We're on our way to Maui to spend some time on the beach with family, so expect posts to be on "Maui time" for awhile. Thanks to a good WiFi connection at the airport, I was able to look at this morning's jobs numbers. Quick take: nothing much has changed.
The chart above is arguably the best way to tell whether the economy is picking up. While jobs growth has slowed a bit this year, it is still higher than it was a few years ago. Nevertheless, this is nothing to get excited about. But what the chart does show is that we've had over five years of steady, 2%+ jobs growth, which is a lot more than what we had in the previous business cycle expansion. This is still the slowest recovery on record, but the economy is nevertheless adding jobs at a fairly steady pace. Since the peak of the last expansion, the private sector has added a net 4 million+ jobs. Not great, but still it's progress, and there is still no sign of any significant deterioration on the horizon.
This doesn't make a compelling case for a Fed lift-off, but at the same time there is no reason for them not to normalize rates, as I've been arguing for awhile.
Scott: Enjoy Maui, probably the prettiest place I've ever seen (Hana).
ReplyDeleteIn the recent past you've mentioned widened credit spreads in the energy sector. I was wondering if you had any updated take on credit spreads in non-energy sectors.
Best,
MG
Lots of great blogging, hope we get more even from Hawaii. Ponder a conversion to Market Monetarism under the coconuts.
ReplyDeleteScott
ReplyDeleteI suspect you probably appreciate Bob Higgs as much as I do. In a recent article he describes how GDP is measured. Below is an excerpt.
"In practice, unsold government services are absurdly valued by the amount the government happens to pay its employees who provide them. A more arbitrary and ill-justified basis for these services’ inclusion in the national product can scarcely be imagined. This procedure implies, for example, that if the government simply raises the wages and salaries it pays its employees, their contribution to GDP increases even though the specific “services” they render remain identical to those they rendered previously. Even more preposterous, perhaps, is the raw assumption that all of these services have any value in the first place, given that many of them consist of actions by which the government harasses, harms, or otherwise makes itself obnoxious to the general population. It thus probably makes more sense to classify government services in general as “anti-output” rather than as “output.” Less stridently, one might exclude them on the grounds that regardless of how valuable they may be, they are intermediate, not final services. In any case, adding the alleged value of government “services” to GDP serves ideological and propaganda purposes far more surely than it serves scientific purposes (Higgs 1998, 150–1520)."
Scott, I do wish your articles that mention GDP would occasionally remind your readers what is being measured, who is doing it and how they arrive at there result.
Erne: Thanks you for your comments, and your point is excellent. I've always been skeptical of the government's ability to accurately measure GDP, and it is a fact that whatever they do measure almost always is subject to significant revisions well after the fact. That's why I prefer market-based measures of economic activity. I would do well to remind readers of this more often.
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ReplyDeleteIt gets even stranger.
ReplyDeleteThe bulk of federal agency spending is on "national security." Do 70,000 private contractors for the NSA add to GDP?
Most classical economists consider defense spending to be dead weight at best, and parasitical at worst.
Logically, "national security" outlays should be subtracted from GDP. But then, that's not a very PC thing to say!