RE: RE: Re: From the Heartland

["Devine, James" <jdevine@xxxxxxx>]

quoth Max:
> My labor market cohorts will have a piece out soon
> on why the unemployment rate will keep rising throughout
> the year.

one reason is the macroeconomic "Okun's Law," one version of which says that
if real GDP doesn't increase fast enough, unemployment rises. This is an
empirical "law": if you graph the year-to-year fall of the unemployment rate
against the yearly percentage change in real GDP, it takes about 2.6% growth
of rGDP (sustained over a year) to keep the unemployment rate _constant_.

Though this is an empirical "law" akin to the Phillips Curve in its style of
origin, it makes sense. First, as time goes by, more people enter the labor
force. Second, as labor productivity grows (as it does in the trend), that
means that fewer workers are needed to produce the same rGDP.

Though some are predicting recovery of rGDP, I haven't seen any predictions
of a rapid enough growth rate to bring U down in the near future.
JDevine