Meme Change

It looks like an economic meme change is on the way, with some thoughtful columnists charting the course.

The Times’s David Leonhardt points to a recent run of bad economic news—and more to come with Friday’s jobs numbers—and raises the specter of a dreaded double dip. Sure, things can go up and down a bit. “But whatever you thought at the start of the year about the recovery—strong, moderate, fragile—you probably need to be more pessimistic today.”

This is especially troubling because the economy is still such a long way from being healthy. Lawrence Katz, the Harvard labor economist, estimates that 10.6 million jobs would need to materialize immediately to return the job market to its condition when the Great Recession began. For it to get there four years from now, the economy would have to add 316,000 jobs a month. That pace would be faster than in any four-year stretch of the 1990s boom.

The FT’s Martin Wolf took a different approach to the question last week. But his tone was equally grim.

Anybody who looks carefully at the world economy will recognise that a degree of monetary and fiscal stimulus unprecedented in peacetime is all that is prodding it along, not only in high-income countries, but also in big emerging ones. The conventional wisdom is that it will also be possible to manage a smooth exit. Nothing seems less likely. So let us consider the endgame, instead.

Like Leonhardt said, any recovery is sure to have its up and downs. And plenty of smart money has been cautious about just how rosy things are getting.

But, despite the snowy weather, there’s been no shortage of green-shoot spottings.

Just today, there’s private payroll data showing that layoff announcements dropped to their lowest level since 2006, and a prediction of “meaningful job growth in the private sector” over the next few months from JPMorgan Chase’s chief economist.

It’s a theme that’s been hanging in the air for a while now.

This Page One Journal story from a month ago seemed to reflect the then-gathering press consensus:

Data Hit Hopeful Notes for Economy

Of course, the optimism wasn’t coming out of nowhere. A lot of the data were positive.

Here’s Bloomberg, on February 9, on a Labor Department report:

Job openings in the U.S. rose in December for the first time in three months, signaling employers are gaining confidence in the economic recovery.

And Bloomberg, same day, on small-business optimism:

Confidence among U.S. small businesses increased in January for the first time in three months as the outlook for sales improved, according to the National Federation of Independent Business optimism index.

By mid-month, the meme had taken hold. On February 10, the Times declared:

“Healthy Jump in Chinese Exports Points to Recovery in World Trade”
China said Wednesday that its exports climbed 21 percent in January from a year earlier, while imports surged 85.5 percent, the latest sign that world trade is starting to recover from the global financial crisis.

Ah yes. Globalized masses stride confidently into glorious future.

Still, the better economic reporting we’ve seen looked below the big numbers, and the foreboding signs weren’t that far below, really.

Reuters, for instance, did a better job of keeping it real with the NFIB survey, just by quoting the trade group that put it together.

“Small business owners entered 2010 the same way they left 2009 — depressed,” the group said, noting its Small Business Optimism Index reading for January was still below the 90 mark, the dividing line between positive and negative outlooks.

And a few outlets found their way to an interesting new index that tracks how often truckers are filing their rigs with diesel. When it comes to the economy, more is better.

As USA Today put it back on February 10:

The latest government statistics say the economy is bounding back from a deep recession. The message from the nation’s truck stops isn’t so reassuring.

USAT added:

The truck stop index fell at a 36.8% annual rate in January after soaring 60.8% in December. The index’s less-volatile three-month moving average decelerated to 3.3% annual growth in January from 14.6% in December.

The findings suggest the economy cannot sustain the galloping 5.7% annual growth rate the government reported for the fourth quarter of 2009.

“Don’t put your party hats on yet,” says Edward Leamer, the UCLA economic forecaster who helped create the index. “We were hoping our index would be stronger, symptomatic of an economy powerful enough to start putting Americans back to work.”

The Journal also found the index worth a look, though with modest play:

The report comes at a time where most economists agree the economy is recovering, albeit without much vigor and with no job gains. Most also believe that, after inventory-related factors powered decent gains in the nation’s gross domestic product over the final months of 2009, growth will moderate, although they do expect job losses to soon give way to modest increases.

These days, as Leonhardt and Wolf make clear, what we really need is economic reporting that goes deeper than the headline numbers—ideally with shoe-leather reporting&mdash and reminds us that, while some big numbers might be good for the moment,and some long-term lines might even be headed north, the economy still has a ways to go, and, really, the current pace isn’t getting us there.

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Holly Yeager is CJR's Peterson Fellow, covering fiscal and economic policy. She is based in Washington and reachable at