A 6 percent unemployment rate now equals full employment. But that's no consolation if you're one of the 6 percent.
Economists have long debated what is an "acceptable" unemployment rate. That is, what constitutes full employment of the workforce, considering there will always be some who are between jobs, or students who are looking for their first job, mothers (or fathers) who are returning to the workforce as their children mature, those in the military (who are not counted as part of the civilian workforce), those in prison, and others.
Zero unemployment is not possible, since that would mean everyone would be assigned a job slot and would not be able to refuse or quit. And a high unemployment rate is a symptom of economic problems. Most would agree that 10 percent is too high, and is a clear indicator of economic recession. (During the Great Depression of the 1930s, unemployment in America was as high as 25 percent, and in some parts of the world today it's in the same range.)
So the question remains: What is the "natural" rate of unemployment, meaning what portion of the workforce out of a job is an acceptable measure of "full employment" of those available for work and actively seeking work?
There was a time when 7 percent was considered an acceptable indicator that full employment had been reached. Currently, the nationwide U.S. unemployment rate is just above 6 percent, roughly the same level as before the Great Recession began in 2007, according to an analysis by the Congressional Budget Office.
In some areas, the unemployment rate is as low as 4 percent or less, but this results from a strong demand for workers in a booming industry, and that can bring high wages in the short term until the boom slows or more workers move to the region.
It's important to remember that the unemployment rate is calculated through a telephone survey, asking 1/ who is out of work, 2/ who is available for work, and 3/ who is actively seeking work. If all of the above, that person is counted as unemployed.
However, the labor force participation rate -- the number of workers with jobs -- is still down from before the Great Recession, "well below what the CBO estimates would be achieved if the demand for workers was currently stronger," the CBO reported, and the share of part-time workers who would rather be working full-time "is significantly higher than it was before the recession, and the rate of long-term unemployment is still about a percentage point above" the average before the recession.
The Bureau of Labor Statistics, meanwhile, reported that companies have been hiring, adding thousands of jobs to their payrolls every month, or an estimated 1.5 million from January through July of this year.
Is that contradictory? Not really, since the number of job-seekers may be increasing faster than the rate of new hires.
Separately, the Federal Reserve Board, in its latest Beige Book report on the national economy, noted that economic recovery is still happening, albeit slowly. Maybe that's a good thing. Slow growth may be better than a binge-and-bust pattern.
However, there's always a but. And here it comes. Banks are sitting on hoards of cash, and borrowing rates are low. But there are few takers, even at rates close to zero. Across the pond, the European Central Bank's policy of charging banks a fee to let them park their excess cash for a short time doesn't seem to be working. In effect, interest rates went below zero.
That should be an incentive for lenders to put more money to work, by making more loans to businesses and consumers, thus stimulating the economy. The Federal Reserve and the Bank of England also have kept interest rates close to zero as part of a strategy to encourage lending.
At the same time, low savings rates for bank customers should be an incentive for them to buy more stuff, but that's not happening either. After all, there's no point to saving if the interest rate is only 1 percent or less and prices are rising at the rate of 2 percent. That means you're losing by not spending.
Moreover, it would seem that Americans are doing just that. The U.S. Bureau of Economic Analysis reported that despite a marginal rise in income in July, spending fell. Here are the numbers: Disposable personal income increased $17.7 billion, or 0.1 percent, while expenditure decreased by $13.6 billion, or 0.1 percent.
So we're still waiting for the recovery party to start, as families and firms watch closely for good news. On the whole, however, this new normal may be a good way to avoid an economic hangover from too much binge spending.
Wednesday, September 3, 2014
Thursday, August 28, 2014
EconoProgress
Ya pays yer money, an' ya takes yer choice.
It's still not time to start a party, but the economic doctors are reporting improving symptoms.
