Employment: Worst since 1974-1975
Barbara's working on a piece for TIME.com about today's nasty unemployment report, which we'll link to when it's up. (Update: Here it is.) As always, I'm frustrated with all the reporters and Wall Street economists who look at the payroll employment drop of 598,000 in January and say it's the worst since December 1974—ignoring the fact that the overall population and labor force in December 1974 was much smaller than today. So I've been playing with Excel to look at percentage drops in payroll employment. And here's what I've found.
1) January's 0.44% drop in nonfarm payroll employment was the worst one-month drop since May 1980, when employment fell 0.47%. (There was also a 0.44% drop in November 2008, but that was rounded up from 0.438% while January's was rounded down from 0.442%.)
2) The three-month fall in employment of 1.30% was the worst since the 1.71% drop from Dec. 1974 to Feb. 1975.
3) The six-month fall in employment of 1.93% was the worst since the 2.09% drop from Dec. 1974 to April 1975.
4) The nine-month fall in employment of 2.23% was the worst since the 2.36% drop from Oct. 1974 to July 1975.
5) The twelve-month fall in employment of 2.53% was the worst since the 2.62% drop in the 12 months ending in November 1982.
The lesson here: Maybe I should stop wasting my time playing with spreadsheets. As measured by the percentage drop in payroll employment over most of the time periods I looked at, this is the worst since 1974-1975. And barring a dramatic recovery in the next couple of months, the total job losses from this recession will likely come out even worse than those of 1974-1975.
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1
There's no way to feel good about this is you're at all a follower of Fisher. For one thing, we seem to be losing the fight against Debt-Deflation, even though we were aware that it could happen. From my perspective, this means that the government's actions have not been effective. Since I don't agree with what the government has been doing, all my optimism about the resources we had available to meet this challenge is fading. I'm now feeling like the quote from Kafka that I had on a button I wore in college:
"There is hope, an infinite amount of hope but not for us.'
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2
Any chance you'd be willing to do a follow-up of the "tax-cuts vs. spending as stimulus" debate Justin? It seems like there's even more of a consensus now than there was before that spending is more stimulating. Here's Mark Zandi of Moody's (page 9)-
http://www.economy.com/mark-zandi/documents/Economic_Stimulus_House_Plan_012109.pdf
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3
Almost 600,000 people lost their jobs in January. If this is not scary, what else is?
Somehow, it is rather counter intuitive. With the unemployment rate soaring up to 7.6% (far beyond expectation), coupled by extremely weak economic confidence, one would have expected the stock market to have dropped further. Yet Dow stubbornly moves up against the receding tide.
Perhaps the news of the lawmakers getting close to approve a trimmed economic stimulus package has injected a positive mood into investors, assuming that the time is ripe for entering into the market again.
But the question is: Will the package work and to what extent? Few people seem to be able to give any tangible answer let alone an affirmative response.
Don't tell me the unhealthy yet deceptive speculation is raising its pretentious head again?
(Tan Boon Tee) -
4
This conversation was sparked by Nancy Pelosi's graphs. Do you think you could post the graphs that your worksheets generate. I've been dying to see 2008 and 1975 side by side, ever since the subject came up.
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5
What Paul Dirks said.
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When confronted in a discussion of policy it is always helpful to have the facts, figures and graphs in which one has placed their reliance on display.
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Where are the Republican numbers? What statistics, graphs, figures, etc. are they relying upon to support their proposition that tax cuts are the nirvana? Where is their Zandi? Have they no Krugman? Or are we witness to the bald-faced statements of charletans and voodoo "tax" doctors?
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