A great item by Scott Winship looking at JOLTS data is a reminder that the labor market never really recovered from the allegedly mild recession that occurred in 2001:
People have different interpretations of this, but my view is that it illustrates the fact that we know perfectly well what an economy wracked by an inadequate level of productivity increase and long-term growth looks like. It looks like the American labor market from 2003-2007, which is to say it looks a lot better than the American labor market today. This is why progressives weren’t sitting around during the Bush years saying “no output gap, no urgent need for short-term stimulus, clearly no problems with U.S. economic policy.” At the same time, conditions have clearly deteriorated substantially starting in October of 2008 prompting the push for hair-on-fire-lets-fix-this-immediate-crisis measures. That, in turn, seems to have prompted “let’s think about long-term structural problems in the economy” to switch its partisan/ideological valence into a conservative idea, even though conservatives weren’t really touting it during the period when long-term structural problems were most clearly salient. Instead, we were hearing all about The Bush Boom (see also).
My view is that the fact that we’re facing a major short-term emergency is not in tension with the reality that we’re also facing a serious longer-term problem. On the contrary, desire in various quarters to leverage the short-term problem as a way to increase the salience of their preferred long-term ideas has become an impediment to fixing the short-term problem. Meanwhile, the existence of a massive short-term problem is creating new long-term problems as unemployed workers and recent graduates lose opportunities for on-the-job training and skill-enhancement and state/local policymakers scrape together emergency budgets.
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