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Sounds like a great idea. Right?
Let's use hindsight to see how well it is working.
All Employees: Total nonfarm (PAYEMS)
December 2001: 130,723,000
December 2011: 131,900,000
1,177,000 total nonfarm payroll jobs were added over the previous 10 years.
The Debt to the Penny and Who Holds It
December 14, 2001: $5,875,869,812,211.80
December 14, 2011: $15,051,286,197,149.79
That's a $9,175,416,384,937.99 increase in total public debt outstanding over the previous 10 years.
How much government debt was added per created nonfarm payroll job?
$9,175,416,384,937.99 / 1,177,000 = $7,795,595.91
January 6, 2012
Economists React: ‘Step in the Right Direction’ for Jobs
– December’s employment report was better than expected across the board. You don’t have to be a rocket scientist to interpret today’s number, just check off the boxes: a pick-up in nonfarm payrolls, another drop in the unemployment rate, a tick up in hours worked, and a mild gain in hourly earnings. Today’s report extends the steady diet of solid economic data, and suggests the US economy built up momentum as we closed out the year. –Neil Dutta, Bank of America Merrill Lynch
There you have it. We don't have to be rocket scientists.
July 1, 2011
As shuttle program winds down, NASA layoffs loom
But for many shuttle workers, the very last flight of the 30-year shuttle program will truly be the beginning of the end. NASA expects to undergo a big round of layoffs that will significantly reduce the shuttle workforce, which currently stands at about 6,700 people, said John Shannon, NASA's shuttle program officer.
September 23, 2011
Neil Armstrong: US space program 'embarrassing'
Armstrong decried NASA's downward spiral. "We will have no American access to, and return from, low Earth orbit and the International Space Station for an unpredictable length of time in the future," he said. "For a country that has invested so much for so long to achieve a leadership position in space exploration and exploitation, this condition is viewed by many as lamentably embarrassing and unacceptable."
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
14 comments:
CR's jobs graph is showing a continued "recovery" i.e. non-downturn in employment.
This isn't really part of my thesis so I need to find its underpinnings.
Perhaps the lack of fail -- return of 3M jobs since the 1Q10 low -- is sustainable.
We're right at the peak of the dot com economy:
http://research.stlouisfed.org/fred2/graph/?g=4fg, jobs-wise.
Adding fiscal intervention in red:
http://research.stlouisfed.org/fred2/graph/?g=4fh shows we're still at historic highs in this department, with annual federal deficit spending exceeding 15% of total wages.
I don't know what's going to happen this decade. I fail to see how anyone *can* know, really.
There is a slight problem with the implicit assumption underlying your analysis, and it is displayed in the title to your post.
For the first 9 years - and actually, still - a major component of that government debt wasn't used to create jobs. It was used to kill people who live far away, have incrementally darker skins vis-a-vis yr typical anglo, and generally don't understand our culture. Which also kind of keeps them from understanding why we destroy their countries.
A lesser amount wound up in Wall street bonuses. In truth, I only mention that out of bitterness.
Most recently, federal spending has been boosted by safety net programs. But they aren't really intended to create jobs. They're intended to give marginal help to those who have lost them.
Cheers!
JzB
Troy,
I think it is a "lack of fail" so far. One wonders what the next recession will do though, unless we think the government has found a way to permanently prevent them. Seems unlikely!
Jazzbumpa,
You are on to me. This post was mostly tongue in cheek. Had the numbers said that one job was lost (instead of a million created) over the last decade I would have had to similarly argue that the government spent $9 trillion to destroy that one job, if only to be consistent. ;)
I agree with your points. I once joked that we should have dropped brand new GM cars and trucks on the "evil-doers". Kill multiple birds with one stone.
Bonus thought.
You don’t have to be a rocket scientist to interpret today’s number...
That's the phrase that triggered this post. The "number" is not simple to interpret. It is as complex as our entire economy. What would the number be if the government was not borrowing over a trillion dollars per year? Is that borrowing sustainable? Can 200,000 jobs really be considered good *four* full years after the last recession began (December 2007)? And lastly, does it alter my concerns about our future in a non-trivial way?
I once joked that we should have dropped brand new GM cars and trucks on the "evil-doers". Kill multiple birds with one stone. If only GM, K-Mart and Sears had merged prior to your thought. We could have dropped a hybrid auto/washing machine. (I'm having a Rick Perry moment, I can't come up with the third one.) Any ideas?
Mark -
Sometimes I view the world in terms of cartoon images. Now I see an avalanche of Jimmies and Silverados cascading down on the tire tread bedecked heads of Bin Ladin and Khadaffi.
I'd also like to see Romney bombarded with Jeeps. From my early blogging, back in '08.
http://jazzbumpa.tumblr.com/post/60781918/mitt-romney-to-jazzbumpa-drop-dead
Cheers!
JzB
I think state and local fiscal situations are going to be the next shoe to fall, too.
http://www.fresnobee.com/2011/12/28/2663822/pension-costs-could-squeeze-services.html is an interesting case in my state . . . pensions will cost 1/7 of expenditure.
And the baby boom is only aged 50 to 65!
25% underfunded, too. I was called into jury duty and it's funny seeing in this cross-section of random people how much of the local non-immigrant economy is driven by gov't spending.
Raise taxes and/or cut spending, the choices we face are deflationary. Except borrowing, but that's the primrose way to a future hell.
I still don't understand how it's mathematically possible to spend $40,000 per household on government services (not counting SSA checks).
