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.