Thursday, September 26, 2019

Brad wants an unemployment chart for 2010


As of the end of 2010, the construction sector will have shrunk in nominal terms to its size in 1999, when the economy as a whole was only 57% as large as it is today... As of the end of 2010, the summed deviations of residential construction spending from their long-term trend will be zero: we will have underbuilt relative to trend in late 2007, 2008, 2009, and 2010 by about half again as much as we overbuilt relative to trend in 2003, 2004, 2005, 2006, and early 2007. Yet the depression will still be going on. Resources have already been allocated out of construction. To speak of the fall in the size of the bubble sector construction as something ongoing in the future--"will have to shrink... jobs will disappear..."--is to commit an elementary factual error. The sector has already shrunk. And it has shrunk by moving its excess workers and a huge honking number of other workers into the most unproductive activity possible: unemployment.
Brad is in a debate about whether rates were too low in 2005.  My point is, this was a normal recession for most of the nation, except California, and that seems rather common as we see from the charts.

Why, Brad, did California unemployment stay high relative to the rest of the economy?  Public sector, there, Brad. Absent the anchor effect of the public sector, California would have had a normal recession.  The public sector crashed because taxes dropped dramatically as the economy stopped and the public sector does not adapt. 

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