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Opinion: Best Stretch of Economic Numbers in Years Means We're Getting Back on Track

Friday, November 04, 2011 - 11:39 AM

hiring, jobs, business, economy (TheTruthAbout/flickr)

A whole slew of positive numbers from Gallup over the last few weeks show that the economy appears to be continuing to slowly improve.

Headlines from all over are reporting the positive bump that the economy is likely to get during the holiday season, and I'm sure retailers were heartened with the news that Gallup says that Americans are planning on spending about the same as they did last year. Other outlets have been reporting an uptick in consumer spending, the main driver of our economy.

Although it is much lower than it was last year, it appears that consumer confidence has hit bottom, having bounced around between 51 percent and 46 percent since it plummeted in July. Now, lets hope Greece doesn't implode and test the strength of this slow, but steady, recovery, and that people are slowly beginning to see past the hyperbolic headlines that suggest the likelihood for a double dip recession is far higher than economists think it is.

The most positive numbers come from unemployment. Gallup's numbers are more rosy than the official government numbers, having showed a drop from nine percent to 8.3 percent in just the last couple months, as well as a similar drop in the number of underemployed part-time workers who are looking for full-time jobs. These numbers are trending downward, and the last two weeks' rolling 30-day averages are the lowest Gallup has measured. Gallup measures unemployment differently than the U.S. Bureau of Labor Statistics, but the downward tick will hopefully be seen in the government's numbers.

Confidence, planned holiday spending, consumer spending in general and even unemployment in the long run are all side effects of job creation though. Perhaps the best economic news out of everything we've heard of late can be summed up from this Gallup chart:

Although not as good as we saw in June, numbers being brought in from all around suggest more employers are hiring, while less are planning on firing. The index above is derived from polling that shows the difference between employees who "say their companies are letting workers go and reducing the size of their workforces decreased", which in October was 32 percent on the hiring side, vs 18 percent on the firing side. The hiring number has been in the low thirties for several months now, the best stretch our economy has seen since just before the economy went into a tailspin in late 2008.

That last sentence is worth repeating. For a while it seemed like we were resigning ourselves to being satisfied when the economy just wasn't getting worse, or was getting worse slower. Now we're looking at actual improvements, and the numbers we're focusing on is whether job growth can keep pace with population growth and people who had previously given up on looking for work coming back into the workforce. They may not be looking skyward, but things are most certainly looking up, and show no indication of turning back around.

Solomon Kleinsmith is a former nonprofit worker, serial social entrepreneur and strident centrist independent blogger from Omaha, Nebraska. His website, Rise of the Center, is the fastest growing blog targeting centrist independents and moderates.

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Comments [3]

JJ-

You've asked several questions. I'll try to address them.

'And what incents an individual to change?
When the pain of staying the 'same' is greater than the pain of changing.'

I'm inclined to agree with you on this, with one comment. The perception of the pain of changing may not be the same as the actual pain. There's no pain involved in taking a pill which will alleviate a discomfort ... but try convincing some children to do it.

Perceptions are important motivators of human behavior. Adjusting them so that they mirror reality can be difficult.

'As I see it, there are two problems. One is short-term...How does the government induce hiring (increase aggregate demand) when corporate earnings and consumer spending seem to be already on a gentle increase. They are making enough. Why take risks and hire now?'

I feel that the solution to this can be found through the reluctance of businesses to stand by and let orders pile up unfilled. The solution to the Gordian knot you propose lies in generating orders. Various pathways exist. Many of them require action by the government.

'And long-term, how do we balance the government's revenue and against its expenses?'

Here you've hit upon the weakness of Keynesian economics. Contrary to popular buzz phrases and put-downs, Keynes was right in noting that government can* function as an effective governor [a fortuitous similarity of words, don't you think?] of economic activity. It can supply stimulus [as expenditures] during downturns. The problem obtains in retrieving the money when the economy recovers. In our [US] democratically-elected government, there's little incentive [read: electoral advantage] for our legislators in doing this.

* Operative word.

Nov. 07 2011 10:35 AM
Jack Jackson from Central New Jersey

T34 -

And what incents an individual to change? When the pain of staying the 'same' is greater than the pain of changing. As I see it, there are two problems. One is short-term...How does the government induce hiring (increase aggregate demand) when corporate earnings and consumer spending seem to be already on a gentle increase. They are making enough. Why take risks and hire now? And long-term, how do we balance the government's revenue and against its expenses?

Nov. 07 2011 07:44 AM
Torus34 from Tottenville

Sir;

That this recession is demonstrably different from those of the past 60 years is shown by the unemployment data. We are a very long way from returning to the level of job availability which obtained just before it began its descent. The return slope is shallow and remarkably consistent over a period of some 20 months. A graph can be found at:

http://www.crgraphs.com/p/employment.html

One characteristic of societies, well-studied, is their inertial resistance to change. When change is forced upon them, they’ll eventually adapt to it ... and then carry it forward. The difficulty in ‘repatriating’ East Germans after years of Soviet occupation will serve here*.

The cautionary message is this: unemployment requires people to change their attitudes and their lifestyles. The longer it goes on, the more difficult it will be for them to change back to the way things were. This has implications for the economy in terms of changed consumer buying habits.

* You might ponder with profit upon the job ahead for South Korea should the North Korean government collapse.

Nov. 05 2011 11:31 AM

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