We try to deal with this measurement issue by creating a price index – an index that tracks the changes in shopping list of goods over time.  But any price index is a just a subset of all the prices.  Even the Billion Price Project index at MIT admittedly misses most services and lots of consumer goods that aren’t available online.  Price indices are very imperfect beasts.  They have many faults, not the least of them being that they often tend to be volatile in nature.  Since we’re looking for an estimate of inflation which means sustained increases, we need to massage the data further by creating some kind of “core inflation” measure or “trimmed means” type price index.  I’ll explain those some other time.

What prompted today’s post is an article in Bloomberg and a post by Krugman about it.  Together they illustrate one of the reasons so many people want to believe we have greater inflation than we really do.  Companies like to disguise price changes.  They don’t want to be known that prices could be cut in response to demand. Example: auto company offers $2000 rebate on $20,000 car but won’t cut price by 10%, or a firm offers a “value meal”, or they offer a freebie bundled product.  Similarly they often disguise price increases by reducing sizes or portions or by changing the financing.  From Krugman:

Good article in Bloomberg:

Procter & Gamble Co.’s failure to raise the price of Cascade dishwashing soap shows why investors are buying Treasuries at the lowest yields in history, giving the Federal Reserve more scope to boost the economy.

The world’s largest consumer-products company rolled back prices after an 8 percent increase lost the firm 7 percentage points of market share. Kimberly-Clark Corp. (KMB) started offering coupons on Huggies after resistance to the diapers’ cost. Darden Restaurants Inc. (DRI) raised prices at less than the inflation rate as patrons order more of Olive Garden’s discounted stuffed rigatoni than it anticipated.

This is basic economics; prices tend to fall, or at least slow their rise, when there is vast excess capacity and weak demand.

As both the article and Krugman’s excerpt show, we’re closer to deflation than most people realize.  They don’t see the failed attempts to raise prices.  They don’t see the shifts in portions or increase in coupons that reduce effective prices.  What they do see and remember is the $.50 increase in a loaf of bread or the $.70 increase in a gallon of gas.  But even with the gas, they selectively remember the $.70 price increase in summer, but forget the $.75 price drop in autumn.  Inflation and deflation are tricky things to measure.

Now I’ll offer one pre-emptive comment.  Critics of the arguments McWilliams makes often claim that either government spending isn’t really effective, that somehow only private investment spending will stimulate an economy.  Or, the critics claim that any resources the government puts into use through spending actually detract from the economy by denying those resources to some supposedly better, privately chosen use. Both of these criticism fail.  We are clearly discussing a situation in which there are excess, unused economic resources in the economy.  In plain language:  there’s high unemployment and people are out of work.  The criticisms are all based on an idea called “crowding out”.  For crowding out to occur, the economy must be at full employment – the opposite of being in a recession.

Another reason for changing is that WordPress.com (the host for the blog) is really pushing it.  The old theme isn’t being updated.  We’ll just have to see if I get the spacing on the graphs right.

The new them also makes it easy for me to add short “Aside” posts.  I’m going to try to adding some of these usually as links to articles I find interesting but don’t have time to write a full commentary.

Anyway, I’m interested in any comments on either the theme or other ideas to make the blog more readable or useful (short of recommendations that I replace the author!).

jim

First, let’s make no mistake the “recovery” from this last recession has been very, very weak.  Private sector growth has been anemic at best. In employment, the recovery has largely been missing in action.  Today, 31 months after the supposed end of the recession, we have only recovered 1/3 of the jobs we lost during the 19 months of recession. As I’ve mentioned before, we are well on our way to a lost decade or more before we regain full employment.  A huge part of the weak recovery has been slow and at times negative growth in private sector employment.

But a bigger problem has been government.  Government has a three-fold impact on employment during a recovery.  Government spending by itself will create employment in the private sector.  For example, if the government chooses to react to a recession and high cyclical unemployment by increasing it’s spending it can create new private sector employment. This would be a classical stimulus program.  The government could embark on highway, bridge, or school construction.  The spending with construction contractors causes those contractors to hire employees. That’s direct private sector employment through government spending.  As long as there are significant unemployed resources (workers), such government spending will increase employment.  Arguments about crowding out do not apply when large unemployed resources exist.

