Paul Krugman: The Big Shrug

I’ve been in this economics business for a while. In fact, I’ve been in it so long I still remember
what people considered normal in those long-ago days before the financial crisis. Normal, back
then, meant an economy adding a million or more jobs each year, enough to keep up with the
growth in the working-age population. Normal meant an unemployment rate not much above 5
percent, except for brief recessions. And while there was always some unemployment, normal
meant very few people out of work for extended periods.

So how, in those long-ago days, would we have reacted to Friday’s news that the number of
Americans with jobs is still down two million from six years ago, that 7.6 percent of the work force
is unemployed (with many more underemployed or forced to take low-paying jobs), and that more
than four million of the unemployed have been out of work for more than six months? Well, we
know how most political insiders reacted: they called it a pretty good jobs report. In fact, some are
even celebrating the report as “proof” that the budget sequester isn’t doing any harm.