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I've never understood how strong labor numbers negate a recession. Like sure your money is worth less because of all the inflation, and your COL keeps increasin
by _gabe_ 4y ago
I've never understood how strong labor numbers negate a recession. Like sure your money is worth less because of all the inflation, and your COL keeps increasing but your wages remain the same, but hey we have lots of people working.
Maybe somebody smarter than me can explain how these two correlate lol.
- xhrpost 4y agoHopefully I'm not being snarky here, but if you looked at another country with a smaller economy, and then saw that they employee fewer people, would you be equally confused?
- _gabe_ 4y agoOnly if you then proceeded to tell me that because less people are employed the country has a lower standard of living and is more economically unstable. As a direct example of this, Sweden's unemployment rate is 7.6% right now[0], and it's historically been quite a bit higher than the US's. But people say that it ranks #1 in terms of quality of life[1]. Additionally, their unemployment rate is not negatively effecting their growth[2]. So in answer to your question, yes it continues to confuse me when people try to equate employment numbers with the overall economic status of a country. You don't take any number in isolation, you look at the data holistically, and sometimes you have numbers that seem to be at odds with one another. When that happens, it requires a deeper investigation to see what's truly happening instead of taking the number you like better and using that to promote your narrative. [0]: https://www.statista.com/statistics/527418/sweden-monthly-unemployment-rate/ https://www.statista.com/statistics/527418/sweden-monthly-un... [1]: https://www.globalcitizensolutions.com/sweden-best-country-for-quality-of-life/ https://www.globalcitizensolutions.com/sweden-best-country-f... [2]: https://www.bloomberg.com/news/articles/2022-07-28/swedish-economy-expands-more-than-expected-in-second-quarter https://www.bloomberg.com/news/articles/2022-07-28/swedish-e...
- zeroonetwothree 4y agoUnemployment can be measured in different ways so it’s hard to compare across countries.
- lotsofpulp 4y agoStrong labor numbers means wages would be increasing. Perhaps not for all income deciles, but at least the bottom ones (which is a good thing in my opinion since it helps close the income/wealth gap). What would be an issue is the labor participation rate decreasing, which it is, but it may be unavoidable due to things like aging demographics. That means fewer workers supporting non workers, and hence less supply of labor to be distributed amongst everyone (assuming it is not offset by gains in automation). I think this will be the government’s real problem, as there is no quick fix other than opening the immigration doors.
- xyzzyz 4y agoWhat about real wages, are they also increasing, or only nominal ones do?
- JumpCrisscross 4y ago> What about real wages “Real average hourly earnings decreased 3.6 percent, seasonally adjusted, from June 2021 to June 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 4.4-percent decrease in real average weekly earnings over this period” [1]. [1] https://www.bls.gov/news.release/realer.nr0.htm https://www.bls.gov/news.release/realer.nr0.htm
- whimsicalism 4y agoI don't think looking at mean wages is the best to get an answer. Real median income is up Y/Y and the past quarter, driven by the still largely tight labor market. [0] [0]: https://realtimeinequality.org/ https://realtimeinequality.org/
- lotsofpulp 4y agoStrong labor numbers would necessitate real wage increases, otherwise I do not see how it could be classified as strong labor numbers. But it can be negative for higher income groups and positive for low income groups simultaneously.
- Grimburger 4y ago> negate a recession What do you think GDP actually measures? A hurricane that kills 1000 people increases GDP for instance.
- pestaa 4y agoGross Domestic Product is not divided by population. GDP per capita is what you're referring to?
- Phrenzy 4y agoThe aftermath of a large storm requires a lot of clean up. The clean up costs would be added the the GDP.
- thehappypm 4y agoNot even a little, storms destroy tons of productive businesses.
- Grimburger 4y agoNo, I'm referring to the money spent on cleanup and rebuilding, not X lives lost reducing the denominator in GDP per capita. Disasters are great for GDP as a metric on a medium term scale. Not so much for people or wellbeing. This is basic econ stuff.
- niall00c 4y ago"When your neighbor is out of work its a recession. When you are out of work its a depression" - said someone
- forgingahead 4y agoWhen asset prices increase quickly, everything is fine, as the wealthy are benefitting. When wages increase though, that's inflation and we must tamp down hard on it!
