Tag Archives: employment

The US economy flies into the “coffin corner”, but we don’t mind!

Summary: Every year Wall Street economists see a spike in a few indicators and announce an imminent boom. This slowly fades away, leaving another year of slow growth — preventing full recovery from the crash. Readers of the FM website have seen this accurately reported since the crash, avoiding the boom-bust cycle of of crushed euphoria. Here’s a new update, as we start another slowing cycle. Eventually, inevitably, we will hit a bump that pushes slow growth to outright decline. Then, when we no longer can prepare, economic news will become exciting.



  1. Seeing the US economy as it is
  2. What might spark a crisis?
  3. Graphs: see the pulse of America’s economy
  4. For More Information

(1)  Seeing the US economy as it is

Slowly economists see the dilemma facing the Fed’s governors): they’re desperate to raise interest rates, but the US economy can grow only slowly, and so remains vulnerable to a shock that knocks it into a recession (probably a severe downturn, given its weakness).

Seven years of the Fed’s Zero Interest Rate Policy (ZIRP, since December 2008) have distorted America’s large and dysfunctional capital markets. Not just in the obvious bubbles in the stock market (e.g, biotech and social media stocks), in equity investors’ mad belief that bad news is good news (small cap stocks up 5% after the ugly jobs data), but also in ways we can only dimly see today.

Worse, ZIRP means that in the next recession the Fed will have to take America to negative interest rates — with consequences impossible to foresee (so far only small nations have crossed this Rubicon). Long experience in the US, Europe, and Japan has proven the ineffectiveness of their only other tool, quantitative easing.

On the other hand, the data suggests that raising rates now would be insane: near-zero inflation, a too-strong US dollar (already depressing exports), and slow growth (even slower on a per capita basis).

We’re in the coffin corner: can’t accelerate, can’t continue at this speed, and can’t afford to decelerate. All that maintains public confidence is the happy talk of the Fed governors and Wall Street’s gurus, at the long-term cost of destroying their credibility when it proves false. The only hint the Fed has given us is the slow downward ratchet in their forecast of US long-term growth.

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The numbers about immigration that fuel Trump’s campaign

Summary:  Trump serves a common and vital role in US politics, introducing popular issues that the elites of both parties suppress. Such as immigration. Here are some of the numbers that show why many Americans worry about the high rate of immigration (but not our elites, who love the cheap workers and politically passive voters).  {1st of 2 posts today.}

Trump and motto

Photographer: Victor J. Blue/Bloomberg

Cui bono from the recovery?

This graph and the accompanying analysis from the ECRI shows that the employment to population ratio (E/P) for those with less than a high school diploma (orange line) hit bottom in 2011. Since then it has regained almost two-thirds of the losses in the great recession. But the E/P ratio for high school and college graduates (90% of adults; purple line) has not recovered since the recessionary losses. The new jobs have gone to the least educated — and so the lowest-paid — workers.

ECRI: Employment to Population Ratio

Combined with the income gains to the top 10%, we have a recovery that has done little for most Americans. No amount of cheer-leading by Team Obama and Wall Street can change that.

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A Brighter Outlook for America’s Unemployed

Summary: Following up yesterday’s post (the good news is that the bad news about the economy is wrong), we have a cheerful view of the economy.


A Brighter Outlook for America’s Unemployed

by John Ridlehoover of the VA Home Loan Centers

Over the last several years, the unemployment rate in the United States has been in a state of flux. In 2008, the United States saw a low unemployment rate of only 4.7%. After the collapse of Wall Street and the U.S. housing bubble burst in 2009, the unemployment rate had grown to around 10.1%. In 2010, the number of unemployed Americans was roughly around 6.8 million, which was the peak of unemployment.

A large unemployment rate puts a halt on the economy of a country as a whole. The more unemployed citizens mean the less consumer spending there will be. Consumer spending and the building of new businesses are keys to growing an economy.

During the first few months of the year, the economy fell 0.7%. Economists believe this drop to be caused by the extreme winter we had this year. The winter weather caused everything to slow down, including US ports.

Though America has seen dark times as far as unemployment, May and June of 2015 have shown strong job growth in some time. With over 470,000 jobs created, the number of unemployed citizens fell from close to 7 million to 2.5 million. Chief economist at Bank of the West in San Francisco, Scott Anderson, has said about the current job market, “Job growth roared back to life in May.”

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Why Japan can become an economic star of the 21st century

Summary:  Today we look at the future of Japan, and speculate at how well it will cope with the new industrial revolution. Their unique strengths (sometimes wrongly considered weaknesses) suggest that the 21st century might see the sun again rising over Japan. America too will face this challenge; we should watch and learn from Japan.   {1st of 2 posts today. It is a revised version of posts from 2013 and 2014}


  1. A falling population is a boon for Japan
  2. A new Industrial Revolution
  3. Japan: suited to be a star of the 21st Century
  4. For More Information


(1)  A falling population is a boon for Japan

Japan’s government has worried about its overpopulation since the Meiji Restoration when they had about 3 million people (1868). They encouraged emigration to Korea, to no effect. They had 50 million in 1910, 100 million in 1967, and a peak in 2008 at 128 million — all crowded into a narrow urban belt along the coast. At their current level of fertility, by 2100 their population might be half of today’s, back to the level of 1930.  If fertility continues to fall, population might fall to 60 million (1925) or even 50 million (1910).

