There is a silly controversy concerning when the recession began.
The White House has argued revisions last year to economic data meant the fourth quarter of 2000 would be more accurate, a change that would shift the start of the downturn from the presidency of Bush to that of his predecessor Bill Clinton.
What we should be arguing about is when the recession ended–if it has. Labor capacity utilization has not risen since I wrote this essay. The latest data on aggregate hours worked, which is the cyclical numerator for my labor capacity utilization index, can be found in this table from this morning’s data release.
For Discussion. Should we view the economy as still being in recession?
Mar 5 2004 at 12:10pm
The recession began the second Tuesday of November, 2000, at about 11PM at night. When America went to sleep that night without a winner declated in the Presidential election, the recession began.
After the election fiasco, Sept. 11th, wars in Iraq and Afghanistan, corporate scandals, energy volatility, etc. etc. is the economy REALLY all that bad?
In 1993, 1994, and 1995, Bill Clinton would have given up a certain piece of his anatomy in order to get a 5.6% unemployment rate. Every President after Nixon would have!
Mar 5 2004 at 6:26pm
“In 1993, 1994, and 1995, Bill Clinton would have given up a certain piece of his anatomy in order to get a 5.6% unemployment rate.”
Exactly. The liberal media are doing their best to destroy the Bush presidency.
The current economy is perceived to be a glass half empty, but would be considered half full if Bill Clinton were still in office. The goal line is further pushed out when it comes to the current administration.
Mar 5 2004 at 6:44pm
I found the following short piece minutes after posting my earlier comments:
“The Bush bashers on radio and television have been saying that unemployment doesn’t matter; that its payroll jobs that count. Lou Dobbs, host of CNN’s Moneyline, recently said this while debating Steve Forbes on the air. Forbes cited the growth in jobs under the household survey, the survey used to determine the unemployment rate. Dobbs countered, “Who uses the household survey anyway?” The answer, Lou, is that up until the household survey started to show good news, you and almost every other financial journalist in America used it.”
Mar 5 2004 at 9:47pm
Tim Kane makes a good case as to why the payroll survey is a flawed indicator:
Lawrance George Lux
Mar 6 2004 at 8:47pm
Should we view the economy as still being in recession?
The creditable sources for determining if the Recession is still with Us are not present. Questions which should be asked:
1) Level of new Business Starts?
2) Level of Business Shutdowns?
3) Is Personal Income Withholding tax revenues increasing or decreasing?
4) Is the percentage increase in Household debt higher than the percentage increase in Personal wages?
5) Is the bottom half of Personal Incomes purchases increasing or decreasing?
These are the best indications of Recession or Recovery, and are left fundamentally unanswered by a Bush administration, and Economists dedicated to economic theory rather than data evaluation. lgl
Mar 7 2004 at 4:53am
The economy is too dynamic and too distributed to label it “recovering” or “in recession”. Inflation looks to be under long term control. Interest rates are so low as to make little marginal difference. There are some specific “problems” with the economy that might (or might not) be addressed through policy: gas retail prices, housing prices in some hot markets, displacement of tech workers… Discussing these and why they may or may not be symptoms of something bad (or good) is interesting. But if we’re just going to lump everything in “the economy” as a whole, we just get the same old “it’s good”, “no it’s bad”. Makes for wonderful TV I guess, but who cares?
Mar 7 2004 at 11:39pm
Few people pay any real attention to the data.
The 5.6% unemployment rate is dismissed by the “job counters” because the labor participation rate has fallen, so there must be so many discouraged workers out there.
But the partcipation rate *hasn’t* fallen at all for the adult work force, age 25 and over.
 4th Q 2000, before the recession, the last Clinton glory year, 67.1%
 4th Q 2003, after the recession and three years of the Dubya economy creating discouraged workers, 67.1%
Difference: 0.0%. For adult workers, the supposed plunge of the labor force participation rate is a myth.
What has happened is that among age 16 to 24 school age kids and recent school leavers, the participaton rate has fallen 5 points from 65% to 60%. Looks like in response to the recession a lot of kids have rationally decided to stay in school for an extra year or two (how bad is that?), or otherwise haven’t looked for jobs.
In any event we aren’t talking about any employment recession or increase in discouraged workers among adults.
The 16 to 24 age group alone accounts for one million of the “two million lost jobs”. The other million is accounted for as The Economist recently explained…
…jeremiahs point out that a net total of 2.3m jobs have been lost since Mr. Bush came to office.
Although this date is often used as the starting-point from which to make a comparison, it is a silly one. In early 2001 the hangover effects from the investment boom of the late 1990s were only starting to be felt. Unemployment, at 4.2%, was unsustainably below the “natural” unemployment
rate, consistent with stable inflation, that most economists put at around 5%.
In other words, perhaps two-thirds of those 2.3m jobs were unsustainable “bubble” ones…
That’s the story of the labor market over the last four years: first “bubble jobs” disappearing, then an *appearance* of overall slow labor growth, which in fact has been normal growth for adults accompanied by a sharp decline in the 16 to 24 year old age group *only*, which has deflated the overall growth number.
And thus an unemployment rate that falls to 5.6% without much total job growth is explained.
Do kids staying in school constitute an employment recession? You decide.
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