Tag: Neil Irwin

Unemployment rate truthers department

Posted on by Brad DeLong

The very sharp Kevin Drum gets it largely right:

Kevin Drum: U6 Is Now the Last Refuge of Scoundrels: “Tuesday Donald Trump repeated his fatuous nonsense about the real unemployment rate being 42 percent….

…Then Neil Irwin of the New York Times inexplicably decided to opine that ‘he’s not entirely wrong’ because there are lots of different unemployment rates. Et tu, Neil?

Bill O’Reilly picked up on this theme today, with guest Lou Dobbs casually declaring that unemployment is ‘actually’ 10 percent… [and] Bernie Sanders… ‘Who denies that real unemployment today, including those who have given up looking for work and are working part-time is close to 10 percent?’… The 10 percent number is colorably legitimate… U6… unemployment plus folks who have been forced to work part time plus workers who are ‘marginally attached’….

But you can’t just toss this out as a slippery way of making the economy seem like it’s in horrible shape…. What’s normal in an expanding economy is about 8.9 percent…. The US economy is not a house afire…. I’m getting pretty tired of the endlessly deceitful attempts to make it seem as if we’re all but on the edge of economic Armageddon, and the last thing we need is for liberals to sign up for this flimflam too. It’s good politics, I guess, but it’s also a lie.

There are two arguments you can make that are not lies but are, rather, coherent arguments that are more likely than not true:

  1. That the US labor market performs abysmally at the low-wage end essentially all the time, as evidenced by U6.
  2. that the unemployment rate is a misleading indicator today because of the long-run disruptions to the labor market occasioned by what we must soon start calling “The Longer Depression”, as evidenced by the divergence in the behavior of unemployment and the employment-to-population ratio. And, no, this divergence is not primarily due to population aging.

Thus I think the Sanders conclusion–that the U.S. labor market is not performing all that well right now–is more likely than not to be correct. I object to the road he claims to reach it by. And I join Kevin Drum in doubly objecting to Trump and Irwin.

Must-Read Pre-Liftoff Lollapalooza: Neil Irwin: Yellen Blinks on Interest Rates

Posted on by Brad DeLong

Must-Read Pre-Liftoff Lollapalooza: From last September: the very sharp Neil Irwin on Yellen’s blinking:

Neil Irwin: Yellen Blinks on Interest Rates: “The cost of waiting… to ensure that the economy continues to perform the way… models predict…

… [is] low…. The challenge… is that we could well get through the end of 2015 without the open questions that triggered the September delay being resolved…. There is no assurance that these key questions… whether inflation is finally… poised to rise, and whether economic softness in… emerging markets will crimp… growth… will be resolved by December or even by the spring…. Inflation continues coming in less than forecast, and the global economy looks perilous….

As… Stanley Fischer said… if the Fed waits until it is absolutely certain it is time to raise rates, it will probably be too late…. The decision to hold off on rate increases this week suggests Ms. Yellen and the Fed want a little more evidence that the economy is on the mend, but they may find themselves back in the same spot before they know it.

But, as Stanley Fischer did not say, if the Fed raises interest rates when the odds are still only 60-40 that it should, it is not probably but definitely raising them too early.