Disappointing Data
This is a quick follow-up to the previous post on the speed of the recovery:
1. Brad DeLong and Greg Ip have follow-up and/or related comments:
- Special factors or new trend?, by Greg Ip, The Economist
- Milton Friedman: "We Curtsy to Marshall But We Walk with Walras", by Brad DeLong
New claims for unemployment insurance went back up last week, and historically claims at this level indicate job loss. Every time claims go up we hear about holidays falling at unusual times, seasonal adjustment problems, weather related problems -- there seems to be no shortage of reasons to dismiss weakness in labor markets. So I'll be interested to see what excuse policymakers come up with this time to ignore the unemployment crisis3.From Justin Wolfers at Freakonomics, The New GDP Data Is Bad. The Hidden Data Behind It Is Worse:
This morning the Bureau of Economic Analysis (BEA) released its latest estimates of GDP. And there's bad news, hidden in the details. Most analysts are focused on the fact that GDP growth in the first quarter of this year was unrevised, remaining at 1.8%. But they're focused on the wrong number.
National accounting aficionados know that hidden beneath the headline number is an alternative estimate of GDP. This alternative is often called GDP(I), because it is based on income data, rather than spending data. And GDP(I) is actually a more reliable estimate. Unfortunately, this more accurate indicator tells us that GDP grew by only 1.2%. That's bad news.
In fact, this alternative indicator says that GDP is still below its level from late 2006. ... Okun's Law tells us growth needs to exceed 3% before the unemployment rate will decline.Rebecca Wilder has more on the report.
Today's data are disappointing, and do nothing to dispel the fear that it will be sometime yet before we return to full employment.
