Democrat Stimulus Architect Admits “the Economy’s Problems,” not “Economic Greatness”
Then: The January 2009 Romer-Bernstein Report predicts 5 percent unemployment by now.
Now: Jared Bernstein, “How the Jobless Rate Underestimates the Economy’s Problems,” October 2, 2014
- The economy is not growing as it should: “(T)here’s considerable slack, in terms of underutilized resources, in the American economy in general and the labor market in particular.”
- The economy has been lagging “for years now”: “They’ve (i.e. the Federal Reserve) been providing extensive monetary stimulus to the lagging economy for years now…”
- Millions of people are still underemployed: “(T)here are over seven million involuntary part-time workers, almost 5 percent of the labor force, who want, but can’t find, full-time jobs. That’s still up two percentage points from its pre-recession trough.”
- Millions more have given up on finding work: “Once you give up looking for work, you’re no longer counted in the unemployment rate, so if a bunch of people exit the labor force because of the very slack we’re trying to measure, it artificially lowers unemployment, making a weak labor market look better. That’s certainly happened over the recession and throughout the recovery, but it’s been mixed in with a more benign source of labor force exits: the retirement of aging baby boomers. So economists have scurried about trying to figure out how much of the three-percentage-point decline in the labor force participation rate, from about 66 to 63 percent, to attribute to slack and how much to so-called structural (vs. cyclical) factors. And the answer, according to the economist Jan Hatzius, is that about one percentage point, or about a third of the total, is because of slack. By itself (not accounting for the involuntary part-timers), that implies an unemployment rate more like 7 percent. That’s another 1.6 million people worth of slack, people who could get pulled back into the job market if the jobs were there.”
- Wage growth has been “persistently slow”: “The persistently slow growth of wages in recent years is Exhibit A in the case for slack…”