Total output in the U.S. increased by 4.2 percent in the second quarter, the government Bureau of Economic Analysis reported. That's a solid increase from the 2.1 percent growth rate of GDP in the first three months of this year. Meanwhile, the Congressional Budget Office estimated that growth will "expand more rapidly" for the rest of the year, after being held back by bad weather and some other factors earlier. And for next year, the CBO anticipates a growth rate of 3.4 percent during 2015.
There's also a report that the government's spending deficit is still narrowing. That will satisfy some critics, but others insist that spending cuts are holding back recovery.
And for its part, the Federal Reserve Board, which plays a major role in pumping some life into the economy, remains cautious, suggesting that they haven't yet seen strong enough evidence to pull back too sharply yet.
So economic recovery seems to be taking hold, and we can expect the Administration to take the credit for it as midterm elections approach. There is, of the course, the question of who deserves blame or credit for downturn and recovery. When things look good, incumbents claim credit. If not, they blame predecessors.
As for a global picture, the International Monetary Fund is even more cautious than the Fed, noting that some European nations are still mired in deep economic mud, while others are struggling.
Who's right? Everybody and nobody. Consider your own political leanings, and then take your pick.
It's still not time to start a party, but the economic doctors are reporting improving symptoms.
Total output in the U.S. increased by 4.2 percent in the second quarter, the government Bureau of Economic Analysis reported. That's a solid increase from the 2.1 percent growth rate of GDP in the first three months of this year. Meanwhile, the Congressional Budget Office estimated that growth will "expand more rapidly" for the rest of the year, after being held back by bad weather and some other factors earlier. And for next year, the CBO anticipates a growth rate of 3.4 percent during 2015.
There's also a report that the government's spending deficit is still narrowing. That will satisfy some critics, but others insist that spending cuts are holding back recovery.
And for its part, the Federal Reserve Board, which plays a major role in pumping some life into the economy, remains cautious, suggesting that they haven't yet seen strong enough evidence to pull back too sharply yet.
So economic recovery seems to be taking hold, and we can expect the Administration to take the credit for it as midterm elections approach. There is, of the course, the question of who deserves blame or credit for downturn and recovery. When things look good, incumbents claim credit. If not, they blame predecessors.
As for a global picture, the International Monetary Fund is even more cautious than the Fed, noting that some European nations are still mired in deep economic mud, while others are struggling.
Who's right? Everybody and nobody. Consider your own political leanings, and then take your pick.
Tuesday, August 26, 2014
Austerity
"No man is an island, entire of itself." -- John Donne
The problem with austerity as a national policy is that it doesn't work.
"A dangerous idea." -- Mark Blyth, Brown University.
"A country is not a company." -- Paul Krugman, Princeton University
The news that the government in France has toppled as its austere economic policies failed to revive the economy comes as no surprise. Austere budgeting may help a household muddle through hard times, and a firm may need to trim expenses briefly to help it survive. One family, however, cannot affect the larger economy of a city or a metropolitan region, and a major firm cannot radically damage the entire country with austere reductions.
The effects, however, can ripple through larger segments. When a large company trims its budget by reducing its workforce, those unemployed workers have less to spend on food, clothing, shelter and luxury goods. In turn, this reduces the income of grocers, tailors, builders and jewelers. Food sales drop, rental income falls, gasoline sales and auto repairs are delayed as vacation trips are canceled, and all these vendors suffer as the economy of a neighborhood, a city or a region declines.
Austerity may work for an individual or a family for a short time, but a nation -- the largest of economic entities -- will only drown in a self-perpetuating recessionary whirlpool.
Nevertheless, some politicians and their economy wonks continue to preach the glories of austerity as a national savior, even as history has documented that only the 1 percent benefit, since their daily bread does not depend on having a job.
One family can adopt austerity until its finances improve. One company can adopt sharp cutbacks until sales resume, and the economic damage will be limited to those workers who are laid off.
On a larger scale, when one company dominates a regional economy, the economic damage can be widespread. When a government does it, the entire nation suffers directly, and the malaise can quickly spread to other nations.
And, as reported, the collapse of the government in France threatens to drag the eurozone countries into a new recession.
The lesson is not new. An economy survives on trade, purchases, sales and money flow. When the money stops flowing, the economy stops. And if families and businesses cannot or will not spend, the government must, until those disabled by recession recover.
Or as the economy minister in France, Arnaud Monte Bourg, said to the newspaper Le Monde, "The priority must be exiting the crisis, and the dogmatic reduction of deficits should come after."
The problem with austerity as a national policy is that it doesn't work.
"A dangerous idea." -- Mark Blyth, Brown University.
"A country is not a company." -- Paul Krugman, Princeton University
The news that the government in France has toppled as its austere economic policies failed to revive the economy comes as no surprise. Austere budgeting may help a household muddle through hard times, and a firm may need to trim expenses briefly to help it survive. One family, however, cannot affect the larger economy of a city or a metropolitan region, and a major firm cannot radically damage the entire country with austere reductions.
The effects, however, can ripple through larger segments. When a large company trims its budget by reducing its workforce, those unemployed workers have less to spend on food, clothing, shelter and luxury goods. In turn, this reduces the income of grocers, tailors, builders and jewelers. Food sales drop, rental income falls, gasoline sales and auto repairs are delayed as vacation trips are canceled, and all these vendors suffer as the economy of a neighborhood, a city or a region declines.
Austerity may work for an individual or a family for a short time, but a nation -- the largest of economic entities -- will only drown in a self-perpetuating recessionary whirlpool.
Nevertheless, some politicians and their economy wonks continue to preach the glories of austerity as a national savior, even as history has documented that only the 1 percent benefit, since their daily bread does not depend on having a job.
One family can adopt austerity until its finances improve. One company can adopt sharp cutbacks until sales resume, and the economic damage will be limited to those workers who are laid off.
On a larger scale, when one company dominates a regional economy, the economic damage can be widespread. When a government does it, the entire nation suffers directly, and the malaise can quickly spread to other nations.
And, as reported, the collapse of the government in France threatens to drag the eurozone countries into a new recession.
The lesson is not new. An economy survives on trade, purchases, sales and money flow. When the money stops flowing, the economy stops. And if families and businesses cannot or will not spend, the government must, until those disabled by recession recover.
Or as the economy minister in France, Arnaud Monte Bourg, said to the newspaper Le Monde, "The priority must be exiting the crisis, and the dogmatic reduction of deficits should come after."
Monday, August 25, 2014
Collective Confusion
When in doubt, leave it out.
If you have to ask, the answer is no.
Question: Which is correct for a collective noun, a singular or a plural verb?
Answer: Rewrite the sentence.
Many an hour has been wasted in pointless debate over superfine points of grammar, especially between those who insist that collective nouns always take a singular verb, a result of what they maintain is an absolute and irrevocable rule that was drummed into them in an American elementary school.
Never mind that the Brits, who developed the language, use either singular or plural verbs depending on the sense of the sentence, and whether members of the group are acting together as a team, or individually as a motley bunch.
Consider: /A/ The crew is ready to set sail or /B/ (Members of) the crew are going ashore, and each is likely to get drunk. However, in British usage, especially in sports reports, the team gets a plural verb, as in Manchester United are going to win the championship.
You want logic in language and grammar? Fuhgeddabowdit!
As mothers have often said, if you have to ask, the answer is no.
So the debate continues, as editors and writers argue over which is "correct," and readers stop in mid-sentence and try to puzzle out which is "better," until no one is able to finish reading the relevant passage.
Point to remember: You write to convey information or a message. When readers are distracted by wondering or debating which usage is grammatically "correct," your message is lost in the confusion.
The goal of writing is clarity, not confusion. If the reader is distracted because the verb choice "doesn't sound right" -- even though the elementary school grammarian insists it is -- you the writer have failed to reach your communication goal. Your message is buried.
Or consider this, from an earlier ER posting: A first draft said, "The most important weapon the news media have ... " Or should it be "news media has"? Solution: Rephrase to "news reporters have..."