Theoretically, that's almost one government job per household.
Troy,
A few things I notice in your second graph:
1. At the dot com peak, we were actually negative debt/wages.
2. The longer term trend of debt/wages is not good.
It appears to me that during Clinton, we were, in fact, taking on more debt, but that due to high job and wage growth, we had little trouble paying off the debt. I don't see the same type of dynamic at any time in the 80's (Reagan) or the 00's (Bush/Obama).
The data immediately prior to Reagan is poisoned by the very high inflation.
Adding in consumer debt take-on (green):
http://research.stlouisfed.org/fred2/graph/?g=4fB
one can see the very nice tailwind of a nation borrowing 15%+ of their paychecks, 2003-2007.
FRED also has total credit debt take-on (yellow):
http://research.stlouisfed.org/fred2/graph/?g=4fC
that shows how the bubbe-ish period of 1999-2000 (50% new debt to wages) was exceeded in 2003 and allowed to run up to 70% of wages immediately prior to the recession.
Once the borrowing failed, so did the bubble economy.
The closeness of the red (Fed debt take-on) and yellow (total) lines at the end indicates how dependent the economy is on Fed borrowing.
Eliminate that and hello Somalia AFAICT.
So few people in this country have seen these graphs.
Using your 2nd graph from your first post again, I adjusted the start dates backward to 1981.
Given the trajectory of the fed/debt line, can we infer that during the high jobs/wages period, '95 -> tech bubble burst, that we were accumulating peak tax revenues?
Can we also infer that at no other time during the interval in question (1981 to present) have we experienced job/wage growth *and* tax revenue growth moving in the direction that indicates more Americans working for higher wages, taking on debt and being able to service that debt, and paying more taxes into the system?
And if the above is true, can we then conclude that during those other periods, the '80's and the '00's, that it was purely a .gov/HELOC credit based eCON that was fueling the fire?
And finally, could we say that the "prosperity" of those periods was definately NOT trickle-down-economics/supply-side policies?
The 2nd graph (http://research.stlouisfed.org/fred2/graph/?g=4fh) even back to 1981 is interesting but does not tell the full story.
Looking at it set back to starting at 1981, all I see is four recessionary dips in hiring -- 1982, 1992, 2002, and the massive most recent recession.
The 1982 recession was engineered by the Fed pushing interest rates to 20% or whatever.
The 1991 recession was the hangover from the orgy of the baby boom 1980s, and the 1980s expansion of credit leverage in finance, corporate, and consumer debt.
In 1991 the baby boom was aged 30 to 45.
What followed for the rest of the 1990s is hard for me to pin down. An important element not to forget is that the PC revolution (specifically Windows), the internet, big box retail, and offshoring production greatly increased domestic productivity.
The latter was undoubtedly driven by the radical devaluation of the yuan in 1994:
http://research.stlouisfed.org/fred2/graph/?g=4fZ but the preceding graph (which has the merchandise trade imbalance in blue) does not really show a clear causative relationship here.
can we infer that during the high jobs/wages period, '95 -> tech bubble burst, that we were accumulating peak tax revenues?
There are a lot of moving parts here. For one, the baby boom was entering its prime earning years, and the Clinton tax regime of 1993-2000 was borderline confiscatory if the current zeitgeist is to be be taken at face value.
Defense spending was held to minimal nominal growth for much of this time, which I think gave the actual productive economy some sunlight for a change.
But there was that growing trade imbalance in my previous graph that I think was the cancer in the system. We were getting billions and billions of essentially free stuff from China, this was great to enter as a new regime ca. 1995 but these consumer cost savings soon were lost as the economy adjusted to the newer, favorable price levels (and behind the scenes manufacturing was getting slaughtered).
http://research.stlouisfed.org/fred2/graph/?g=4g0 shows the above trade deficit (blue) vs. mfg employment (red). Blue went from -$50B/yr to -$200B/yr, as red went from 17M jobs to 11M.
My thesis is that on the micro level consumers were saving money buying these new imports, but on the macro level the consumer economy was beginning to lose hundreds of billions of dollars on the paycheck side of the ledger as the resulting trade deficits became sovereign wealth somewhere else.
(cont'd) Can we also infer that at no other time during the interval in question (1981 to present) have we experienced job/wage growth *and* tax revenue growth moving in the direction that indicates more Americans working for higher wages, taking on debt and being able to service that debt, and paying more taxes into the system?
Yes, the 1990s were special. But I think we were laying the seeds of our own destruction then, too.
We had a nice tailwind as oil stayed at $20. On the West Coast, we were in an oil glut through around 1995 as Alaska was peaking and their only customer was us, LOL.
Real estate was still depressed, as the hangover from the late 80s mania was only just beginning to be worked off in the mid-late 90s.
And finally, could we say that the "prosperity" of those periods was definately NOT trickle-down-economics/supply-side policies?
most certainly. The prosperity of the 1980s was driven by a flood of debt, consumer, corporate, and government. The 00s was, I think, largely a consumer debt binge, powered through the home mortgage sector, where approximately $1T/yr was being pumped from global wealth centers directly back into the US consumer economy via the rising valuations of an increasingly sketchy housing sector.
HELOCs and cash-out refis were money-good for millions of households, yet the 2003-2007 period's reliance on this actual cold hard cash flowing out of RE is something of a mystery to economists, still.
And that is a mystery to me.
Great comments everyone!!
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