Comments on: 10.2% Unemployment Rate is Just the Beginning

By: Hoosier Economist

Hoosier Economist — Sat, 07 Nov 2009 23:41:42 +0000

…when their jobs are next on the chopping block.

By: Dave

Dave — Sat, 07 Nov 2009 05:44:19 +0000

…that the current administration is actually trying to improve our economy.

The private sector is rapidly headed for extinction, government revenues are tanking, yet we are being told that a recovery is just around the corner.

Right.

This economy is purposely being imploded, and until the Obamanistas are driven from power, that will not change.

There is no such thing as a “jobless recovery.”

It appears government education has finally won the day, as this nation is now populated by economic illiterates.

Idiots all.

-Dave

By: Hoosier Economist

Hoosier Economist — Sat, 07 Nov 2009 05:12:59 +0000

…your post makes some pretty bold (and fairly pessimistic) assumptions. Namely, that firms are reducing output to give the appearance of increased worker production instead of assuming that workers are actually producing more. I’m sorry, but the facts simply do not match your assessment.

Durable goods orders in September increased 1.0 percent subsequent to a 2.6 percent drop in August. Overall construction spending increased 0.8 percent in September after dipping 0.1% in August. You don’t see economic improvements like that without an increase in productivity to match the demand.

Consumers are spending. Consequently, producers are making demands of their reduced workforces that employees are making good on.

In addition, keep in mind that year-on-year, productivity improved to up 4.3 percent in the third quarter from 1.9 percent the previous quarter and year-ago unit labor costs dropped to minus 3.6 percent from down 1.2 percent in the second quarter (Source: Haver Analytics).

In other words, the increased productivity is good news for businesses and bad news for prospective employees. With increased productivity on the part of existing workers, businesses are not feeling the need to take on additional labor liabilities. But don’t let that dissuade you from underestimating the role workers are playing in keeping this economy afloat.

One last word regarding your assertion that much of the statistically reported gain is simply because firms can no longer afford to hire the less productive workers. My response to that would be: …and?

Last I checked, it makes little sense economically to keep unproductive workers on the payroll during any point of the economic cycle. Keeping unproductive workers employed is a tool of the unions, not sound economics.

By: quill67

quill67 — Sat, 07 Nov 2009 02:45:34 +0000

Productivity numbers can sometimes be very misleading. Since your user name indicates you are an economist that me remind you of something you probably already know. When a firm increases its production and moves up its total product curve, the marginal product of labor falls (worker productivity falls) and the cost of the next labor hour increases. Hence, if a firm reduces its output, it moves down its total product curve and marginal product of labor increases (worker productivity increases) and marginal labor costs fall.

When an economy moves into recession firms reduce output so productivity numbers appear to improve but while there is undoubtedly some improvement in technology that may improve productivity, much of the statistically reported gain is simply because firms can no longer afford to hire the less productive workers.

By: Hoosier Economist

Hoosier Economist — Fri, 06 Nov 2009 16:11:15 +0000

If there is a positive to be taken from these developments, it is the potential for conservativism to take hold across the country and be embraced during the 2010 midterms. But I think it is imperative that conservatism be pitched as an economic solution rather than a political one. The country still equates political conservatism (however incorrectly) with George W. Bush. Make conservatism the ECONOMIC solution and the rest will fall in place.

By: Achance

Achance — Fri, 06 Nov 2009 15:58:37 +0000

in any meaningful way. It was simply almost a trillion dollars worth of spite; recompense to Democrat constituencies that had suffered at the hands of evil Republicans for all those years. Next year when the economy in in even more desperate straits, they’ll pour stimulus money into the hands of their front groups and if you want a job, you’re going to have to be a supplicant to the government or one of those Democrat contractors, non-profits, unions, and their other interest groups.

Comrade Obama has no interest in doing the right thing as anyone here would see the right towards the American economy. He and his makers want to eliminate the US as a singular World power and reform our economy to some socialist form. Most of what they’re talking about looks a lot like Wiemar Germany. Most studious communists look at Wiemar as a sort of ideal until those evil capitalists brought on a World wide depression and made Wiemar unable to keep up with the social welfare spending. That’s the balance they have to strike here too. They have to keep enough economic activity going to keep the masses sullen but not mutinous. So far, they’re keeping all the balls in the air, but printing and borrowing money to do it. Consequently, we are now completely in thrall to our creditors and our policy freedom is limited by their noblesse oblige. That’s one goal already accomplished; the US is no longer a singular World power able to pursue its interests without a by your leave to anyone.

I can only assume that the Chinese are waiting until after the ’10 elections on the off-chance that the revanchists might return to power then before they take Taiwan and we won’t be able to lift a finger. South Korea won’t be far behind.