the US has enjoyed a sustained economic recovery that has exceeded most contemporaneous and historical financial crisis benchmarks. Up until a year ago, the unemployment rate was falling by an average of 0.7 percentage points per year, roughly tracking the more successful historical experiences, and well exceeding the norm following a financial crisis. In the past year, the pace of the decline in the unemployment rate has doubled. As a result, the official unemployment rate is 83% of the way back to its pre-Global Crisis average. A variety of other indicators–such as broader measures of labour market underutilisation that include discouraged workers or marginally attached workers as well as unemployment rates for different demographic groups–show similar magnitudes of recovery
But I look at 25-54 [year-olds]. The employment rate is down from 79.9% in 2007 to 76.6% in July 2014–3.3%-points less, compared to 4.0%-point a fall from 63% to 59% over the entire population. The participation rate is down from 80.8% in July 2014 compared to 83.1% for 2007–2.3%-points, compared to the 3.1%-point fall from 66.0% to 62.9% over the entire population.
Pointer from Mark Thoma.
Ordinarily, I would side with Braun, for two reasons. First, he is a gentle, soft-spoken guy. Second, he knows labor market data better than anybody I know.
In fact, right now I find DeLong’s take more compelling. But if Braun were to convince me that I am wrong, it would not be the first time he has done so.
UPDATE: DeLong strengthens his case.
If Braun to convince me that I am wrong, it will not be the first time has done so. And I would be very happy to be made more macro-optimistic…
Isn’t one problem that from where we stand we might be on the cusp of the economic cycle “completing.”
So, the official unemployment rate is approximately 1.20 times the pre-recession level and the non-employed rate of 25-54 year-olds is approximately 1.13 times the pre-recession level. Why does the second fact indicate a smaller magnitude of recovery than the first?
Whoops! Unemployment rate of 25-54 year-olds is approximately *1.16* times the pre-recession level.And looking at the underlying Prof. DeLong link I see the “points from the trough” argument.
Perhaps another refinement that might appeal to Mister DeLong:
There should be a refinement to the measures of the numbers of persons employed (not just by age segments, though those should be included) to include consideration of the net increase or decrease in “employed hours” (or their equivalent in particular work classifications).
For example, we have observed a report of a decline of 500,000 full-time jobs, and an increase of 800,000 part-time jobs; statistically a 300,000 job increase, but likely no increase in, and possibly a decrease in, employment time.
So far, the evidence does not support any correlation of detriments to production or distribution adequate to demand.
While having something to do and some direct connection to the social organization represented by employment is better for the general psychological outlook, the economic benefits of increased numbers of persons having some form of employment may not be a reliable indication of improvements in our economic and social conditions.
Using the 25-54 year old category still trucks in some demographic issues. Data is available for 35-44 year olds, which is a much more stable statistical group to look at, especially if we’re going to freak out about employment changes of 1% or 2%, which are much smaller than the changes in labor force participation that happen as a product of age. The fall for 35-44 year olds is less than it is for the broader group.
We should also keep in mind that there is a very long term trend of slowly falling labor force participation among the prime working age groups. 7 years is enough to expect a 1% decline in LFP within an age group, without any cyclical or age demographic cause.
So the economy can’t be better than we could reasonably have expected and worse than we could have hoped for? Especially closer to the end than the beginning.
The period of 2003 – 2007 was a period of abnormally low unemployment rates – well below 5% and approaching 4%. And the low unemployment rates during that period can be attributed to the unsustainable mal-investment that was the “housing bubble”.
So I suspect DeLong and others who use 2007 employment numbers/rates (or any other economic metric, for that matter) as the basis of comparison are being misled by their results.