Pop macroeconomics in an era of unprecedented non-change
By Scott Sumner
About 90% of the macroeconomics you read in the media is pop macro, which basically caters to the prejudices and ignorance of the average reader. For instance, I recently did a post discussing the media’s focus on “currency manipulation” (as if there are any
countries in the world central banks that do not manipulate the value of their currencies.)
Today I’d like to talk about the data on change. How fast are things changing today? Are we in a period of unprecedented change? Can we no longer expect to work for the same company throughout our entire career? Are jobs rapidly being displaced by robots?
There’s lots of data one could bring to bear on these questions, and I don’t have all of the answers. But the data I have been able to find suggests the economy is increasingly inertial, or slow to change. One type of change is moving to a new residence, perhaps associated with a job change:
So we are moving less frequently than ever before. But what about the fact that companies no longer have any loyalty to workers, and lay them off at the drop of a hat? In the past few weeks the rate of new claims for unemployment (as a share of total employment) has reached an all-time low since records began in the mid-1960s. Indeed much lower than in 1969, which was the strongest job market in my lifetime.
As far as those robots are concerned, we don’t see any job market impact in the productivity data. For reasons not well understood, productivity growth has slowed sharply in the past few years. The very low long-term bond yields suggests that market participants expect slower RGDP growth going forward.
Last year the US saw a 0.73% increase in its population, the slowest since 1937.
My grandma was born in 1890 into a middle class family in small town Wisconsin. Her home probably lacked indoor plumbing, most home appliances, electric lights, telephone, TV, radio, car, etc., etc. Slightly improved from life in ancient Rome. She lived to see jet air travel, computers, atomic bombs, antibiotics, and died the week they landed on the moon.
I was born in a world of indoor plumbing, atomic bombs, jet air travel, home appliances, computers, cars, telephones, TV, radio, antibiotics. I’ll turn 60 this year, and live in a world of indoor plumbing, atomic bombs, jet air travel, home appliances, computers, cars telephones, TV, radio, antibiotics, plus the internet and cell phones. Yeah, I’d say change is slowing down, really fast.
I look forward to the comment section where you’ll tell me I’m hopelessly wrong.
PS. Yes, my “ancient Rome” comment was an exaggeration. She had access to trains and the telegraph.