The increased government spending then has a second effect, a “multiplier” effect.  The multiplier effect reflects the idea that workers who got jobs in the initial round of spending themselves spend their incomes and create more demand for more goods. This increased demand for goods results in even more employment.  In other words, the construction workers hired to build the new bridges or schools spend their paychecks.  The firms selling those workers goods then have to hire in order to produce the goods/services the construction workers want.  The exact size of the multiplier effect is uncertain and subject to dispute depending on the econometric methods used to measure it.  However, it’s clear that as long there were substantial unemployed resources to begin with, there is a positive multiplier effect on private employment from increased government spending.

But what I want to draw attention to today is direct employment effect of government.  One of the greatest reasons why we have had a very slow employment recovery is because government in the U.S. has been aggressively cutting jobs for the last 2-3 years. Conservative critics of government have been partially right. Government has been part of the problem – but not in the way they think.  Let’s look at total government employment in recent years:

The data series can be a bit tough to read because government employment has a very seasonal pattern to it.  That’s shows up by the regular up-and-down pattern each year.  Let’s focus on the trend, smoothing out the ups-and-downs. There’s four patterns. Government employment was essentially flat in 2002 and 2003.  Then a period of employment growth in government began running form 2004 through early 2008.  During the recession itself government employment was essentially flat.  Since 2009, though, government employment has been declining.  Cutting government employment is contractionary.  It directly reduces retail demand for goods and services by reducing the incomes of what were formerly government workers.

The pattern is a little clearer if we look at the data in a slightly different way.  The following graph, courtesy of Menzie Chinn at Econbrowser.com, shows the a smoothed trend.  It does this by plotting the 12-month change in government employment (000′s of jobs) by month.

While private employment continues to grow, government employment continues to fall; the decline is most pronounced at the state and local level (Wisconsin is a good example of the contractionary impact of such measures [1] [2]). However, civilian Federal government employment is also declining.

Figure 3: Twelve month change in government local employment (blue), in state employment (red), and government employment ex.-temporary Census workers (geen), 000’s, seasonally adjusted. NBER defined recession dates shaded gray. Source: BLS via FRED, NBER and 

One thing I particularly like about this graph is that it shows the relative contribution of federal, state, and local governments. What this graph shows is that before the recession (the grey zone), government was net hiring approximately 250,000 additional jobs per year. Of that, most was at the local level and some at the state. Very little was federal hiring.

Since the end of the recession in June 2009, government has been firing more workers than it hires.  It has been reducing employment.  The federal government, contrary to popular belief, began shrinking (in employment terms).  State governments were largely able to hold the line on employment until early 2011.  Then state governments began reducing employment in rapidly increasing numbers.  But the big impact again came from local governments.  For the last 30 months, they have been laying off large numbers of workers. The reductions have slowed in 2011, but they are still cutting workers at nearly the same rate that they added them in 2007 – hundreds of thousands of lost jobs each year.

There is a temptation among politicians and commenters to think of government employees as representing largely just some bureaucrats mindlessly pushing paper in large bland office buildings.  That is not true.  At the federal level, most federal government employees are either soldiers or part of some security forces (TSA, FBI, ICE, etc).  At the local level, the vast majority of local government employees are police, fire and emergency workers, and teachers. Reductions in local government employment directly translate into fewer services and less education for children.

Why are state and local governments cutting employment?  Simple.  It’s reduced taxes combined with balanced budget requirements.  State and local governments, unlike a sovereign national government, must balance their budgets.  They are budget constrained.  The recession and weak recovery have hit income and sales taxes hard.  Even more significant is that the collapse of home prices a few years ago has translated into lower property tax collections.  Either way, state and local governments have been pinched.  The response has been to reduce government employment – fire police, firefighters, and teachers.

Paul Krugman notes the how this reduction in state and local government revenue has translated into reduced spending, which in turn has translated into lower employment.  Despite the federal government embarking on a stimulus spending program in early 2009, a program which is over and done with now, it was not large enough to offset the reduction in state and local spending.

if you look at what’s being cut, it’s heavily focused on investment:

That is, we’re sacrificing the future as well as the present. Oh, and the cuts that aren’t falling on investment in physical capital are largely falling on human capital, that is, education.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster.

On this point, I have to agree with Paul.  Unless we reverse course and do it strongly, we are flirting with a long-term disaster.  We are under-investing in our future.

