July 31, 2003


From the New York Times:

Faster 2nd-Quarter Growth Fuels Optimism: The United States economy threw off its sluggish growth in the second quarter and expanded at a 2.4 percent annual rate, pulled up by rising military and consumer spending and, at long last, a revival in business investment in computers and software, the government reported yesterday. The spring upturn has nearly every forecaster, even the pessimists among them, signing on to the proposition that the national economy is finally breaking out of the weak, jobless recovery that has lasted for 18 months...

Huh? The spring upturn in production was a nice positive surprise. But it was not not the end of the "jobless recovery": hours worked by Americans shrank at a 1.6% per year rate in the second quarter. The spring upturn was a positive surprise not because output growth pulled employment up, but because fast productivity growth allowed the American economy to satisfy stronger demand even with the putrid labor-market performance of the spring.

Posted by DeLong at July 31, 2003 09:16 PM | TrackBack


I have up on my blog a graph of job creation from 1992 to today. When Dubya became president, the graph plunges into the negative, and since early '02 has been relatively stable at 50K jobs loss per month.

Posted by: Unrelated Disney on August 1, 2003 04:22 AM

Dang, I should have known that the government would release the July unemployment numbers today! 44K jobs lost, continuing the trend I mentioned in my prior comment. I will update the chart and repost it tomorrow.

Posted by: Unrelated Disney on August 1, 2003 06:19 AM

More evidence of simplistic "this equals that" sort of thinking. If output rises faster than expected, then job growth will be better than expected, right? In fact, better than expected doesn't even mean that the data show the economy is breaking out of a period of weak growth. If your definition of weak is "below trend" then the economy was still weak in Q2.

Posted by: K Harris on August 1, 2003 07:27 AM

The problem with economic journalism is that every little piece of data has to tell a story. No story, no byline.

But the month-to-month or quarter-to-quarter numbers usually don't tell very good stories -- there's too much noise in the data. That's especially true when the economy lacks momentum, as now.

But you gotta write something. So the reporters usually end up building stories based on the current conventional wisdom. And right now, the conventional wisdom is that the economy will pick up sharply in the second half. The facts have to be tailored to fit that theme.

To be sure, the fact that a lot of economic journalists don't know diddly about economics doesn't help. The NY Times is in particularly bad shape, because their economics reporter, Louis Uchitelle, is a complete air head.

Posted by: Billmon on August 1, 2003 12:59 PM
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