by Patrick Appel
Government officials, especially those at the Fed, have proven too optimistic again and again throughout the crisis. In recent months, they have been saying that they didn’t need to take further action because the economy would soon heal on its own. What do they do now?
Karl Smith sees no silver lining. Nor does Bill McBride, who provides the above chart. Krugman notes that wages are down slightly:
My bottom line on the inflation-deflation issue has always been to look at wages; you can’t have a wage-price spiral if wages ain’t spiraling. And they aren’t, to say the least.
Temp jobs were down 12,000 in June and have dropped for three straight months — by 19,000 in all since April, according to the Labor Department. Temp help is often a leading indicator of broader labor market trends. Companies tend to cut temp workers before they start cutting permanent workers.
Obviously, a stall is better than the massive job losses that characterized the Great Recession. But if policy makers fail to recognize that our most pressing problem right now is job creation, they are a big part of the problem.
Mark Thoma is on the same page:
Why, again, are we spending so much legislative time trying to figure out how to cut the deficit in the short-run — which will make things even worse — instead of focusing on job creation? We do need to get the budget under control in the long-run, but deficit reduction can wait until the economy is on better footing. We need more help for job markets right now, not the creation of additional headwinds that work against the recovery.
Weigel makes related points.
The Dish 