Today the Bureau of Labor Statistics (BLS) released the January 2012 employment data.   The unemployment rate has declined again. It is now down to 8.3%.  The number of net new jobs was pleasantly above the consensus expectations.  Calculated Risk quotes the BLS for us:

From the BLS:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month. … Private-sector employment grew by 257,000 …

The change in total nonfarm payroll employment for November was revised from +100,000 to +157,000, and the change for December was revised from +200,000 to +203,000..

So what accounts for the increase?  As the BLS states, large gains were widespread – services, hospitality/leisure, and manufacturing. But overall positive effect compared to what was expected and to what we’ve grown accustomed is strongly due to two factors we didn’t see.  We didn’t see reductions in government employment dragging down the total numbers. I’ll have another post on that later today.  The other effect is that the weather was nice – the exact opposite of last January (2011) when the weather adversely affected the numbers.

Nonetheless, a solid increase is a solid increase and something to feel good about.  But in keeping with my skeptical self, it’s also very important to not declare victory yet. We’re not out of the woods by a long shot.  I can think of four reasons right away.

First, we’ve been here before.  As Calculated Risk explains,

Job growth started picking up early last year, but then the economy was hit by a series of shocks (oil price increase, tsunami in Japan, debt ceiling debate) – and now it appears job growth is picking up again.

Click on graph for larger image.

This is the third or fourth time in this “recovery” that it appeared employment would finally be accelerating into the kind of “V-shaped” recovery we really need.  Each time before, something (often politics) interfered.

A second reason for caution involves both the employment-population ratio and the labor-force-participation rate.  Both rates are at lows we haven’t seen for 30 some years.  Both ratios indicate that large numbers of people have left the labor force and simply aren’t looking for work.  If they change their minds and start to look for work, then the unemployment rate could easily begin rising again as the denominator of the unemployment rate rises faster than employment (the numerator).

A third reason is that there are still too many unknowns on the horizon and most of them carry downside risk.  The UK and the Eurozone continue their self-inflicted austerity march into recession and flirtation with banking and default crises. House prices have continued to decline, threatening the ability of households to sustain increases in consumer spending. And there’s always the completely unknown.  Twelve months ago nobody would have considered the risk to economic growth from an earthquake that created a nuclear disaster.

The fourth reason to be cautious is the mismatch between the positive increase in employment we’ve just seen and the size of the employment gap we are facing.  This is the graph we need to keep in mind.  Again from Calculated Risk:

… third graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession – much worst than any other post-war recession – and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

We are far, far from leaving this employment depression behind.  Dean Baker of the Center for Economic Policy and Research cautioned today that, while it appears that we are on stronger path, it is still too weak.  January’s numbers seem strong only because we have grown accustomed to such abysmal recovery for the last 2-3 years.  Even at the pace January showed, it will still be 2020 before we regain full employment.  That’s 8 years away – 100 months.  Government and central banks easily lose focus on growth in a period that long.  Congress and the President, while returning to jobs now in this election season, have already shown that they couldn’t sustain a focus on job growth last year as they turned to imaginary concerns over government debt instead.

We have a long way to go.  We should be running but we’re only walking. Nonetheless, at least we’re walking forward now instead of backwards they way we were in mid-2011.

Does anybody understand debt?  Some – but not many.  Today’s post is less of my normal extended prose and more of an outline.  I’ve been invited to speak at some writing classes here at the college and this is intended to serve as my speaking notes.

Background: What have you heard?

Krugman in New York Times

Harvey in Forbes

Background Info on U.S. National Debt

Brazelton:  The US CANNOT Go Broke

Numbers, Metaphors, and Stories

Get the terms right

Three Bad Metaphors

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 Govt Debt is NOT a Burden on future generations

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Private Debt is NOT like Government Debt

Federal Reserve Breakdown of Household Debt

So…

Are Gov. Deficits Necessary?

I’m angry because the SOPA/PIPA bills in Congress are nothing more attempts by a privileged few large corporations who want to reap even greater profits at everybody else’s expense.  Rather than engage in the difficult and creative work of creating products and services that people want at prices that people want to pay, these corporations want to sit back and earn monopoly profits using monopolies granted by Congress. They make a big deal of the supposed “losses” to “piracy”.  But their numbers are totally bogus. Their numbers for losses are based on an assumption that demand curves for music, entertainment, movies, etc don’t slope downward.   I’ll comment on that and explain it more in a future post.  These publishers don’t even want to be bothered to engage in protecting their interests themselves.  A major portion of the SOPA/PIPA bills involve clauses that would require other people, y0u and me, to do the enforcement that has historically always been the responsibility of the copyright owner.  If these corporations/publishers don’t think you or I or Google or whoever is adequately protecting their profits, then they want the power to shut us down summarily without having to even prove anything in court.

