>From the LA Times: >The jobless recovery, nearly 2 1/2 years old, has gone >on too long to be called an anomaly or a blip, Zandi >said. "Even if the economy finds its way and creates >jobs," he added, this strange time will be remembered >as "part of economic lore."
>If the past pattern of growth no longer holds, the >implications are enormous. Regression to the mean. I suspect that the real anomaly was the low unemployment rate of 1999-2000 and the "jobless recovery" has been simply working off a backlog of what might be called "fictitious employment." In other words, the "goldilocks economy" was a bleached blonde and now the mousy brown roots are growing out. On the surface, things now are not quite as bad as they look-- it's just that they were too good to be true then. Deep down, though, things are worse than they appear. What drove the jobs bubble was an unprecedented asset inflation, the residual of which remains embedded in house prices. Paradoxically, poor job growth may be the only thing sustaining the recovery. Here's why: rapid job growth and, more importantly, the consequent income growth would increase inflationary pressures leading to the raising of interest rates and, ultimately, the bursting of the housing bubble. The other paradox is that poor job growth is likely keeping the unemployment rate lower than it otherwise would be. A hiring boom would swell the labour force. Interesting times. Tom Walker 604 255 4812
