Radio commentary, August 27, 2009

Not all that much to say. The economy continues to stumble along, not really declining, but not really improving either. First-time claims for unemployment insurance fell by 10,000 last week, but remain quite elevated. On a graph, the picture is of a distinct improvement during spring and early summer, followed by a stall. The number of people continuing to draw benefits fell by 119,000 the week before (the continuing claims numbers are always a week behind the initial claims figures), but they too remain quite elevated, and are only in the mildest of improving trends. And some of that decline may be the result of the unemployed running out their benefits rather than getting new jobs.

In other labor market news, last week, the Bureau of Labor Statistics issued its quarterly report on gross job flows. The familiar monthly employment numbers are the rather placid-seeming net results of massive turbulence—literally millions of jobs created less millions of jobs destroyed every month. Unfortunately these numbers are only available with an eight-month delay, so we’re only just learning what happened at the end of 2008. Still, the story is pretty compelling. In the last three months of 2008, there 6.7 million jobs created in the private sector (a combination of existing employers expanding and new ones sprouting up), and 8.5 million jobs destroyed (through layoffs and business failures), for a net change of -1.8 million. In percentage terms, the net change was the worst since the series began in 1992. But it wasn’t the gross losses that set a record—the end-2008 figure was well below the damage done in the third quarter of 2001. The real outlier was the weakness in gross gains, which set a new low by a comfortable margin, capping a two-year downtrend. Employers never went on anything like the 1990s hiring spree during the recent expansion—and now they’re not hiring at all.

Compared with the early 1990s recession, job losses in this downturn have come more from contracting establishments than from outright closures. That may help explain the recent strength in the productivity numbers—which is amazing. Employers are laying off workers and forcing the remaining staff to work twice has hard. In the bloodless world of numbers, that appears as an acceleration in productivity. To use the old language, it’s an increase in the rate of exploitation.

That’s been very good for profits. On Thursday morning, the Bureau of Economic Analysis reported strong corporate profits figures for the second quarter of this year. That’s a remarkable performance in such a deep recession. And what profits damage occurred last year was mostly in the financial sector—which now looks to be recovering. In fact, the scuttlebutt on Wall Street is that the big banks are making scads of money, but they’re going to try to hide it through accounting tricks so as not to attract bad publicity.

It’s amazing that despite the severity of this recession, almost nothing has changed in the broad economic or political structure, or in popular or elite consciousness. Which makes me wonder if this is really all over, or just the eye of the storm.

2 Comments on “Radio commentary, August 27, 2009

  1. It turns out that the fear of unemployment spurs productivity growth. The real underutilisation of US labour capacity is probably circa 16-17% – broadly, one in six or seven workers is either jobless or underemployed. Essentially the “credit crunch”, which will rumble on for some years, hits those in the weakest market position the hardest. Many workers now work on temporary contracts, and they are the most vulnerable to rapid layoffs. Like I said before, I think unemployment will continue to increase in the next half year or so, be it perhaps at a slower pace. The overall effect is that a fraction of the workforce is durably shut out of the goodies of life. The best indicator for that is the growth of longer term unemployment.
    The “eye of the storm” is presumably that if you get large concentrations of pauperized people who become disintegrated from society and have nothing left to lose, then you start to get “social problems” (revolts, crime, overburdened welfare systems etc.). The statistical information to hand suggests that the socio-economic impact of the slump is very uneven, affecting some groups of workers in some areas much more severely than others, who do not experience much change. I suspect that ideology as a whole will move from the “naturalization” of unemployment to outright hostility against the poor. America as one of the world’s wealthiest countries is only now experiencing the full brunt of neoliberal reform which other countries experienced already decades ago; from the perspective of many poorer countries, the problems of America are not all that significant.

  2. Vote for “eye of the storm.” It’s not the end of the world, it’s just more goddamn secular stagnation to be followed by a cyclical boom. “Jobless recovery” or “paper recovery” or whatever you want to call it, but I’m getting too fucking old, because I could have sworn that was what it was after the last bust. Will America ever wake up? Here’s to hoping military adventures break the bank like they did for the Dutch and we can get a welfare state, or at least health care and maybe some more trains, after the painful adjustment period. Or something.

    In other news, in Yugoslavia, a “Free Market” think tank is deriding “socialis[t]” workers striking over months and months of unpaid wages. But feudalism can’t happen here, can it?

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