I’m angry because if SOPA/PIPA succeed, even if in an altered form, I will at a minimum have to stop accepting comments on this blog.  I’ll have to live the likelihood that should I write anything to which one of these corporations takes offense, then they can and very likely will be able to shut down this site permanently.  No recourse in court. They won’t even have to prove they own any copyright they allege is infringed. Most likely I will have change my teaching also. My online teaching may become untenable.  It’s not because I infringe on anybody’s copyrights.  It’s because these powers in SOPA/PIPA will be abused.

I’m angry because the major publishers of textbooks (McGraw-Hill, Cengage, Pearson, Macmillan, some others) have all publicly supported these bills. They’ve funded the lobbying that created these anti-free speech bills.  Why? Because they want a monopoly on the distribution of knowledge in higher education.  These two bills would grant the power to these publishers to shut down open education resources, shut down professors that want to share material the professors have written, and shut down any collaborative learning site if they take offense to it.  The result will be higher costs for students, less knowledge shared, and less learning. But it will mean these same publishers will be able to continue to make profits without having to adapt to new technology or having to actually improve their products or re-invent their business models.

I’m angry because in the subject I teach, I regularly get sales reps from these big publishers pushing “solutions” (read textbooks w/ software that mean the book can’t be resold) that cost easily $200 or more.  That’s almost as much as the tuition for the course itself.  A couple of these big publishers have even adopted a page from the pharmaceutical industry.  I’ve been offered (and refused) all-expense paid trips to 5-star resort hotels in Texas, South Carolina, and California for “conferences” on teaching – just like doctors who get bribed into prescribing expensive medicines the patient doesn’t need (happened to me 10 years ago).  these SOPA/PIPA bills are just an attempt to perpetuate the same corrupt ways of doing business.  In economics, we have a term for it. It’s called rent-seeking.  It’s the opposite of doing productive activity.  I have now instituted a policy of refusing to talk with these reps.  From henceforth, reps from any firm who publicly supports SOPA/PIPA is not welcome in my office.  I will not spec any book for any class from them. I call on all other professors in higher education to do so also.  We either stand on the side of learning, sharing knowledge, and or students, or we stand with monopolists interested only in profits and closing minds.

I’m angry because the politicians, mostly Republicans, who claim to be all about stopping “job-killing regulations” are supporting and co-sponsoring these bills in large numbers.  Yet these two bills, SOPA/PIPA are draconian measures to regulate the Internet, the World Wide Web, and public communications and these two bills will kill jobs.  By the tens of thousands in the technology industry.  Jobs that the entertainment industry won’t replace.

I’m angry because freedom of speech, the freedom to converse, share ideas, to learn, to innovate, will end under these two bills.  If these bills become law, then make mistake, you and I will only be free to speak so long as some unnamed, unseen corporation decides to tolerate what we say.  The firms than enable us to talk without being face-to-face, the Googles, the Wikipedias, the Facebooks, the WordPresses, etc, will have inspect and limit what we say lest they find themselves banned and their funds cut off.  That’s not what the U.S. was supposed to be about.

I affirm they stand with the author of the Declaration of Independence, Thomas Jefferson, whose words are inscribed on the dome of his memorial in Washington, D.C.:

“…I have sworn upon the altar of god eternal hostility against every form of tyranny over the mind of man.” – Jefferson to Dr. Benjamin Rush, September 23, 1800

The labels are the work of ideologues and theorists.  Pure capitalism or socialism or communism exists only in the mathematical axioms of textbooks, the novels of Ayn Rand, or the writings of some political power grabber. Real economic systems are the creatures of politics, history, the available resources, culture, religion, and some economic theory.

Another lesson I try to impart is that while we might all want to improve economic conditions, how to do that effectively is also complex.  There are no silver bullets or universal magic solutions.  There are costs and benefits to any proposed policy or practice.  The key to progress is evaluating those costs and benefits wisely and making conscious decisions.

