I look at U6 as well,but U1,U2,U3,U4,U5 all tell me if unemployment has gone up or down. I look at jobless claims because if they decrease than it may mean that business have stopped firing which is the first sigh that the unemployment rate is going to bottom out soon.
Or it could mean that more people have exhausted their unemployment benefits, no?
No offense, Blazencage, and I mean this completely as a joke, but…
Did Cass Sunstein put you up to this? [:P]
Jim Cramer graces us with his presence.
Buddy, the crises hasn’t even begun yet, and nominal GDP doesn’t excite anyone.
Stimulus is like putting fuel on the fire, all it does is postpone the day of reckoning.
This is a depression.
There is a caveat. Goldman Sachs predicted that the real growth rate, or “growth in demand”, would be nearer to 2%.
This is far from a depression.
Robert Higgs argues that U3 is the correct figure, and the figure that has always been used.
what do you mean by real growth?
Hate to do this, but I will
[quote Paul Krugman]
(http://krugman.blogs.nytimes.com/2010/01/16/blip/):
…the economists at Goldman Sachs are now predicting 5.8 percent growth in the fourth quarter. But they also say that the headline number will be highly misleading: two-thirds of the growth will be an inventory bounce, with final demand growing only 2 percent. In short, it will be a blip.
real as in, not just more pieces of green papers being thrown into the market in order to prop up the almost completely useless figures such as GDP.
Look, the fact that the unemployment drop usually trails the GDP is proof that GDP doesn’t indicate real productive output. Shouldn’t it be the other way around? First you hire workers and only then you can produce.
No, In CNBC’s world of inventory adjustments, production is no longer a function of capital and labor.
[quote=“Jonathan M. F. Catalán”]
Hate to do this, but I will
I agree with everything Paul krugman said in the article, but the point still remains that we may see 5.8% growth in the 4th quarter. Krugman has been saying for a long time now that any big increases in growth after the 3rd quarter would be mainly attributed to an inventory bounce. In economics an inventory bounce means growth is occurring,but it will only be temporary.
Right now our economy is out of the recession,but because so many indicators are doing poorly it means our economy is weak and recession prone.
In regards to 3rd quarter growth, Krugman is actually wrong. I suspect that the same will remain true for any 4th quarter figure.
Whether we are really out of the recession is debatable. By GDP standards we might be out of recession, but notice how the “Great Depression” did not end in 1932, which was the last year in which the economy was technically in recession until 1937. In any case, GDP figures are heavily flawed and do not tell the entire story (see link above).
Growth is very subjective. Is debt spending a sign of growth?
http://irishliberty.wordpress.com/2008/11/09/gdp-a-meaningless-statistic/
I said usually and i was drawing upon my knowledge of history. Basically in a recession or Depression particular indicators may take longer to recover than others. Here are the Reasons as to why the market can still make a profit while the labor market is doing poorly:
1 Business may hord their most valuable workers and keep important assets because they may still expect to make a profit, and if the economy recovers they will want to make sure that their best assets stay with the company.
- Business may have increased investment, or continued to spend while the labor market was still doing poorly. Thus companies were making up for the loss of spending from the unemployed. Proof of this can be found in the stock market which began to resume normal business very early on in this recession.
How does he possibly know this since the GDP figure is measured in monetary terms. If there were no “inventory bounce”, how do you know if the GDP figure would have been any different. The number of money units spent has nothing to do with the real physical supply of goods.
The GD did not technically end until the winter of 1932,but we did have a recession in 1936-37.
Yes, that’s what I said. But, the Great Depression is considered to have gone from 1929 to 1940, which goes to show that the “official” statistics hardly reflect on reality. When people study the Great Depression it doesn’t end in 1932.
monetary terms?
This isn’t something that paul krugman would know outright, but any economist or historian would tell you that an inventory bounce is a normal occurrence.
Inventory bounce is a term used in economics to describe an economy’s bounce back to normal GDP levels after a recession.
Firms usually keep a certain amount of inventory. When an economy faces a recession, sales might be unexpectedly low, which results in unexpectedly high inventory. In the next period, firms cut production so that inventory will drop to their desired levels, which results in even lower GDP. Subsequently, firms might increase the production back up to maintain the usual level of inventory, which causes the GDP to bounce back. This bounce back is called an inventory bounce. We care about it because if GDP recovers is only an inventory bounce, the recovery of GDP might not be sustained, which means that economy might not have truly recovered from the recession.
Basically an inventory bounce occurs because firms are trying to maintain what they already have.