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A couple of pieces from the NY Times that make you wonder where the US
economy is going.
Ed
Ed Weick 577 Melbourne Ave. Ottawa, ON, K2A 1W7 Canada Phone (613) 728 4630 Fax (613) 728 9382 Is There Such a Thing as a Jobless Recovery?After falling into recession in 2001, the economy did indeed recover in 2002, hard as that is to believe. Despite a sluggish fall, most economists believe the United States expanded at close to 3 percent last year (final statistics are still being compiled). But because productivity — the amount of goods or services produced for each hour worked — is climbing relatively fast, last year's relatively tepid expansion created almost no new jobs. Instead, businesses are finding ways to get more production out of each current employee. In fact, the unemployment rate has risen from 3.9 percent in 2000 to 6 percent today. "The single most important statistic that looks ugly and is concerning people is jobs, and we've created no jobs, in the aggregate, in this 11month recovery," said Donald Straszheim, the president of Straszheim Global Advisors and the former chief economist for Merrill Lynch. "For most people, it's about a paycheck, and if you've got a job, you're O.K. And if you don't, you're not." The lack of job growth is the downside of the productivity boom that began in the mid-1990's and still seems to be continuing today, said Brad DeLong, an economist at the University of California at Berkeley. In the long run, higher productivity should be good for the economy, leading to broad increases in wealth. But in the short term, it means that 2.5 percent annual growth, which in the late 1980's or early 1990's would have created lots of new jobs, now does not, he said. "The kind of growth that previously gave us a rising employment environment now gives us a rising unemployment environment," Mr. DeLong said.
U.S. Economy in Worst Hiring Slump in 20 Years
The employment decline has become even worse than it was at a comparable point in the so-called jobless recovery of the early 1990's, according to recently revised statistics from the Labor Department. The economy has lost more than two million jobs, a drop of 1.5 percent, since the most recent recession began in March 2001, as layoffs have continued despite the resumption of economic growth more than a year ago. The decline was 1.3 percent at the same point in the business cycle a decade ago. About one million people appear to have dropped out of the labor force since last summer, neither working nor looking for a job, according to government figures. The surge in discouraged workers is the most significant since the months immediately after the recession's start. This suggests that the pain of joblessness has worsened even though the official unemployment rate, which counts only people looking for work, held steady at 6 percent in December. |
he economy has fallen
into its worst hiring slump in almost 20 years, and many business executives say
they remain unsure when it will end.