[T]his is an odd slowdown, by historical norms: no clear decline in GDP, no months of 6-digit job losses. Instead, the economy is being slowly ground down.Among other things, rising output and falling employment implies that labor productivity is doing well (indeed, the BLS reported 4.2% growth in the second quarter). Usually, that's good news. Hm...
What I suspect, however, is that this is what the 21st-century business cycle looks like. The sharp slumps of the past partly reflected an inflation-prone environment, in which the Fed occasionally had to slam on the brakes; it also reflected a mainly goods-producing economy, with lots of inventories, in which recessions had a lot to do with inventory adjustments.
Saturday, September 6, 2008
Unemployment vs. Output
Last week's employment report from the BLS had unemployment rising from 5.7% to 6.1% in August. As Brad DeLong, James Hamilton and others note, it sure looks like a recession:But past recessions have also been clearly visible in data for output growth:The "recovery" looks pretty anemic by historical standards, but there is not the sharp drop in output growth (yet?) that we've seen in past recessions. As Krugman puts it: