Portfolio Strategy, Long Only, Long-Term Horizon
Contributor Since 2013
Summary: The news overflows with chaff about the economy. It's great! It's a recession! Neither is true. Since the 2009 trough we have had growth - but unusually slow growth. Here we look at one measure of growth: jobs, going in slow clear steps from the wonderful headline news to the grimmer reality.
The headlines surge with good news about jobs. "U.S. Economy Added A Robust 292,000 Jobs In December". "Barack Obama has been a great president for job creation". "Job Growth Surges in February". "Job growth picks up steam, economy adds 242k jobs in February." There are reports comparing the numbers of new jobs "by" each President (Washington, Teddy Roosevelt, and LBJ look pretty bad by this daft metric, which doesn't account for population growth).
Let's start with the good news and work through to the grimmer reality.Here's the good news that excites Janet Yellen:
The bad news:
The very bad news:
Confirming the bad news (no tight labor markets):
The worst news: for the first time since the 1930s
Jobs and wages are the key not just to prosperity in America, but to social and economic stability. Growth of an underclass - people without secure jobs, in part-time contingent minimum-wage jobs - drives a wide range of social ills. This is incomparable with our political institutions, and tangible evidence of our failure.
For almost a generation we have tried a wide range of economic nostrums: tax cuts for the rich paid for by government borrowing - massive growth of household, business, and government debt - wild fiddling with the knobs of monetary policy (zero interest rates, massive expansion of the money supply, quantitative easing) - and even foreign wars. Nothing has worked.
Meanwhile our public infrastructure rots from insufficient maintenance and inequality grows. Hillary Clinton has little interest in these things (I'll wager that passing the Trans-Pacific Partnership faux-trade treaty becomes a higher priority if we elect her). Trump gives us random sound bites, while his far-right advisors plan policies to help the 1%.
America is changing into something else. But the political machinery the Founders bequeathed us remains powerful, needing only our participation to make it work (voting is the starting point of citizenship, not its essence). The clock is running. Time is not our friend.For More Information
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Are we Doomed to Secular Stagnation? Limitations of Supply-Side Economic Policies by Uwe Petersen (2014) and the highly rated Secular Stagnation: Facts, Causes and Cures by editors Richard Baldwin and Coen Teulings (2014).
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.