If you have to ask, the answer is no.
Question: Which is correct for a collective noun, a singular or a plural verb?
Answer: Rewrite the sentence.
Many an hour has been wasted in pointless debate over superfine points of grammar, especially between those who insist that collective nouns always take a singular verb, a result of what they maintain is an absolute and irrevocable rule that was drummed into them in an American elementary school.
Never mind that the Brits, who developed the language, use either singular or plural verbs depending on the sense of the sentence, and whether members of the group are acting together as a team, or individually as a motley bunch.
Consider: /A/ The crew is ready to set sail or /B/ (Members of) the crew are going ashore, and each is likely to get drunk. However, in British usage, especially in sports reports, the team gets a plural verb, as in Manchester United are going to win the championship.
You want logic in language and grammar? Fuhgeddabowdit!
As mothers have often said, if you have to ask, the answer is no.
So the debate continues, as editors and writers argue over which is "correct," and readers stop in mid-sentence and try to puzzle out which is "better," until no one is able to finish reading the relevant passage.
Point to remember: You write to convey information or a message. When readers are distracted by wondering or debating which usage is grammatically "correct," your message is lost in the confusion.
The goal of writing is clarity, not confusion. If the reader is distracted because the verb choice "doesn't sound right" -- even though the elementary school grammarian insists it is -- you the writer have failed to reach your communication goal. Your message is buried.
Or consider this, from an earlier ER posting: A first draft said, "The most important weapon the news media have ... " Or should it be "news media has"? Solution: Rephrase to "news reporters have..."
The Embarrassment of Truth
"Nobody every went broke underestimating the intelligence of the American public." -- H.L. Mencken
Protect me from your True Believers. -- A cynic's prayer.
Insults and mockery do not substitute for intelligence and competence.
The most powerful weapon news reporters have is embarrassment, and truth has a way of embarrassing politicians. Some, however, are beyond embarrassment, and count on their beguiling looks and personality -- often so successful in the past -- to get them through sticky situations and pesky news reports that persist in exposing wrongdoing.
Their defense, then, is a strategy of denial and blaming the media, despite overwhelming evidence of their guilt.
Independent news media are essential to the successful functioning of a democratic society, and reporters fail in their moral obligation when they ignore or neglect to expose problems that should be dealt with.
However, just as there are incompetent politicians and greedy business executives, there are also incompetent reporters and greedy publishers.
Protect me from your True Believers. -- A cynic's prayer.
Insults and mockery do not substitute for intelligence and competence.
The most powerful weapon news reporters have is embarrassment, and truth has a way of embarrassing politicians. Some, however, are beyond embarrassment, and count on their beguiling looks and personality -- often so successful in the past -- to get them through sticky situations and pesky news reports that persist in exposing wrongdoing.
Their defense, then, is a strategy of denial and blaming the media, despite overwhelming evidence of their guilt.
Independent news media are essential to the successful functioning of a democratic society, and reporters fail in their moral obligation when they ignore or neglect to expose problems that should be dealt with.
However, just as there are incompetent politicians and greedy business executives, there are also incompetent reporters and greedy publishers.
Friday, August 22, 2014
Nitpicker's Delight
Picayune, any yune at all.
A prime characteristic of good writers -- and editors -- is that they are good nitpickers. That is, they pay attention to details of fact as well as of spelling, grammar and punctuation. They know, for example, the origin of the word "nitpicker." And they know there's a difference between "crash" and "collision," unlike whoever wrote a press release for a Pennsylvania politician. The announcement dealt with construction of a highway median to prevent "head-on crashes." Note: A collision requires two moving vehicles. A single vehicle can only crash.
A movie promo had the announcer speaking of "femme fatales," meaning there would be more than one. More than one what? More than one "fatale" or more than one "femme"? The secret is to pluralize the noun, in this case the French word "femme," meaning "woman." Whether the descriptive word (adjective) should also be pluralized is an issue for fluent speakers of French to decide. In English, only the noun is pluralized.
