The Minsky-Jones Forecast Looks Good
By Arnold Kling
Two months ago, I wrote,
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.
That was before the release of figures for February. Today, we had the figures released for April, and the Bureau of Labor Statistics reported,
Since December, nonfarm payroll employment has expanded by 573,000, with 483,000 jobs added in the private sector. The vast majority of job growth occurred during the last 2 months.
In a Garett Jones economy, hiring is discretionary. It is not tied automatically to output. Instead, it is a form of investment. In a Minsky economy, when the economy is in a “hedge finance” stage, businesses are reluctant to borrow and instead finance investment out of profits. The profits started to come back a few quarters ago. Now, hiring is starting to come back.