Third and State

The economy is sick. Unemployment has been rising and private-sector job growth has been very weak in the past few months. WE ARE NOT HEADED FOR A DOUBLE-DIP RECESSION! But with unemployment back over 8% here in Pennsylvania, the risks of financial disaster for people who lose their jobs for reasons beyond their control remain higher than they have been at any point since the early 1980s.

The costs of job loss for individuals and society are well documented (PDF). What we need is aggressive action by Congress and the Federal Reserve to spur job growth. But what we are getting is bupkis from Congress. Meanwhile, a broad range of fiscal and monetary policymakers are making stuff up about what is wrong with the economy.

• Paul Krugman, The New York Times - Phony Fear Factor:

The answer, repeated again and again, is that businesses are afraid to expand and create jobs because they fear costly regulations and higher taxes...The first thing you need to know, then, is that there’s no evidence supporting this claim and a lot of evidence showing that it’s false. The starting point for many claims that antibusiness policies are hurting the economy is the assertion that the sluggishness of the economy’s recovery from recession is unprecedented. But, as a new paper by Lawrence Mishel of the Economic Policy Institute documents at length, this is just not true. Extended periods of 'jobless recovery' after recessions have been the rule for the past two decades. Indeed, private-sector job growth since the 2007-2009 recession has been better than it was after the 2001 recession.

You can read Mishel's full paper here.

One of Pennsylvania's own is part of this notorious club of people making up claims about what is wrong with the economy. Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, gave a speech at Villanova where he explained his recent opposition to more aggressive action by the Federal Reserve.

• Mike Armstrong, The Philadelphia Inquirer - Philly Fed chief: Taming inflation is key to economy:

Plosser is not a fan of the Fed's recently completed second round of quantitative easing ... While the goal is to bring down long-term interest rates, the 'pass-through' to businesses and consumers is likely to be quite small. 'Thus, I am skeptical that this will do much to spur businesses to hire or consumers to spend, given the nature of the structural adjustments occurring in the economy and the uncertainties posed by the fiscal challenges both here and abroad,' he said.

Notice the words "structural adjustments." Plosser opposes boosting employment via more aggressive monetary policy on the grounds that the U.S. economy has been hit by a deep technological wave which has made the skills of millions of unemployed workers useless, thus prolonging their job search. Once again, Plosser has ZERO evidence of this.

Unemployment rates have doubled for all education groups, recent college graduates face unemployment rates above 9%, and unemployed workers outnumber job openings in every sector of the economy. But, of course, who am I kidding? I'm offering counter evidence to a claim by a policymaker who feels no compulsion to actually back up his own claim with a single piece of evidence.

What follows are a few links to other morning news of note:

• Christopher S. Rugaber and Martin Crutsinger, The Associated Press - Economy's gains not enough to help jobless: Experts don't see growth accelerating much
• Devon Lash, The Morning Call - Allentown makes $4 million project wish list: City aims to issue bonds as they see lower interest rates from 2001 bonds:

The city aims to reissue about $9.3 million in general, water and sewer bonds, dropping from a roughly 5 percent interest rate to a roughly 3 percent interest rate. That means the city would pay about $550,000 less in interest over the life of the bonds, after fees.

City governments are very constrained in the amount of bonding they can do, but when both interest rates and construction bid prices are lower than they have been in decades, now is the time to move forward with construction projects.

• Don Spatz, The Reading Eagle - A tale of 2 housing markets: The sinking value of homes in Reading and Berks portends shrinking property tax revenue
• David Wenner, The Patriot-News - Hershey Medical Center reports solid financial year, despite unpaid bills more than doubling