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Comment by phpisthebest | Hacker News Reader

They are not mixed signals, the data we use for signaling is flawed for the modern area

Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment.

Completely absent from most of these older metrics is the "gig-economy" which is really screwing with the data IMO.

Then you have U-6 Unemployment increasing while U-3 is dropping, I think U-3 is just a few months away from reversal and will start increasing soon

>>GDP has long been criticized for being a poor metric for the economy.

yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes

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>>>GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough.

>> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes

Huh?

Discussing the utility of and then issues with GDP has been a staple of Macro courses for decades. E.g., [1], but I'm really serious: every single macro textbook for as long as macro textbooks have existed has had some version of the question "Discuss the strengths and weaknesses (i.e., problems) of using GDP data".

[1] https://www.austincc.edu/sondg/Exams/macro/exam2.html

A reasonable definition of recession is "you can't find a job", but, not only are we in the middle of a labor shortage, traditional good-economic-times like unionization are ramping up, and people are successfully demanding raises (and some households are voluntarily moving to single incomes).

On the other hand, the stock market is down this year, so if that's your definition, things are dire.

Honestly, this seems like stagflation to me, which has been historically known for breaking the definition of "recession".

Neither side wants to say that out loud, because it implies a decade-plus economic funk.

That is actually a really poor definition of a recession. It overlooks many macroeconomic factors that can cause severe problems. "I can't improve my economic position" seems a lot closer, while still being a bad definition, and by that definition, we are deep in a recession.

> "you can't find a job"

that sounds like a depression, not a recession

MMT isn't against using GDP as a metric for the economy

The biggest actual policy disagreement between MMT and mainstream economics is how to achieve full employment. Mainstream economics primarily reaches for monetary policy (tweaking the interest rate), MMT primarily reaches for fiscal policy (create/spend money to give everyone a job).

I don't feel particularly strongly about one side versus the other, but we end up doing both anyways and our current model of changing the interest rate (i.e. recent rate hikes) out of lockstep with corresponding fiscal spending (i.e. Build Back Better) is inefficient when the two need to be kept in balance.

> we have a pretty large drop-off in Work force participation

No, we don't.

While the LFPR is still down from the point it was prior to the 2020 recession, it has been continuing to increase fairly consistently after it's sharp rebound from the trough of that recession.

https://www.bls.gov/charts/employment-situation/civilian-lab...

> what is missing from that is Workforce Participation,

Sure, but the statement I made was job growth ways high AND unemployment remained low. The AND is important for the very reason you point out; U-3 is not a useful stand alone metric. Combining it with job growth data helps provide a better picture of the job market.

Employment still grew by 375,000 jobs last month. This was far above expectations.

>>GDP has long been criticized for being a poor metric for the economy.

> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes

It's been said that a cancer patient going through an expensive divorce is the best contributor to GDP.

You don't measure the health of a human by looking at their weight on a scale. When you go to the doctor for your annual checkup, they'll measure your BMI, blood pressure, body temperature, resting heart rate, and look at a few other indicators to get a very rough estimate of your overall health and how it compares to last year.

GDP is one indicator among many to measure the health of the economy. An important one, yes, but looking at GDP without also looking at employment figures, inflation data, the markets, etc. would be tremendously silly.

> Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment.

Everyone is still very desparate for employees, so I don't think Workforce Participation is low because there aren't enough jobs and people are discouraged from the work force. Baby boomers are currently aging out of the job market at a n accelerated rate, so that must be one of the reasons (U-6 doesn't include that though). I think the current drug disaster is another (a lot of people are simply unemployable), but I'm not sure how to measure that.

A decent measure is the number of unique individuals with a negative background check showing: violent, financial, or drug charges. The best metric I know of that approximates this is linked below; and it’s woefully undercounting.

https://en.m.wikipedia.org/wiki/Felony_disenfranchisement_in...

Of course we have a large drop off of workforce participation. Baby Boomers are retiring en masse; they’re reaching retirement age, and many of those who are close were offered buyouts to leave early.

It’s not the result of decreased hiring due to economic slowdown. It’s the opposite entirely; this is a contributing factor to the labor shortage.

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