Secular Stagnation: A Convenient Canard?
Question: How can unemployment be at a 3.7% low, not seen since 1969, without any meaningful wage inflation?
Answer: Since 2008 - 19M are no longer counted in the unemployment denominator.
Begging another question...
If one wishes to call layoffs due to age, wage, imminent benefit vesting*, and outsourcing to labor at the margin, an "early retirement", along with the resulting wage suppression, then the above explanation might suffice viz. being turfed and after benefits run out, no longer counted as part of the work force.
*(Benefit vesting: next year employee A vests at 10 years, long term benefit costs will rise 50%, employee A suffers bean counter termination with extreme prejudice.)
Alex I'll take economic myths for $500... Trebek queries: This urban myth from the 1930's was proved patently false with the advent of WW2 and subsequent economic growth through the early 80's.
What is? The secular stagnation theory or the "new normal" viz. that technological innovation; and ageing labour force viz. not enough new workers due to an ageing and declining population (demographics); AND higher retirement savings due to the above; are the cause of long term economic stagnation and malaise.
Secular stagnation posits that
1. there has been an increase of deposits (savings) from an aging population, along with Asian precautionary savings,
2. Said inflows outweigh productive real GDP investment (type 2 financialism xfer payments as opposed to type 1 real GDP PCE transactions (see here)).
3. The inflows or deposits in loanable funds have been so great, that the commercial banks cannot lend all of it out, even at historically low interest rates.
Of late, the revival of this implausible lie (secular stagnation) is convenient for its promoters. How so? To explain away seemingly misguided and inadequate bipartisan government, central bank and economic policy.
More to come in Secular Stagnation: Implausible Lie? Stay tuned, no flippin.
Answer: Since 2008 - 19M are no longer counted in the unemployment denominator.
Begging another question...
"What gives in the last 11 years for participation [rate] to decline at a +3X rate from the prior 11 years?" - Record Low Unemployment?Typical response...
"Demographics and higher % retiring early, some of that from Tech job destruction." @surfgeezerOne might exhibit caution about: interpreting declining TFP (total factor productivity) growth as a supply side indicator of technological progress and innovation, and attempting to associate inadequate demand with aging demographics. Moving West...
If one wishes to call layoffs due to age, wage, imminent benefit vesting*, and outsourcing to labor at the margin, an "early retirement", along with the resulting wage suppression, then the above explanation might suffice viz. being turfed and after benefits run out, no longer counted as part of the work force.
*(Benefit vesting: next year employee A vests at 10 years, long term benefit costs will rise 50%, employee A suffers bean counter termination with extreme prejudice.)
"We don't have any basis or any evidence for calling this a hot labor market... While we hear reports of companies finding it hard to find qualified labor, we don't see wages responding... to call something hot, you need to see some heat." - Jerome Powell, House Panel Hearing July 10, 2019Bad news... A 3X acceleration in the ROC from the prior 11 yr period, resulting in 19M conveniently vanishing from the denominator leaving an all time low in unemployment has one explanation... A Convenient Canard.
Alex I'll take economic myths for $500... Trebek queries: This urban myth from the 1930's was proved patently false with the advent of WW2 and subsequent economic growth through the early 80's.
What is? The secular stagnation theory or the "new normal" viz. that technological innovation; and ageing labour force viz. not enough new workers due to an ageing and declining population (demographics); AND higher retirement savings due to the above; are the cause of long term economic stagnation and malaise.
Secular stagnation posits that
1. there has been an increase of deposits (savings) from an aging population, along with Asian precautionary savings,
2. Said inflows outweigh productive real GDP investment (type 2 financialism xfer payments as opposed to type 1 real GDP PCE transactions (see here)).
3. The inflows or deposits in loanable funds have been so great, that the commercial banks cannot lend all of it out, even at historically low interest rates.
Of late, the revival of this implausible lie (secular stagnation) is convenient for its promoters. How so? To explain away seemingly misguided and inadequate bipartisan government, central bank and economic policy.
The secular stagnation of U.S. economic growth and the vanishing of the American middle class have common roots—in the deliberate creation after 1980, through economic policies, of a structurally low-wage-growth economy that not only polarized jobs, incomes and wealth, but also slowed down capital deepening, the division of labor, and laborsaving technical progress in the dynamic segment of the economy (Storm and Naastepad 2012).The resulting actions and inaction of the promoters (politically bipartisan but economically advantaged) has yielded multiple FAILURES to achieve any turnaround (of late post dot.com and GFC) or a robust economic base to build upon in the future.
More to come in Secular Stagnation: Implausible Lie? Stay tuned, no flippin.
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