- willcipriano 4y agoThis is the federal reserves stated position. https://mronline.org/2022/05/26/u-s-federal-reserve-says-its-goal-is-to-get-wages-down/ https://mronline.org/2022/05/26/u-s-federal-reserve-says-its...
- cycomanic 4y agoThis is absolutely ridiculous, maybe they should start by reducing his salary.
- uoaei 4y agoGiven the obviousness of the consequences, it's hard to imagine the Greatest Minds In Monetary Policy haven't foreseen the fact that labor is hurt and corporations are effectively subsidized when enacting such policies. So it must be intentional.
- deleted 4y ago[deleted]
- zeroonetwothree 4y agoWages are not comparable to asset prices since one is an over time payment and the other is a quantity at one time. In any cases total wages (well, income) are equal to GDP so I don’t think anyone is against an overall rise (in real terms).
- zajio1am 4y agoDemand-driven recession means there is insufficient demand which leads to decreased production and a level of slack in economy (real GDP lower than potential GDP), while unemployment is a manifestation of such slack. If you have decline in GDP, but no unemployment, it may be due to supply issues, increase in friction and other factors (i.e. decline also of potential GDP).
- ffggvv 4y agothey didnt until 2 weeks ago. turns out dems really dont want to say the R word before the november election
- parkingrift 4y agoAt this point it's just an argument of what constitutes a recession. The NBER definition requires a "significant decline in economic activity that is spread across the economy and lasts more than a few months." There is lots of leeway in there for defining a recession to be whatever you want to be. However, I think a GDP contraction of 1% (and decreasing) combined with robust job growth and increased spending would not classically qualify as a recession. It's clear that the Fed is attempting to slow down the labor market and kill demand. Combine that with ongoing supply chain issues and it's not clear to me whether we are entering a recession or that there is transitory pain from war in Europe and sudden bumps in borrowing rates.
- harambae 4y agoIf we hit a 3rd quarter in a row of contracting GDP, would you call it a recession?
- dodobirdlord 4y agoMaybe not even then? GDP dropping while employment, spending, and demand increase indicates an economic expansion coinciding with a decrease in labor productivity, which is extremely weird and not at all like a conventional recession where the economy contracts. Different terminology might be required. Additionally, with inflation at such a high level (9% or so), the last two quarter's real GDP growth estimates (-1.6% and -0.9%) are small percentages compared to the size of the error bars on the required inflation adjustment to compute the real GDP. Computing inflation is tricky and requires a lot of hand waving and boiling down different price changes across different sectors of the economy to get a single number, and if the calculation is off by even 1% (i.e. inflation is actually 8%), then the real GDP growth for last quarter would be positive at 0.1%. This is also happening at the same time that the US dollar is getting increasingly valuable vs most foreign currencies, so measured in terms of foreign currency value the US real GDP is still increasing, which just compounds the weirdness. Putting all of this together, I don't think the term "recession" is a good fit.
- parkingrift 4y agoI don't know. Are we still adding 370,000 jobs per month? What kind of GDP contraction are we talking about? 1%, 3%, 5%? Is the GDP contraction increasing or slowing from the prior quarters? If we went from -1.8% to -1.5% to -0.9% and we still had robust job growth I would probably say it's not a recession. But again, what does it even matter? Seems like people are only arguing about this to score political points. If you think we're in a recession, you might be right. If you think this is transitory, you might be right. If it weren't an election year we might not be having this conversation at all.
- rsynnott 4y agoEconomists have always kind of applied an "I know it when I see it, typically after the fact" sort of test for recessions (the two-quarter thing is a rule of thumb, but isn't taken that seriously). But just "there's highish inflation" wouldn't normally be considered a recession, and it is unusual to have a recession with very high employment; historically nearly all periods that ultimately get called major recessions have significant joblessness as a feature.
- lupire 4y agoRecession refers to production, not who profits. You getting paid less doesn't make a recession, it makes a different problem.
- zeroonetwothree 4y agoInflation has nothing to do with recessions either.