No Recovery for the Unemployed

The survey of private sector economists released by the Department of Finance today offers up a pretty bleak forecast that the national unemployment rate will average 8.5% in 2010, up a bit from the 8.3%  average in 2009 and up a bit from 8.4%  last month (December, 2009) .  http://www.fin.gc.ca/n10/data/2010-08_1e.pdf

That forecast strikes me as pretty much bang on or even optimistic if you accept the average forecast of  2.6% real economic growth in 2010. To eat into unemployment, the economy must grow by at least that much given that (1) the working age population is growing by a bit over 1% per year; (2) trend labour productivity growth is at least 1% per year, and may well move higher given recent stagnation of productivity as output fell  faster than employment and (3) the fact that the labour force participation rate is likely to increase at any sign of recovery (it has fallen by by 0.7 percentage points since the recession began in October, 2008.)

So, no recovery for the unemployed. I await banner headlines, and  demands from all sides that the upcoming federal and provincial Budgets focus on jobs, as called for by the CLC in a letter to federal and provincial leaders. http://www.canadianlabour.ca/national/news/dont-cut-back-stimulus-spending

6 comments

  • Well at least the core of my doctoral work is still in tact: within an neoliberal policy paradigm it is labour markets that do the heavy lifting in terms of adjustment.

    I notice Krugman is also musing about this on his blog today. No real surprise and it is just as baked into to New Keynesian and New Classical macro theory.

    I can’t wait for 6 months out from now when we will get hear the majority economists rehearsing the recalcitrant bums argument sometimes masquerading as hysteresis. The first shot has already been fired with the idea that the output gap is overstated because a significant chunk of manufacturing capacity will never be coming back online.

    New Century? More like back to the start of the 1990s. I fear we are stuck in a loop and can not get out. Maybe I should write a repost to Fukuyama called: the cul de sac of a single ideology.

    Maybe 5-8 years of terrible labour markets will wake the kids up and finally finish-off neoliberalism. Perhaps it will just finish-off public sector unions.

  • I still believe in a green economy- in fact I would like to know when someone can lend me the money to put solar panels on my roof- it is the perfect roof for such a thing. So many new small examples of how these type of projects can be feasibly accomplished.

    Now we need to have mass production, which is one thing capital can sometimes accomplish and with workers interests in mind, produce to meet a need that is real.

    If only we could get the leadership in place to take these small projects and develop a vision and a pathway to make them gigantic.

    Innovation and the green economy awaits and the race for the new economy and new standards of living has begun, or at least could somebody wake our political elites and let them know the race is on.

    Whatever economy cranks out mass produced solutions will be the ones to secure the higher standards of living. Eventually fossil fuels will be outlawed.

    Not sure under what system: will get there first. I can say this-any economy based upon neo-liberalism will be the last. Mindfulness is a first step and by their actions they still seem to still be hanging onto the notion that climate change is an international socialist plot to take out big oil- or at least Alberta Oil.

    Can somebody please mass produce me a piece of affordable solar panels and maybe through in somekind of tracking system for a few more bucks.

    Why do Canadians need fridges in the winter? Could somebody also invent me a fridge that captures the cold air outside and uses that to keep my fridge cold. Would that be too much to ask? Sometimes mass production just gets lost when it is but profits guiding it.

    Really is would it be that hard to do some of these things and I have only just thought about it for a few seconds.

    The answer to jobs is green. So lets get some investment going and innovate. The public purse is needed here.

    Mass production of green. It is the pathway to a future that may actually be sustainable.

    pt

  • Just wanted to make a point on the potential of Jobs being created with a recovery in both China and the US as many are pinning Canadian hopes on.

    I have been doing quite a bit of reading on the Chinese economy of late and one things that stands out like a bog gorilla is how many Chinese economists are hoping for a recovery in their export markets (mainly the USA) for recovery.

    Yet when you look at North American economists- a great many are pinning the recovery hopes on a rebound in teh Chinese economy.

    The irony is just unbearable!

    Couple of points on the Chinese economy that I think Mr. Obama should get into his head. Yesterday he mentioned how the US woudl start getting tough with the Chinese and their low dollar strategy basically preventing US goods into China.

    If you look into the statistics that are provided by some authors see note below, much of the surplus wealth is poured back into capital asset development.

    What remains of the surplus is very unequally split between the Urban elite class that exists within the duality of china’s urban/rural class divides.

    This thereby limits the purchasing power and consumption dynamics, and much to the chagrin of the international economy who have been salivating over the years for China to become somekind of end product consumer power house is blocked.

    Adding into the mix is the ever present low dollar strategy. There was a bit of a move in reform that would allow wages within the Chinese economy to rise with Agricultural reform and rural tax reform to reduce the labour mobility from rural to urban and cause shortages in the urban sector. But many of these reforms are under attack by elites within the urban setting.

    So when you start kicking away at the abilities of both economies to recover, some real nastiness within is exposed. The American’s with their lecherousbroken blood sucking financial sector and broken housing market and the Chinese with their incessant investment into the productive capabilities that come at the expense of their workers standards of living. In a command economy you can do this, just look at the great leap period in the 60s. In some ways the Chinese are again caught up within a very unbalanced, asset development at all cost strategy.

    Which most likely is a lot better than what occurred in the US economy- which was fictitious financial asset development that when it burst- nothing but losses for the public were left.

    pt

  • sorry I meant to add this, a public forum is being organized by the Socialist register that looks into this whole subject matter- I should be a very interesting forum and a key to rounding out what we may witness in terms of the nature of recovery.

    http://www.socialistproject.ca/events/e952.pdf

  • Winter Fridge. Not really that much of a problem from a tech pov as all the technology already exists and has existed for a long time. You could probably piece it together.

    Basically you would want a fridge an air intake from outside the house. You would then need a couple of servos hooked up to temperature sensors and a small fan. The basic idea would be to push cold air into the freezer from outside and then internally vent some of that cold air down into the fridge compartment. A temperature activated servo would let the air pass down (passively cold air falls) into the fridge chamber and Voila. That is DIY. Coming to a cabin in Quebec soon.

    And you are right quite why we pay to make cold air during the winter is beyond me and quite why no one makes a commercial version of something like I have described above I do not know. Maybe I should go see those venture dragons. I will call the fridge the Kanuck. Anyone want in on the ground floor?

    Ok I have to get back to cake and eat it too post-Keynesian theory.

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