Posted on 01/18/2011 6:33:28 PM PST by neverdem
Will high unemployment remain a constant feature of the new economy?
So far the pace of recovery from the 2008-2009 recession, the deepest since the Great Depression, has been agonizingly slow, barely enough to absorb the monthly growth in the labor force and not nearly enough of offset the job losses that have occurred. Weak demand rather than structural changes in the composition of output or a mismatch between worker skills and jobs is the primary cause of continued high unemployment.
Even if demand strengthens enough to create 300,000 jobs per month, three times the average monthly rate in 2010, employment will not regain its pre-recession level until 2015 at the earliest. And this is very optimistic.
Consumption and construction are usually engines of strong recoveries, and both remain troubled. Households are still rebuilding their balance sheets and reeling from losses in wealth, and foreclosures and unsold property are impeding a rebound in construction. Small and medium-sized businesses that usually account for most new jobs still face weak, uncertain demand and credit constraints.
Even if demand strengthens significantly in the next few years, job growth is likely to lag output growth even more than it has during the last two “jobless” recoveries. Continuing a 20-year trend of polarization in the labor market, employment losses in the 2008-2009 recession were more severe in middle-skill white and blue collar jobs than in either high-skill, white-collar jobs or low-skill service occupations.
Strong productivity gains driven by labor-saving technological and organizational changes mean that many of the lost middle-skill jobs are gone for good. Many of the displaced workers, especially those unemployed for long periods of time, do not have the training and experience required for new high-skill jobs. Nor will new entrants to the labor force with just a high-school education...
(Excerpt) Read more at nytimes.com ...
They created the demand otherwise their supply would have been too much and the product would have been devalued or the company would not have succeeded.
I agree they were hugely successful, but without offering a product that people wanted to buy i.e. demand, they would never have had that success.
Just look at any second hand or 99cent store to see the flood of useless products no one wanted.
Right now there is a huge surplus of supply in labor and very low demand. That is why employers are in the catbird seat when it comes to wages and perks.
It’s the same with housing. Huge supply, little demand. That is called a buyer’s market.
“Just look at any second hand or 99cent store to see the flood of useless products no one wanted.”
Newt Gingrich’s books?
As long as offshoring of high-wage jobs continues, demand will continue to weaken.
Compare what Apple’s done with all the demand side stimulus by the government, which has had the net effect of creating a huge amount of debt and a 10% unemployment rate.
Giving money to banks doesn’t really build demand.
Reagan ended the recession of the late 1970’s with his tax reductions. The roll backs of high marginal rates resulted in higher disposable income for consumers who spent on consumer goods. At the time the US produced these consumer goods in this country so the demand for toasters, televisions, autos, and apparel resulted in more demand for US factories who in turn hired more workers creating more demand.
Today priming the pump through government transfer payments or tax reductions does not have the same multiplier effect as it did decades ago for one very good reason. The factories producing consumer goods are now outside the US. Spending by a US consumer results in demand in China, India, Bangladesh, or Vietnam. The job and income multiplier effect occurs in those countries, not our country.
Until we bring manufacturing back to this country we will have sluggish GDP growth, high unemployment, and continued decline of the middle class. Wealth is not created by borrowing, it is created by production. The citizens of producing countries become wealthy. Those of borrowing countries becomes slaves. History tells this story. We are living it again today.
Do the multi-million bonuses on Wall Street suggest there is little supply and great demand for investment bankers?
If Obama gets re-elected, Americans will look back on 10% unemployment as the good old days.
No, they are the results of results.
It is no different than the fact that Kobe Bryant or Lebron James, or Tom Brady or Curt Schilling make millions per season when there are others playing on the same teams who don’t even make one.
Or no different than Brad Pitt or Angelina Jolie or Sandy Bullock making $20 million for a movie and the actors in the smaller supporting roles getting significantly less.
The best gets paid the most(usually)
It suggests there is little supply and great demand for investment bankers that can generate profits.
In every position you ever hold - your compensation is directly related to the value you bring to the organization. Nothing more, nothing less. There may be outliers, but that is the standard plain and simple.
Winner. Simple. Accurate. Well said.
Actually it was the middle class jobs in the form of manufacturing that have been shipped overseas. Also, the customer service type call center jobs.
Someone with a highly valued skill or service are okay in this economy.
The unemployment rate among college grads is only about 5%.
Bingo. Til they realize this, the politicians will only be job killers.
The “underconsumption” theory was propounded by FDR throughout the 30s. It was thoroughly debunked then and is meaningless blather today unsupported by common sense or economics.
But how did they create it? Did they do it the way the government does it? You actually supplied the answer already:
offering a product that people wanted to buy [in other words, creating supply that didn't exist before]I remember during the economic downturn of 2002-2003, everybody was complaining about too much supply of dark fiber. The solution was to create a new supply of online content, faster computers, and faster networking equipment. Thanks to all that new supply, there is plenty of demand to fill what used to be an oversupply of dark fiber.
We need more investment, innovation, and more supply of things people want. That's what will get our economy going again and create jobs, not more demand side stimulus and subsidies from the government.
I was not advocating for more government.
Actually, I thought I was supporting and advocating the free market system we sometimes have in this country.
What you described is what has raised the living condition standards of everyone in this country.
That is the problem with Keynesian economics. They think that spending drives the economy and if they can just get enough free money flying around and enough people getting paid to produce nothing, the economy will just magically repair itself.
FDR thought it was as simple as establishing price control boards for everything to force prices up. His logic was that, with government-mandated price hikes and wage hikes, people would have more cash in their pockets buy stuff. He threw lots of people into prison for rejecting his imposed price increases. The companies which complied lost money and had to lay off many workers.
FDR really was a simpleton and totally naive about economics — much like the current occupant.
Boomers were the engine of this economy. They are being replaced by a slew of third world immigrants who were not beneficiaries of the melting pot American culture like previous immigrants.
I am not a pessimist by nature but all the bad ideas conservatives worried about and tried to resist and change is coming to rotten fruition now like a freight train. It's scary.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.