In that vein, consider the term "attorney general." Normally, the adjective comes before the noun. This, however, is an exception, refers to an attorney who is in charge. To say "attorney generals" suggests a bunch of military lawyers, and to say "general attorney" implies a non-specialist lawyer. The correct plural is "attorneys general."
Here's an easy way to decide whether to use "who" or "whom." Without getting into the instructions from your elementary school grammarian, who spoke of subjects and objects, just consider the letter "m." If you can substitute the word "him" for "whom," you have the answer. Example: Who did it? Who did it to whom? He did it to him.
By the way, a nit is not just any very small thingy. A nit, specifically, is the egg of a louse. And that is, indeed, very small.
A prime characteristic of good writers -- and editors -- is that they are good nitpickers. That is, they pay attention to details of fact as well as of spelling, grammar and punctuation. They know, for example, the origin of the word "nitpicker." And they know there's a difference between "crash" and "collision," unlike whoever wrote a press release for a Pennsylvania politician. The announcement dealt with construction of a highway median to prevent "head-on crashes." Note: A collision requires two moving vehicles. A single vehicle can only crash.
A movie promo had the announcer speaking of "femme fatales," meaning there would be more than one. More than one what? More than one "fatale" or more than one "femme"? The secret is to pluralize the noun, in this case the French word "femme," meaning "woman." Whether the descriptive word (adjective) should also be pluralized is an issue for fluent speakers of French to decide. In English, only the noun is pluralized.
In that vein, consider the term "attorney general." Normally, the adjective comes before the noun. This, however, is an exception, refers to an attorney who is in charge. To say "attorney generals" suggests a bunch of military lawyers, and to say "general attorney" implies a non-specialist lawyer. The correct plural is "attorneys general."
Here's an easy way to decide whether to use "who" or "whom." Without getting into the instructions from your elementary school grammarian, who spoke of subjects and objects, just consider the letter "m." If you can substitute the word "him" for "whom," you have the answer. Example: Who did it? Who did it to whom? He did it to him.
By the way, a nit is not just any very small thingy. A nit, specifically, is the egg of a louse. And that is, indeed, very small.
Thursday, August 21, 2014
Anglophone Disconnect
It's one thing to show snobbery, but you make it worse by showing ignorance.
"The French don't care what you do, actually, so long as you pronounce it properly." -- Prof. Henry Higgins, in "My Fair Lady."
If you must use French (or Spanish or any other language), use it correctly.
Every language is capable of expressing subtleties in the most complex of issues. Some elitist folks seem to believe that to prove their intellectual capabilities, they must use words and phrases from another language. In English-speaking countries, that often means borrowing from the French language.
The problem is that when they do so, they run the risk of being branded a show-off, a snob, or worse, of not being understood if the listener is not familiar with French.
Sprinkling your prose with words and phrases from another language only works when the reader understands. When you use them wrongly and your readers and listeners know the right way, you're the one who appears foolish.
The goal of conversation or writing is to communicate ideas and information. If the listener or reader does not understand what you say or write, the fault is yours, not theirs.
"The French don't care what you do, actually, so long as you pronounce it properly." -- Prof. Henry Higgins, in "My Fair Lady."
If you must use French (or Spanish or any other language), use it correctly.
Every language is capable of expressing subtleties in the most complex of issues. Some elitist folks seem to believe that to prove their intellectual capabilities, they must use words and phrases from another language. In English-speaking countries, that often means borrowing from the French language.
The problem is that when they do so, they run the risk of being branded a show-off, a snob, or worse, of not being understood if the listener is not familiar with French.
Sprinkling your prose with words and phrases from another language only works when the reader understands. When you use them wrongly and your readers and listeners know the right way, you're the one who appears foolish.
The goal of conversation or writing is to communicate ideas and information. If the listener or reader does not understand what you say or write, the fault is yours, not theirs.
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