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Baraka_Guru · 01-25-2010, 08:20 AM

I hope most of you don't miss the point on unemployment from a government standpoint. The government isn't concerned so much about the total and actual number of people who are unemployed or underemployed or whatever. They are more concerned about the relative level of unemployment of their measure as compared to the level (of their measure) from previous business cycles. The goal of governments in general is not to strive for 0% unemployment (i.e. full employment)--which is impossible, by the way---the goal is to achieve a balance based on the economic capacity of the nation.

The problem with high unemployment we know: income drops, spending drops, economy slows, etc.

The problem with low unemployment relative to economic capacity is less known: wages spike, prices spike, inflation spikes, etc....

The role of government in this case is to achieve a balance. They aren't concerned about the U6 vs. the regular number. They are concerned about the current state of employment based on their own metrics and how it compares to previous business cycles.

I'll also repeat that unemployment numbers are a lagging indicator (i.e. they tell us about what the economy has already done, not what it's doing now or what it is expected to do). When you consider the stimulus, what's going to be most apparent first will be leading and coincident indicators such as stock markets (up), housing starts (down, but permits are way up), retail figures (fell 6.2% in 2009, but 1.2% increase expected in 1st quarter 2010), industrial production (?), GDP (growth has been slow but steady, and is expected to continue in 2010), etc. Why isn't anyone talking about these things? They'd be the most indicative of Obama's economic performance than unemployment at the moment. I'd look to his Year 2 Performance Report to see a hindsight of how unemployment was handled. At least as a start.

01-25-2010, 08:20 AM	#65 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	I hope most of you don't miss the point on unemployment from a government standpoint. The government isn't concerned so much about the total and actual number of people who are unemployed or underemployed or whatever. They are more concerned about the relative level of unemployment of their measure as compared to the level (of their measure) from previous business cycles. The goal of governments in general is not to strive for 0% unemployment (i.e. full employment)--which is impossible, by the way---the goal is to achieve a balance based on the economic capacity of the nation. The problem with high unemployment we know: income drops, spending drops, economy slows, etc. The problem with low unemployment relative to economic capacity is less known: wages spike, prices spike, inflation spikes, etc.... The role of government in this case is to achieve a balance. They aren't concerned about the U6 vs. the regular number. They are concerned about the current state of employment based on their own metrics and how it compares to previous business cycles. I'll also repeat that unemployment numbers are a lagging indicator (i.e. they tell us about what the economy has already done, not what it's doing now or what it is expected to do). When you consider the stimulus, what's going to be most apparent first will be leading and coincident indicators such as stock markets (up), housing starts (down, but permits are way up), retail figures (fell 6.2% in 2009, but 1.2% increase expected in 1st quarter 2010), industrial production (?), GDP (growth has been slow but steady, and is expected to continue in 2010), etc. Why isn't anyone talking about these things? They'd be the most indicative of Obama's economic performance than unemployment at the moment. I'd look to his Year 2 Performance Report to see a hindsight of how unemployment was handled. At least as a start. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot Last edited by Baraka_Guru; 01-25-2010 at 08:29 AM..