Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (44604)	9/16/2003 3:54:53 PM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Rapid Growth Seen for U.S. Economy: The reason for the bleak outlook on jobs boils down to basic math. The number of new workers is climbing about 1 percent a year. If productivity increases by an annual rate of 3 percent -- and the rate has been above 5 percent both this year and last -- economic growth, as measured by gross domestic product, needs to be significantly more than 4 percent next year before there is drastic improvement in the unemployment rate. "I don't see where the demand is going to come from to produce a falling unemployment rate," said J. Bradford DeLong, an economist at the University of California at Berkeley. "Very few people are predicting real G.D.P. growth of more than 4 percent." White House officials dispute that prognosis. If productivity and growth are rising, they contend, then new jobs will follow. "There is a very strong correlation between real G.D.P. growth and developments in the labor market," said N. Gregory Mankiw, chairman of the White House Council of Economic Advisers. "We will see employment picking up by the end of the year, and we will see very strong advances in employment in 2004." Ah. But Greg doesn't dispute my claim. He knows better than I do that if trend productivity growth is 2.5% per year then real GDP growth at 4% per year reduces the unemployment rate by about 0.1% every six months. And he knows as well as I do that current forecasts are not for growth at a more than 4% rate. So what does he say? He doesn't say that the unemployment rate will decline. He says that employment will grow. And, indeed, employment probably will grow: but if employment doesn't grow by an average of more than 110,000 a month, the unemployment rate will not fall. Posted by DeLong at 10:44 AM \|