Reading about Goldman Sachs’s record quarterly profits and Brad DeLong’s description of the coming “jobless recovery” made me think about a Kafka quote. When asked about hope he said, “There is hope, but not for us.” Here’s what DeLong has to say:
One reason that we are likely to see a recovery starting… right now… is the stimulus package. It probably boosted the real GDP annual growth rate relative to what otherwise would have been the case by about 1.0 percentage point in the second quarter, and is going to boost the annual GDP growth by about 2.0 percentage points between now and the summer of 2010–after which its effects tail off.
But it will not feel much like a recovery. After the 1982 recession the turnaround in employment lagged the turnaround in GDP by only six months. Thereafter employment growth was very strong: in the eighteen months up until the end of 1984, growth in work hours averaged 4.8% per year. it took only 7 months after the 1982 recession trough for the employment-to-population ratio to rise above its trough level (1980: 2 months. 1975: 5 months. 1970: 18 months. 1961: 13 months. 1958: 4 months. 1954: 8 months.) By contrast, it took 29 months after the 1991 recession trough for the employment-to-population ratio to exceed its trough level, and 55 months after the 2001 recession trough for the employment-to-population ratio to do so. Productivity growth in the immediate aftermath of the end of the 1991 and 2001 recessions was surprisingly rapid: rapid enough to eat up all of real demand growth and more as businesses decided to take advantage of the economic downturn to slim down their labor forces and become more efficient.
So here’s my question: what the hell does a “jobless recovery” mean? It sounds like abstracted metrics of economic prosperity like the GDP, NYSE, Dow Jones Index, etc. will level off and return to normal while more Americans stay un- or under-employed. This may be a recovery as far as the media is concerned, but there doesn’t look likes there’s going to be much recovery when it comes to the American working class.
This is an indication of how badly the numbers we use to monitor the economy are disconnected from the well-being of the American people. Goldman Sachs might be able to have a jobless recovery – in fact with all their major competition dead or bought, GS seems to have turned lemons into $50-a-bottle lemonade – but America can’t. Recovery should mean Americans are weathering the storm, not that investment banks can still make obscene amounts of money.
When the horror stories started coming out about how financiers conned an entire nation, a lot of pundits started getting really scared of populist anger. Even President Obama tried to calm the anger and redirect it into support for less Jacobin solutions. I was always more afraid of a lack of populist rage because it’s the only thing that scares these people.
Since I don’t find the topic that funny, except in an absurdist way, check out Jon Stewart’s clip on the “pyramid economy.”
Also, I demand to be able to call this recovery “Kafkaesque.”