Last weekend I heard  a story on the This American Life radio.  It was called Mr. Daisey Goes to the Apple Factory.  It’s about a man who goes to visit the workers at Foxconn, the company that manufacturers Apple products in China.  It’s a long story, but it’s gripping and powerful.  It struck me that it also powerfully illustrates the two lessons I’m trying to teach in class:  economic systems aren’t that simple and making things better isn’t always obvious.

To listen for yourself, go to: This American Life #454 – Mr. Daisey and the Apple Factory. Here’s their summary:

Host Ira Glass speaks with an Apple device about its origin. (2 minutes)

• …

Mike Daisey performs an excerpt that was adapted for radio from his one-man show “The Agony and the Ecstasy of Steve Jobs.” A lifelong Apple superfan, Daisey sees some photos online from the inside of a factory that makes iPhones, starts to wonder about the people working there, and flies to China to meet them. His show restarts a run at New York’s Public Theater later this month. (39 minutes)

• …

What should we make of what Mike Daisey saw in China? Our staff did weeks of fact checking to corroborate Daisey’s findings. Ira talks with Ian Spaulding, founder and managing director of INFACT Global Partners, which goes into Chinese factories and helps them meet social responsibility standards set by Western companies (Apple’s Supplier Responsibility page is here), and with Nicholas Kristof, columnist for The New York Times who has reported in Asian factories. In the podcast and streaming versions of the program he also speaks with Debby Chan Sze Wan, a project manager at the advocacy group SACOM, Students and Scholars Against Corporate Misbehavior, based in Hong Kong. They’ve put out three reports investigating conditions at Foxconn (October 2010, May 2011, Sept 2011). Each report surveyed over 100 Foxconn workers, and they even had a researcher go undercover and take a job at the Shenzhen plant. (15 minutes)

I have been hesitant to embrace the recent positive data flow - once bitten, twice shy perhaps.  Something about the current dynamics that seems a little too familiar.  Indeed, I felt something of relief when FT Alphaville came to a similar conclusion in the waning days of 2011.  Cardiff Garcia reports on a Nomura research note that details a new bias in the seasonal adjustment process, noting:

Up next, writes Nomura, you can expect exaggeratedly strong readings from the Chicago PMI later this month and the next ISM manufacturing survey at the start of January.

I imagine it is premature to call the readings “exaggerated,” but both did surprise on the upside, as much data has of late.  Read the whole piece – it is worth the time.

Indeed, flirtations with either excessive optimism or excessive pessimism were not richly rewarded last year, as on average the economy simply edged upward in pretty unremarkable fashion:

It seems reasonable to expect the same in 2012, at least as a baseline – a slow “recovery” that is really more of an adjustment to what appears to be the economy’s new equilibrium path, one that is decisively subpar to the pre-recession trend.  I don’t believe that such an adjustment is necessary, as in my view it simply reflects a shortfall of aggregate demand.  That said, the longer the cyclical downturn grinds on, the more likely it is that we will indeed see a new equilibrium path.  A greater percentage of the cyclical unemployment will become structural unemployment or permanent shifts in the labor force participation rate.  In addition, investments will go unmade as firms hoard cash.  And, increasingly, policymakers will manage policy along the new equilibrium path, forgetting entirely the pre-recession path.

The gap in the above graph, the gap between the green trend line of what we’re capable of doing and the blue-red trend from Jan 2009 onward of we’re actually doing is the challenge.  We are slowly becoming an economy that simply cut-off 7% or so of our economy in 2008 and we aren’t recovering it.  Instead it increasingly appears that the 90-93% of the economy that survived, those of us still with good jobs, are simply going on our way leaving behind those who lost out a few years ago.

There are over 13 million unemployed workers. Over 5.6 million of them have been searching fruitlessly for a new job for more than 6 months.  These are the people who got kicked off the American economy bus some time ago.  Unfortunately, even at the recently improved rate of 150-200,000 new jobs per month, there won’t be any room on the bus for them again.  Instead, the bus is moving on and they are left behind.

This is new. This is not the normal pattern. In past recessions, public policy, both fiscal and monetary, was managed to restore full employment rapidly after a recession.  It didn’t always succeed but the effort was made.  Now it is not. Now we focus more on long-term debt issues and spending concerns.  Politicians run on platforms of fear of some future default or financial crisis. This despite the fact that the government is able to borrow at record low rates of interest.