The effect on Japan’s environment would be wonderful. Japan could become a garden with the cleaner technology of that future era (a common question in grade-school history will be “Teacher, what is ‘pollution’?”).

See this graph showing the coming evolution of the age distribution in Japan (source; see more information from their National Institute of Population and Social Security Research).

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Happy Meals: now made with 20% less people!

Summary:  By now everybody sees that a new industrial revolution has begun, but few clearly see its dynamics. This post looks at one example: the debate about wages. Raise wages or lower them, it makes little difference compared to the new technology that does jobs both cheaper and better.  {1st of 2 posts today.}

Minimum Wage Meme: False


Funny but false, showing a deep misunderstanding of how automation works…


Mike Konczal demolishes fantasies about a post-work world in his rebuttal to Derek Thompson’s article in The Atlantic (discussed here yesterday): “The Hard Work of Taking Apart Post-Work Fantasy” at the Roosevelt Institute. However, he believes several false elements of consensus thinking, such as this: “If wages are stagnant or even falling, what incentive is there to build the robots to replace those workers?

Economist Gregory Clark gives an example showing why that’s false in A Farewell to Alms: A Brief Economic History of the World (2007)…

There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century. This was the horse. The population of working horses actually peaked in England long after the Industrial Revolution, in 1901, when 3.25 million were at work. Though they had been replaced by rail for long-distance haulage and by steam engines for driving machinery, they still plowed fields, hauled wagons and carriages short distances, pulled boats on the canals, toiled in the pits, and carried armies into battle.

But the arrival of the internal combustion engine in the late nineteenth century rapidly displaced these workers, so that by 1924 there were fewer than two million. There was always a wage at which all these horses could have remained employed. But that wage was so low that it did not pay for their feed.

Horses then, people now. New technology allows machines to do their jobs cheaper and better. McDonald’s shows how this works as they install kiosks allowing people to enter their own orders. They’re already used at “McDonalds in Switzerland“. In the US they’re being tested where “The McDonald’s of the future lets you customize your burgers“.

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Three visions of our future after the robot revolution

Summary: During the past 2 years the robot revolution has come into view, and all but Right-wingers living in fantasy-land have begun to realize it might (like the previous ones) produce large-scale social disruption and suffering. But to prepare for these changes we must first image what kind of world they’ll create. Here we look at three visions about what lies ahead for us.  {1st of 2 posts today.}

“We did not come to fear the future. We came here to shape it.”
— Barack Obama’s speech to Congress, 9 September  2009.

Dark futures



  1. The center-left sees the problem
    ……and offers mild solutions.
  2. Realistic analysis and prescriptions.
  3. Visions of dark futures.
  4. For More Information.


(1)  The center-left sees the problem and offers mild solutions

Slowly, people have come to see the coming robot revolution (aka, a new industrial revolution), even economists. The Left has adopted this issue, as they have climate change, as a means to enact long-sought changes in the US economy. Like climate change, their solutions are far too small for the problem described.

(a) A World Without Work” by Derek Thompson in The Atlantic, July/Aug 2015 — “For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?” Typical of The Atlantic. Long, meandering, confused mish-mash of issues. Never confronts the core issue of how people will earn money to live. Lots of nonsense about people living by selling crafts to each other.

(b) The Future of Work in the Age of the Machine” by Melissa S. Kearney, Brad Hershbein, and David Boddy at the Hamilton Project, February 2015. See the slides and transcript from the seminar they held for academics and businesspeople. Their prescription is aggressive application of conventional methods…

The Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments.

(c) The future of work in the second machine age is up to us” by Marshall Steinbaum at the Washington Center for Equitable Growth, 23 February 2015 — They show that the robot revolution has not yet appeared in the macroeconomic statistics. But it’s coming. Their conclusions are the standard center-left recipe, like those of the Hamilton Project…

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The bottom line of the May employment numbers

Summary: The strong May employment number confirms what I’ve said in previous reports about the economy, casting doubt on the bears’ confident forecasts of an imminent recession. The economy was slow in Q1, but the data so far for Q2 paints a stronger if still mixed picture. {1st of 2 posts today.}



  1. Summary of this important report.
  2. Where were the jobs?
  3. Wages and hours.
  4. For More Information.


(1)  Summary of this most important economic number

The May employment data was clearly and broadly strong. See the BLS’ Highlights report for the pictures. BLS revised the gains in March and April by +32,000 and estimated that total nonfarm payroll employment rose by 280,000 in May. This compares with an average monthly gain of 207,000 over the past 3 months and 251,000 over the prior 12 months.

Keep a sense of proportion about these numbers. There are 140 million jobs in America, done by 147 million employed workers. The monthly changes are small and so difficult to measure accurately. Watch the patterns instead; ignore those who obsess over the tiny wiggles in May’s numbers. They are mostly statistical noise. For jobs the overall pattern was strong, but not a breakout.

Job gains through May 2015

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