A nice take and explanation on magnitude of U.S. joblessness relative to prior "full employment" levels (potential or trend employment) . The article also uses simple and easy to grasp (for the layman) graphs which effectively illustrate the issue.
I don't agree with the basis the author used for "full employment" since it is derived from the excessive risk taking periods by financial institutions during either the dot com boom or the housing boom periods... .both of which were created by the unsustainable conditions which created the bubbles in the first place. Therefore, the article's Chart #2 (showing both full employment based trends --- one for the dot-com bubble period, the other for the housing bubble) overstate the basis for sustainable condition full employment rates.
Other than this overstated "full employment" rate condition, the article gives a reasonably well reasoned and consise basis for the current level of underemployment... .which also translates to the lost economic value due to the recession.
BTW, I commented on the same overstated "full employment" or "potential GDP" used by Krugman in one of his blogs. Both this author & Krugman use a basis level for "potential GDP" which includes unsustainable levels of the economy (not because I called them unsustainable, but because the facts speak for themselves... and no economists or policy makers have stated or implied that either of these conditions were sustainable).
I believe, based on the broad equity market indices over time, that the sustainable basis or trend for "potential GDP" is much closer to that achieved during the early to mid-90's. I say this because it was in mid-'94 that the broad equity market values began to exceed, and continued to accelerate the upper bound of business cycle levels above the long term statistical trend. As that upper bound business cycle equity value level exceeded all prior upper bounds (relative to the long term trend, as percentage of long term trend values), it quickly accelerated to end with the dot-com bubble. Even as the dot-com bubble burst and the market fell, it never came close to gettig back down to the long term trend (which it should have overshot in fact, before coming back up), which was caused by the Fed's (Greenspans') low interest rate policy to "recover" from the dot-com bust... but which led into and created the next unsustainable bubble economy ... the housing boom.
I have a mild curiousity to find out what the actual potential sustainable GDP level should using a basis that doesn't include the effects of the unstainable economic conditions preceeding the dot-com and housing bust. Whatever it is though, it must have a basis associated with GDP growth without inclusion of unsustainable booms... and it is already known (see my other prior posts) that long term GDP growth rates have been on a steady and continuous decline since the mid-80's, without even including the effects of the housing bust recession. From this trend in GDP, then one would surmise that the sustainable potential GDP has also been growing at a decreasing rate... meaning that in fact the potential GDP at any given point in time is lower than its been during periods of unsustainable GDP levels.... and if the trend is left unchanged, will asymtote at some maximum level lower than it used to be (on a per-capita basis).
In other words, when the U.S. does eventually recover from the recession it won't be recovering to the levels achieved prior to the recession even when it's fully recovered. .. therefore unemployment levels will remain higher than observed in historical "normal levels", and GDP will either only grow at the rate of population growth or less --- depending on how the U.S. can capitalize on the global consumption market's growth... but that requires the U.S. to provide more goods to export to those consumption markets, and the U.S.'s economic roi on investment comes from the capital owners using their capital to develop and expand offshore mfg'ing of goods. I see nothing on the future horizon which will change that condition --- therefore the offshore use of U.S. capital will continue unabated... and may accelerate even more for a time.
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