QandO

February 10, 2004

Krugman - 2/10
Posted by Jon Henke

In an otherwise fairly non-hysterical column, Paul Krugman writes something which deserves response....

For technical reasons involving seasonal adjustment, many economists expected the January report to show a one-time bounce in both measures. Yet employment as measured by the payroll survey rose by only 112,000 — well short of the increase needed just to keep up with a growing population. If employment were rising as rapidly as it did when the economy was emerging from the 1990-1991 recession, we'd be seeing monthly numbers more like 275,000.

* In this post-recessionary period, we saw no great unemployment in the first place. It topped out at 6.3%, and only briefly topped 6% - so a boomerang similar to previous recessions was impossible.

* We've seen sustained huge increases in productivity during this recovery - frequently well over 6% - compared to post-91 productivity inreases in the 1-2% range. While high productivity is good for the economy, it slows hiring.

* Does one even need to mention the economic "perfect storm" we face in this post-recession period? The tech bubble, 9/11, corporate scandals, and "geopolitical uncertainty" - as Greenspan put it. It's disingenuous to analyze our economy relative to previous economies, yet leave out any current context.

* Finally...let's remember:

This year, the United States should remain the engine of growth in the developed world, with household spending remaining strong and business spending, stock prices and corporate profits picking up, [the UN Department of Economic and Social Affairs] said.

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