Chin Up in the Downswing: Unemployment Not as Dire as It Looks; Stimulus Packages Spur Infrastructure
by Anne Szustek
A Time magazine financial writer points out that today’s unemployment trends are nowhere as grim as those seen in the 1930s. Stimulus money, both at home and in China, are already helping to spur infrastructure spending.
Nonfarm unemployment figures dating back to December 2007 are barely noticeable when compared with Bureau of Labor Statistics figures for those of the Great Depression, points out Time magazine’s Justin Fox in the Curious Capitalist blog. The present figures largely parallel those of other post-World War II economic downturns. While Fox admits that more people worked on farms during the 1930s, he argues that the data indicates “that the employment downturn we've been dealing with, while probably the worst since the Great Depression, is much, much closer in severity to the recessions of the mid 1970s and early 1980s than to the utter disaster of the 1930s.”
State transportation departments are set to receive $27.5 billion of the $787 billion stimulus bill passed last month. That means boom times for companies that manufacture road construction components such as orange highway cones, asphalt and manhole covers. At World of Asphalt, the sector’s annual convention, The New York Times reported that industry sentiment was by and large positive. While the loss in private-sector business has certainly hit the segment, the projected influx of stimulus dollars has companies hiring and buying equipment.
China’s own stimulus package, launched within the past few months, is already filtering through the economy. Infrastructure investment has been a key component in quickly increasing domestic demand. During January and February, “total fixed investment was 30% higher in real terms than a year earlier, and investment in railways tripled,” writes The Economist. China’s monetary policy has shown positive results as well: interest rate cuts have helped free the country’s credit markets. Lending has increased by 24 percent over the past year in China, making it one of the few countries where credit has been doled out more since the onset of this recession.