"So," says economist Paul Krugman, "about that jobs report: it was genuinely good, certainly compared with the dreariness that has become the norm.
Notably, for once falling unemployment was the real thing, reflecting growing availability of jobs rather than workers dropping out of the labor force, and hence out of the unemployment measure.
Furthermore, it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out. ...Krugman, NYT
Okay? You happy now?
No, we're not. We're still depressed. We're better off but we're still going to have to slog, drag, pant, work an extra hour, spend a little more than we want to. We're still damaged goods. A lot of people remain unemployed "at levels not seen since the Great Depression."
And we still have a residue of people (at the top, of course) who want to ruin the recovery by punishing us with high interest rates.
I think of this as the urge to purge, after Andrew Mellon, Herbert Hoover’s Treasury secretary, who urged him to let liquidation run its course, to “purge the rottenness” that he believed afflicted America.
And every time we get a bit of good news, the purge-and-liquidate types pop up, saying that it’s time to stop focusing on job creation.
Sure enough, no sooner were the new numbers out than James Bullard, the president of the St. Louis Fed, declared that the new numbers make further Fed action to promote growth unnecessary. And the sad truth is that the good jobs numbers have definitely made it less likely that the Fed will take the expansionary action it should. ...Krugman, NYT
It's QE -- quantitative easing -- that Bullard is aiming at.
Unless the purgers and punishers go away or are shouted down, we're bound to remain in trouble.
By the way, James Bullard -- quoted above -- also has this to say, according to China Daily today.
Today's decline in the jobless rate suggests Fed forecasts for unemployment at the end of the year are too high, Bullard said. The fall in unemployment will probably continue thanks to a decline in weekly jobless claims, he said.
"Surely you could get another half percent during the year and you might be able to do better than that," Bullard said. "Sub-8 percent is a reasonable prediction" for the unemployment rate at the end of 2012, with a 7 percent rate possible by the end of next year, he said. ...China Daily
That would have an effect on the election, don't you think?
Ezra Klein passes on some good news -- that's GOOD news -- from Europe -- Europe's problems being a fly also in our ointment. But just as we're seeing a significant lift in the clouds, they are too.
The big thing that would surprise people in Europe this year is growth. And there's more evidence that there's some kind of pulse beating. Last week after some decent PMI number, Goldman raised its 2012 GDP outlook from -0.8% to -0.4%.
The latest: German factory orders jumped 1.7% sequentially, nicely ahead of the 1.0% consensus. ...Business Insider ...(early this morning)
Matt Yglesias shines a light on our economic/financial relationship with Europe.
... These various deals that European leaders have worked out over the past several months have been a boon to the United States from this perspective. For one thing, they've bought time. European banks haven't collapsed, and American officials, American banks, and American non-financial firms have all had time to start thinking through the implications and insulating themselves. That's been an extra source of problems for Europe but it's good for us. The other factor is that while Europe's leaders haven't hit upon a way to forestall a years-long span of catastrophically high unemployment and falling living standards, they do appear to be really really really really committed to saving banks. This kind of "bankers and and rich people first" approach to coping with an emergency is terrible for the average European, but it does take care of our main concern from Europe which was that we might get hit with a sudden credit crunch. ...Matt Yglesias, Slate