Steven C. Kyle, an expert in macroeconomics and government policy and a professor of management at Cornell’s Dyson School of Applied Economics and Management, discusses how today’s Bureau of Labor Statistics (BLS) employment numbers outline the danger of renewed recession and a continued, sluggish recovery.
Additional information about the April 5 BLS Monthly Employment Situation report is available at: http://www.bls.gov/news.release/empsit.nr0.htm
Kyle says:
“While not negative, the report clearly shows the extreme sluggishness of the recovery and highlights the danger of a renewed recession if some unforeseen negative shock were to occur.
“Where might that come from? It might be tempting to blame the negative report on the sequester, but it is a bit premature to see the effects of that in the numbers. Certainly, bad news from Europe – where unemployment is at a record 12 percent for the European Union as a whole – is a candidate but there certainly could be others. “It is clear that continued obsession with cutting spending and/or raising taxes is extremely counterproductive at the present time. If we continue implementing contractionary policies – and make no mistake, that is what spending cuts and tax increases are – then what we are going to get is contraction.
“It is amazing to me that so many people who supposedly have some awareness of history as well as the material in Economics 101 can insist so strongly for so long on policies which obviously generate the opposite of what they say they want. If you want an object lesson in the results of contractionary policy in the current environment, look no further than Europe. “If we continue to do what Europe has been doing then we will get the results that they are getting. Washington, wake up! There is an excellent course in macroeconomic policy up here at Cornell and I would be happy to let you sit in on it any time!”
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