JONATHAN CHAIT APRIL 8, 2010
Floyd Norris has a column in today's New York Times arguing that the economic recovery may be stronger than everybody expects. Both parties seem interested in downplaying good news, he points out. Plus, economic forecasters tend to miss both sharp downturns and sharp upswings:
[I]t is normal for recessions to make people pessimistic. “Go back and read what people were saying in 1982 or 1975,” said Robert Barbera, the chief economist of ITG. “Nobody was saying, ‘Deep recession, big recovery.’ It is quite normal to expect an abnormally weak recovery. It is also normal for that expectation to be wrong."
The weakness in Norris's column is his argument that the recovery will bring a relatively quick resurgence in jobs, which would make it unlike the last two recoveries. (Norris's main argument is that employment will probably bounce back because it dropped so quickly to begin with.) Noam Scheiber had a more convincingly upbeat take on jobs last November:
Grant and Gertner assume (following Bloomberg) that the recession ended in May. In that case, the peak for the number of people out of work 5-14 weeks came the same month as the end of the recession; the number of people out of work 15-26 weeks peaked one month after the recession; and we may be about to see the peak for the number of people out of work 27 weeks or more, which would put it in the 6-7-8 month range. Which is to say, barring some sort of double-dip (and pending that final peak), the dynamics of unemployment during this recovery look a lot more like the traditional post-war recovery than the brutal jobless recoveries of the last two recessions. Here's hoping, in any case.
I'm leaning toward optimism on growth and pessimism on jobs. We'll see.