There's no magic number of months. Much depends on the magnitude of the decline as well as the variability.
But there is a further complication in that the labor force was forcibly reduced by some 4.7 million workers as a consequence of the Pandemic Panic Recession--that half of the 9 million workers forced out of the labor force as a res…
There's no magic number of months. Much depends on the magnitude of the decline as well as the variability.
But there is a further complication in that the labor force was forcibly reduced by some 4.7 million workers as a consequence of the Pandemic Panic Recession--that half of the 9 million workers forced out of the labor force as a result of COVID lockdown lunacies who have never returned to the labor force. For whatever reason, that cohort of workers refuses to return to the labor force and at this juncture is unlikely to return to the labor force.
This is what creates the appearance of a "tight" labor market, and thus businesses become even more reluctant to lay off even as they strive mightily to hold labor costs down. If the labor market were truly "tight", then the resolution would be that labor costs would trend up relative to consumer price inflation--that labor costs have not done so except in recent months points to the labor markets being far more "toxic" than "tight".
Thus we have to be even more careful about making projections on future economic trends based on prior economic history. In many ways the current situation is almost without precedent, and so the traditional views of the data, and in particular the headline data, must be taken with massive doses of skepticism and more than a few grains of salt.
This much is certain: declining disposable income and declining investment are not trends that can ever result in future economic growth and prosperity. Therefore we may be certain that the economic prognosis in this country is, to one degree or another, "grim".
There's no magic number of months. Much depends on the magnitude of the decline as well as the variability.
But there is a further complication in that the labor force was forcibly reduced by some 4.7 million workers as a consequence of the Pandemic Panic Recession--that half of the 9 million workers forced out of the labor force as a result of COVID lockdown lunacies who have never returned to the labor force. For whatever reason, that cohort of workers refuses to return to the labor force and at this juncture is unlikely to return to the labor force.
This is what creates the appearance of a "tight" labor market, and thus businesses become even more reluctant to lay off even as they strive mightily to hold labor costs down. If the labor market were truly "tight", then the resolution would be that labor costs would trend up relative to consumer price inflation--that labor costs have not done so except in recent months points to the labor markets being far more "toxic" than "tight".
Thus we have to be even more careful about making projections on future economic trends based on prior economic history. In many ways the current situation is almost without precedent, and so the traditional views of the data, and in particular the headline data, must be taken with massive doses of skepticism and more than a few grains of salt.
This much is certain: declining disposable income and declining investment are not trends that can ever result in future economic growth and prosperity. Therefore we may be certain that the economic prognosis in this country is, to one degree or another, "grim".
This is another excellent and insightful answer, by the way. (But I’m always saying that.)
If it has to be grim, please let it happen well before Election Day so that we can benefit from a change of administrations!