Cartoon of the day

Special mention

Cartoon of the day

Special mention

Cartoon of the day

Special mention

 

Chart of the day

source

Société Générale expects the unemployment rate in Spain, which currently stands at a record-breaking 27.2 percent, to reach 30 per cent in 2015.

Cartoon of the day

Special mention

Protest of the day

Thousands of people are protesting in Rome today against austerity policies and high unemployment.

Cartoon of the day

Special mention

 

Cartoon of the day

Special mention

Austerity—American style

More times than I can count, I have attempted to explain to students, colleagues, and friends that we’re not on the “road to Greece.”

That’s what they believe: that, because of fiscal deficits and growing public debt, the United States is quickly moving in the direction of Greece. And that disaster awaits.

Well, no, as I’ve explained on this blog many times before. The problem is not growing debt but, instead, the imposition of austerity policies. Austerity is a term we often use to describe the situation in Europe but rarely in the United States. And it’s not clear why. Perhaps because of the Obama administration’s half-hearted stimulus measures. Or because of the oft-cited but barely perceptible recovery.

In any case, there’s a quick and easy way to calculate the effects of austerity in the United States: figure out the average number of government jobs that were created after every recession in the United States going back to 1970 and then add to that the number of government jobs that have been destroyed during the current recovery.

That’s exactly what Michael Greenstone and Adam Looney do. The number they come up with is 2.2 million.

In the forty-six months following the end of the five other recent recessions, government employment increased by an average of 1.7 million. During the current recovery, however, government employment has decreased by more than 500,000. Put together, the policy differences have led to 2.2 million fewer jobs today. Such a large contraction of the public-sector during a recovery is unprecedented in recent American economic history.

Cutting jobs during a period of already high unemployment is austerity—American style.

Chart of the day

source

According to the Bureau of Labor Statistics, total nonfarm payroll employment rose by 165,000 in April (based on an increase of 176,00o private sector jobs and a decline of 11,000 government jobs), and the official unemployment rate was little changed at 7.5 percent.

But before the corks start popping, let’s remember that, almost four years into the “recovery,” 11.6 million people remain officially unemployed in the United States. And when we consider both workers marginally attached to the labor force and those who are working part-time for economic reasons, the total number of unemployed and underemployed Americans is 21.9 million, which leaves the broader (U6) unemployment rate little changed at 13.9 percent.

That’s what the employment situation looks like in the midst of the Second Great Depression.