Both Matt and Ezra have posts on the issue and I take it, that’s it’s still a major talking point. Even some of my friends on Facebook have started saying that we don’t have a credit problem we have a business hiring problem.
However, it’s not even clear that we have that. What we have is the aftermath of a rough recession. There are good points to be made about capital expenditures but we don’t even need to go there. Lets just look at employment.
This is all private employment in the United States over the last 15 years. You can see that the latest recession was bad. But, if anything the post recession period looks better than the 2001 recession.
After the dot-com bust private employment continued to drift down for another 2 years before finally picking up. And, on could argue there was a lot uncertainty!
The next big thing had just turned out to be a bust. Terrorists were blowing up buildings. The US was going to war and a bunch major corporations had cooked their books.
However, this time private employment more or less turned around in short order and is rising with roughly the same slope as it did towards the end of the last expansion. That’s important because both the end of the last expansion and this period share something in common. The mind-blowing bust in construction.
I still argue that this is a phenomenon begging for a deeper explanation and one that should be one of the major stories of the period. There is a sticky price story to be told but for reasons that would take too long I am not even fully comfortable with that.
However, lets take construction out of the picture since presumably no one is saying that ObamaCare and uncertainty about the Bush Tax Cuts is why we aren’t building more homes.
Now look at the slopes in the last two expansions. They are darn near parallel. The 90s were better, there is no doubt about that. However, no is not clearly worse than the Bush Boom in terms of job growth.
We can calculate growth rates just to check our eyes and make sure we are seeing what we think we are seeing.
Here is percent change from a year ago
Looks pretty similar.
Here is absolute change month-to-month. That’s like the “jobs report” numbers that you hear reported in the news.
Again, it looks pretty similar. We are on a down-stroke but unless that down stroke continues its nothing out of the ordinary from what we say during the last expansion.
The rate of private non-construction expansion now matches what it was during the the best part of the last expansion. Its hard to see how that makes us think there is regulatory uncertainty.