I read an economist comment that today’s report of only 69,000 net new jobs created in May is “what a jobless recovery looks like.” No, this is what an economy tipped on the edge of a new recession looks like.
China and India are slowing. Much of the eurozone is already in a recession and on the verge of a breakup and breakdown that will make Lehman Brothers look like a community bank failure. And the U.S. economy is rapidly decelerating. The job growth was half what’s needed just to keep up with the natural growth of the labor force, much less find new work for 12.7 million unemployed. Worse, all the new jobs came from part-time positions. With the decline in labor-force participation, the unemployment rate badly underestimates joblessness. Average hours and weekly wages fell. The share of people unemployed for longer than six months grew. (Here’s a quick briefing in charts).
In Europe, leadership is lacking; the big banks are in control and seem happy to take the continent down. The Federal Reserve has consigned itself to the sidelines. Unlike the Reagan administration, which expanded federal jobs amid the 1981 recession and after, the Obama White House has been cutting them. The demand hole mostly behind the jobs crisis was never adequately addressed. Yet no new stimulus will be forthcoming from a gridlocked, election-year D.C. Unless things get really scary. And they just might.
Read on for the best links of the week and the haiku:
This Week’s Links:
- Jamie Dimon and the fall of nations || Simon Johnson/NYT Economix
- Smart taxes || Project Syndicate
- Why do people dislike inflation? || Noahpinion
- What is shadow banking? || Atlanta Fed
- Fear and ‘a massive failure of our economic institutions’ || Brad DeLong
- Markets and morals || Nick Kristof/NYT
- Is environmentalism bad for fighting climate change || The Berkeley Blog
- Obama and the economy: Crunch time || The New Yorker
- The case against tax breaks for private equity || Triple Crisis
Today’s Econ Haiku:
Law of the jungle?
Big bankers in the jungle
Would be a food source