Forecast for a Minsky-Jones Economy
By Arnold Kling
The Monster Employment Index surged in February, with increases across a range of geographies and job categories, suggesting that employers are starting to emerge from a long hibernation. The Index, compiled by online job service Monster.com, grew to 124 from 114, the highest reading since December 2008 and the largest month-over-month increase since the company compiled began the index in 2003.
In a Minsky economy, firms rely on profits for expansion. In a Garett Jones economy, firms expand in order to add capability, not to increase output.
For the last six months, the economy has been characterized by what Keynesians call a breakdown in Okun’s Law. Basically, firms have been cutting workers, maintaining output, and generating profits. For a Minsky-Jones economy, this means that they are poised to expand. That is why I am more optimistic than standard forecasters for the next six months.
The standard forecast is, “employment has been less than what we expected, so let’s assume it will continue to be less than expected.” My forecast is that the recalculation is just getting started, and we will probably see employment growth of 200,000 jobs a month, or perhaps more, for the next year. Note that I make no bets about tomorrow’s numbers.