For real? We're not economists, but this just seems a little too good to be true.
Just yesterday, the Globe ran a feature article about how the clock is about to run out on many people's unemployment benefits and about how difficult it is for many of them to find a job.
"The Globe has been writing about Massachusetts residents who have relied on these [unemployment benefit] extensions, and reinterviewing some yesterday underscored how bad the labor market is. Nearly all were still looking for work," said the Globe story.
Also yesterday, State Street announced that it started a round of 400 layoffs here in Massachusetts. And they're just the latest example.
Does this AP headline today somehow suggest that things have changed overnight?
We are wary of economists and government officials who seem so eager to say the economy is on an upswing. It's easy to play fast and loose with economic data, especially unemployment numbers.
Yes, it's indisputably great news if the number of first-time filers for unemployment drops. But it's not necessarily a signal of a turnaround. There's only one number that makes any difference - the unemployment rate, which nationally remains unchanged at over nine percent. Even in the AP story, economists say they don't expect those numbers to improve anytime soon.
"The economy would need to consistently add 200,000 to 300,000 a month to make a noticeable dent in the unemployment rate.... It could take until near the end of this decade to drop the unemployment rate to a more normal 6 percent," says the AP.
Check out the stories yourself. What do you think? Please post us a comment:
ASSOCIATED PRESS 12/2/2010
http://www.boston.com/business/articles/2010/12/02/two_year_low_for_layoffs_hints_at_hiring_pickup/?p1=News_links
BOSTON GLOBE 12/1/2010
http://www.boston.com/business/articles/2010/12/01/jobless_benefits_slated_to_end_for_many_on_christmas_day/?p1=News_links
The AP and Globe stories are not wrong nor are they mutually exclusive -- though the AP story kinda misses the point, I think, that what we're really seeing is a bottoming out and not a picking up.
ReplyDeleteBoth stories say that we're going to be stuck with long term unemployment. We're going to have fits and starts -- hiring here, layoffs there -- that Dems say are signs of recovery on the one hand, Republicans say are signs of disaster on the other.
The real question is: Given the signs we've hit bottom, do consumers have enough spending power to force companies to hire? Or can they get by without adding to payroll significantly and still turn nice profits as we've been seeing the last couple of quarters?
That's one reason why it would probably be a bad idea to stop jobless benefits and end the Bush tax cuts to the middle class right now, at the very least. We need all the money flowing into the economy as we can get.
BTW, the Globe-written headline for the AP story is terrible.
ReplyDeleteA low in layoffs doesn't hint at a hiring pickup. That I'll agree with!
Extending unemployment benefits may be a crutch for some. While I think we should keep trying to help the chronic unemployed, some are just not seeking work because the unemployment dole is good. I think we need a process whereby the benefits start to decline as you get further into the program...say a graduated reduction, but then let the benefits run even longer. We need a better incentive to get people to take jobs that are out there. We also need to tighten the reviews of unemployed to see that they are actually looking for work, or, if not, then they need to get some sort of credit for community service to continue to qualify for benefits. I know of people who do nothing but just collect, for months on end.
ReplyDelete