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It is important to note that unemployment is a lagging indicator; we may be in recovery while unemployment worsens for some time. http://en.wikipedia.org/wiki/

by Femur 17y ago

It is important to note that unemployment is a lagging indicator; we may be in recovery while unemployment worsens for some time. http://en.wikipedia.org/wiki/Lagging_indicator http://en.wikipedia.org/wiki/Lagging_indicator

jamesbressi 17y ago
A very good point that I was going to include in my comment on this article and left out in an effort to stay on my topic about the flaws of the calculation. To support your point, I think it is more well known after this last year that "recession indicators" are lagging and we are typically in a recession a good 3-6 months before it is declared and the reverse is true for when we get out of it. Thanks for bringing this up.
jswinghammer 17y ago
U-6 is now at 17.5%. If unemployment continues to climb all next year is it still lagging or just an indication that our economy is a mess? I'm voting total mess.
fnid 17y ago
An extended period of unemployment will be very bad for a society based on consumption. Consumer spending accounts for two-thirds of the US economy and consumers are a dying species. I see few signs that we are in recovery. What I see is boredom with gloom. People want the economy to be in recovery, so they find reasons to believe it so.
- bh23ha 17y ago
  That's true, we may not be in a recovery but in a restructuring. Restructuring an economy is much more painful then a run of the mill recession. However if we are indeed restructuring to be less of a consumer nation and more of a manufacturing and export nation again, in the long run that's a good thing. Or to put it in other words, you can't run both trade and fiscal deficits at the same time for ever. Things would not have gone this far if the US didn't have such a huge fiscal deficit, which allowed China to depress their currency by buying US debt. If it had not been for China buying so much US debt, the dollar would have slowly fallen against the yuan over the years, and the yuan would have slowly risen. And if oil wasn't traded in US dollars, we would have invested more in insulation and alternatives much sooner. Now this is all finally happening and it is painful, but unavoidable.
Agathos 17y ago
Did it lag so much on the way down?
- SamAtt 17y ago
  No, but it had been going down for a while before that so I'm not sure it counts (http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=LNS14000000 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_i...) The beginning of this is generally considered to be the Collapse of Lehman brothers and the dissolutions of Bear Stearns and Merril Lynch which all happened in Sept. 2008. The Unemployment rate in Aug. '08 was 6.2% but that was already up from 4.7% in Aug. '07. So actually it was a predicting factor on the way down.
  - enjo 17y ago
    The collapse of Lehman brothers and Stearns was itself a lagging indicator. The issues had already been pressing all the way back to 2007 (see 'housing bubble'). We had clear signs of a stalling economy well before these companies collapsed. The signal these collapses sent, really, was that this was going to be a deeper recession than we had originally hoped. I don't claim to understand all of this, but my wife (PhD economics) first started sending me warnings about serious economic issues in late 2007.
  - sophacles 17y ago
    Remember in 2008 when we got tax rebates from Bush? Those were to get the economy going, based on the fact that we were entering a recession. It was a big worry. Unemployment at that point was < 5% too. In fact, I bought my house that summer, when housing prices were on the way down, but before the credit crunch made it impossible to get credit. We were already in a recession then, according to the news at the time anyway. The collapse of LB and BS et al, is something different, those were a big deal panic, associated with, but not the start of, the recession. They were the worsening of it. The actually interesting thing here is that we were told about the recession we were in for quite a while before the collapses, then we were told how we just got into a recession because of the collapses. Or have we always been at war with eastasia?
- 17y ago
skushch 17y ago
Historically, unemployment peaks after the official recession has ended. http://media-files.gather.com/images/d637/d49/d746/d224/d96/f3/full.jpg http://media-files.gather.com/images/d637/d49/d746/d224/d96/...

by Femur 17y ago

jamesbressi 17y ago

A very good point that I was going to include in my comment on this article and left out in an effort to stay on my topic about the flaws of the calculation. To support your point, I think it is more well known after this last year that "recession indicators" are lagging and we are typically in a recession a good 3-6 months before it is declared and the reverse is true for when we get out of it. Thanks for bringing this up.

jswinghammer 17y ago

U-6 is now at 17.5%. If unemployment continues to climb all next year is it still lagging or just an indication that our economy is a mess? I'm voting total mess.

fnid 17y ago

An extended period of unemployment will be very bad for a society based on consumption. Consumer spending accounts for two-thirds of the US economy and consumers are a dying species. I see few signs that we are in recovery. What I see is boredom with gloom. People want the economy to be in recovery, so they find reasons to believe it so.

bh23ha 17y ago
That's true, we may not be in a recovery but in a restructuring. Restructuring an economy is much more painful then a run of the mill recession. However if we are indeed restructuring to be less of a consumer nation and more of a manufacturing and export nation again, in the long run that's a good thing. Or to put it in other words, you can't run both trade and fiscal deficits at the same time for ever. Things would not have gone this far if the US didn't have such a huge fiscal deficit, which allowed China to depress their currency by buying US debt. If it had not been for China buying so much US debt, the dollar would have slowly fallen against the yuan over the years, and the yuan would have slowly risen. And if oil wasn't traded in US dollars, we would have invested more in insulation and alternatives much sooner. Now this is all finally happening and it is painful, but unavoidable.

Agathos 17y ago

Did it lag so much on the way down?

SamAtt 17y ago
No, but it had been going down for a while before that so I'm not sure it counts (http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=LNS14000000 http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_i...) The beginning of this is generally considered to be the Collapse of Lehman brothers and the dissolutions of Bear Stearns and Merril Lynch which all happened in Sept. 2008. The Unemployment rate in Aug. '08 was 6.2% but that was already up from 4.7% in Aug. '07. So actually it was a predicting factor on the way down.
- enjo 17y ago
  The collapse of Lehman brothers and Stearns was itself a lagging indicator. The issues had already been pressing all the way back to 2007 (see 'housing bubble'). We had clear signs of a stalling economy well before these companies collapsed. The signal these collapses sent, really, was that this was going to be a deeper recession than we had originally hoped. I don't claim to understand all of this, but my wife (PhD economics) first started sending me warnings about serious economic issues in late 2007.
- sophacles 17y ago
  Remember in 2008 when we got tax rebates from Bush? Those were to get the economy going, based on the fact that we were entering a recession. It was a big worry. Unemployment at that point was < 5% too. In fact, I bought my house that summer, when housing prices were on the way down, but before the credit crunch made it impossible to get credit. We were already in a recession then, according to the news at the time anyway. The collapse of LB and BS et al, is something different, those were a big deal panic, associated with, but not the start of, the recession. They were the worsening of it. The actually interesting thing here is that we were told about the recession we were in for quite a while before the collapses, then we were told how we just got into a recession because of the collapses. Or have we always been at war with eastasia?
17y ago

skushch 17y ago

Historically, unemployment peaks after the official recession has ended. http://media-files.gather.com/images/d637/d49/d746/d224/d96/f3/full.jpg http://media-files.gather.com/images/d637/d49/d746/d224/d96/...