We are on path to a “new normal”, a “normal” that says it’s OK to have millions of long-term unemployed who have no hope.  I don’t think I like the “new normal”.

To start things off, yesterday was the first Friday of the month which means, of course, the monthly report on employment, jobs, and the unemployment rate.  I’ll let Calculated Risk report the news and graph first:

December Employment Report: 200,000 Jobs, 8.5% Unemployment Rate

There were 200,000 payroll jobs added in December. This included 212,000 private sector jobs added, and 12,000 government jobs lost.

The following graph shows the employment population ratio, the participation rate, and the unemployment rate.

Click on graph for larger image.

The unemployment rate declined to 8.5% (red line).

The Labor Force Participation Rate was unchanged 64.0% in December (blue line). This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 58.5% in December (black line).

The good news then is that trend indicates we are creating net more jobs in the last few months than we have been doing for several years.  An unemployment rate of 8.5% is definitely a lot better than the 10% we had in 2009. And, the rate is coming down.  But we shouldn’t get too excited nor should politicians think  their work is done.  First off, although this is the strongest 3 month improvement in the rate we’ve seen since the start of the recession back in 2007, we have seen similar short trends of improvement that fizzle out. It’s always possible as some analysts have observed that the November-December numbers were driven by a surge in temporary hiring in the online retailing sector.  It’s possible that we’re only seeing  a temporary strengthening and that January and February will see a return to same stagnation we saw last summer.

Second, it’s always possible that Congress will do something incredibly stupid that dramatically cuts employment and aggregate demand immediately. A third, very serious risk is that Europe will continue to slide into government austerity-induced recession and possibly trigger a global financial crisis with the Euro.  A European slide will adversely affect our exports and depending on how severe it is, possibly reduce employment in U.S. exporting industries.  A Euro financial crisis would likely ripple back to big U.S. banks who could in turn cause problems here.

But the biggest reason that we shouldn’t be satisfied with these numbers is simple. This isn’t enough! An improvement of 200,000 net new jobs might be acceptable if we were already at full employment, but we’re not. We need to grow faster so we can put the millions of unemployed back to work.  Again back to Calculated Risk:

This graph shows the job losses from the start of the employment recession, in percentage terms aligned at maximum job losses.

This is the worst post WWII employment recession. However, as bad as this is, the Great Depression would be way off the chart. At the worst, employment fell a little over 6% during the recent employment recession – although the data is a little uncertain – employment probably fell by around 22% during the Great Depression.

Calculated Risk makes the point that the past few years haven’t been as severe as the Great Depression.  That’s true in the sense of how deep or severe the crisis has been.  But in terms of length, how long we go without full employment, we are clearly on a path to making this on par with the Great Depression.  The Great Depression in employment was essentially 11 years long.  Unemployment started rising in late 1929. It never fully recovered until the war spending took off in a big way in 1940-41. That’s eleven years. The current recession/depression/inadequate recovery started in late 2007. It’s at least 4 years old already.  The current pace of jobs addition puts us another 3 or so years until we recover all the jobs we lost.   So that’s a total of 7 plus years.

But as Paul Krugman points out, the population and labor force has been growing during the last 4 years.  To really reach full employment we need even more.

Let me give two back-of-the-envelope ways to think about how inadequate 200,000 jobs a month is.

First, note that there are still about 6 million fewer jobs than there were at the end of 2007 — and that we would normally have expected to have added around 5 million jobs over a four-year period. So we’re 11 million jobs down — and we need at least 100,000 jobs a month just to keep up with working-age population growth. Do the math, and you’ll see that it would take 9 or 10 years of growth at this rate to restore full employment.

Alternatively, note that during the Clinton years — all 8 of them — the economy added around 230,000 jobs a month. As it did that, the unemployment rate fell about 3 1/2 percentage points — which is about what we’d need from here to get back to something that felt like full employment. Again, this suggests that we’re looking at something like a decade-long haul to have full recovery.

So yes, this is better news than we’ve been having. But it’s still vastly inadequate.

So, yes I’m encouraged by the recent employment reports, but not very much.  I still hold to my position that when all is done and we look back on this period we’ll be referring to it as some sort of depression, not a “Great” one, but some sort of depression.