (I wrongly answered “same”.)
As always, it’s also fun to look at the word cloud of adjectives the bloggers used to describe the current state of the economy:
Uncertainty still dominates the middle of the nation, but weakness, vulnerability, and fragility have, unfortunately, being gaining territory.
For results from previous surveys, see this earlier post.
In his economic speech on Tuesday, presidential candidate Tim Pawlenty set out an ambitious goal for economic growth:
Let’s grow the economy by 5%, instead of the anemic 2% currently envisioned. Such a national economic growth target will set our sights on a positive future. And inspire the actions needed to reach it. By the way, 5% growth is not some pie-in-the-sky number. We’ve done it before. And with the right policies, we can do it again.
Between 1983 and 1987, the Reagan recovery grew at 4.9%. Between 1996 and 1999, under President Bill Clinton and a Republican Congress the economy grew at more than 4.7%. In each case millions of new jobs were created, incomes rose and unemployment fell to historic lows. The same can happen again.
In the aftermath of the Great Recession, it wouldn’t be surprising to see a couple years of strong growth at some point. Let’s hope it’s soon.
But could we have remarkably strong growth for a full decade, as Pawlenty hopes? His two examples don’t inspire confidence. In each case, strong growth ended in four years or less.
So when was the last time the United States grew at 5% for a full decade?
Mid-1958 through Mid-1968. Over that span, U.S. growth averaged exactly 5.0% per year.
But that’s the only instance since World War II. Economic growth was lower than 5%, usually much lower, in every other decade since 1947:
Growth hasn’t reached even 4% over any decade since the late 60s and early 70s.
Getting up to 5% over the next decade thus seems not merely ambitious, but almost unthinkable.
Of course, a few years back many would have said the same thing about getting the U.S. growth rate down to 2%. Until the Great Recession, there was only one ten-year stretch in the post-war period, ending in early 1983, in which growth averaged as low as 2%.
Sadly, we’ve broken that record handily. Over the past ten years, growth has averaged a meager 1.8%.
So maybe T-Paw’s right, and the economy can break out to the upside just as we’ve done to the down.
But I wouldn’t bet on it, regardless of who is president.
P.S. The quarterly data I use here are available since 1947. Annual data go back to 1929. Perhaps not surprisingly, every ten-year period ending in 1941 through 1951 had an average growth rate of 5% or more, thanks to World War II and the rebound from the Great Depression.
Zanran is a new search engine, now in beta testing, that focuses on charts and tables. As its website says:
Zanran helps you to find ‘semi-structured’ data on the web. This is the numerical data that people have presented as graphs and tables and charts. For example, the data could be a graph in a PDF report, or a table in an Excel spreadsheet, or a barchart shown as an image in an HTML page. This huge amount of information can be difficult to find using conventional search engines, which are focused primarily on finding text rather than graphs, tables and bar charts.
Put more simply: Zanran is Google for data.
This is a stellar idea. The web holds phenomenal amounts of data that are hard to find buried inside documents. And Zanran offers a fast way to find and scan through documents that may have relevant material. Particularly helpful is the ability to hover your cursor over each document to see the chart Zanran’s thinks you are interested in before you click through to the document.
Zanran is clearly in beta, however, and has some major challenges ahead. Perhaps most important are determining which results should rank high and identifying recent data. If you type “united states GDP” into Zanran, for example, the top results are rather idiosyncratic and there’s nothing on the first few pages that directs you to the latest data from the Bureau of Economic Analysis. Google, in contrast, has the BEA as its third result. And its first result is a graphical display of GDP data via Google’s Public Data project. Too bad, though, it goes up only to 2009. For some reason, both Google and Zanran think the CIA is the best place to get U.S. GDP data. It is a good source for international comparisons, but it falls out of date.
Here’s wishing Zanran good luck in strengthening its search results as its competes with Google, Wolfram Alpha, and others in the data search.
Tim Kane at the Kauffman Foundation is out with his latest survey of economics bloggers(full disclosure: I am both an adviser to the survey and a participant in it).
My favorite feature is a word cloud of adjective that respondents offered to an open-ended question about the U.S. economy:
Uncertainty still reigns (as it should), but ”recovering”, “improving”, and “growing” hold some prime real estate. As do “weak”, fragile”, and “sluggish.”
Thursday morning brought the first official look at GDP growth in the first quarter. Headline growth was a disappointing, if not surprising, 1.8%.
Here’s my usual graph of how various components of the economy contributed to overall growth:
Consumers continued to spend at a moderate pace; their spending grew at a 2.7% rate, thus adding 1.9 percentage points to overall growth. Equipment and software investment (up at a 12.6% rate), inventories, and exports also contributed to growth.
Residential investment fell back into negative territory, reflecting the latest down leg in the housing market. But the real negatives were structures (down at a 21.7% rate, thus cutting 0.6 percentage points from growth) and government (down at a 5.2% rate). Defense spending fell sharply (11.7% rate), and state and local continued its decline (down at a 3.3% rate).
Note: As usual, imports subtracted from growth as conventionally measured. As discussed in this post and this post, I’d like to see GDP contributions data that allocate imports across the other sectors. Such data would reveal, for example, how much consumer spending contributed to growth in the U.S. economy itself. Presumably it’s less than the 1.9 percentage points shown in the chart, which reflects consumer spending that was satisfied by both domestic and international production, but we don’t know by how much.
Earlier today the fine folks at Brookings announced that they have made all past and current issues of Brookings Papers on Economic Activity free. You can find them here.
Some specific papers that readers of this blog might enjoy (all from the Spring 2009 volume):
Wednesday’s housing data showed that the number of single-family homes under construction fell again in February:
Ten years ago, America’s home builders were in the midst of constructing 672,000 single-family homes. Five years ago, they were building 990,000 homes. Last year, they were building 304,000. And now that figure is down to 252,000.
Nice jobs report on Friday. Let’s hope we get twenty or thirty more.
One good sign is that the broad U-6 measure of underemployment continues to fall. It peaked at 17.4% in October 2009 and was still as high as 17.0% last November.
In February it was down to 15.9%:
(As you may recall, the U-6 measures includes the officially unemployed, marginally attached workers, and those who are working part-time but want full-time work.)
