Economists Surprised by Strength of Economy

(p. B3) There are a lot of good things to say, and few bad things to say, about the November [2019] employment numbers that were published Friday morning.

Employers added 266,000 jobs, a blockbuster number even after accounting for the one-time boost of about 41,000 striking General Motors workers who returned to the job.

. . .

Still, there is a bigger lesson contained in the data, one that is important beyond any one month’s tally of the job numbers: that the American economy is capable of cranking at a higher level than conventional wisdom held as recently as a few years ago. As the economy continues to grow well above what once seemed like its potential, without inflation or other clear signs of overheating, it’s clearer that the old view of its potential was an extremely costly mistake.

The mainstream view of the economics profession — held by leaders of the Federal Reserve, the Congressional Budget Office, private forecasters and many in academia — was that the United States economy was at, or close to, full employment.

. . .

People often say that this expansion, now in its 11th year, is growing long in the tooth, or that we are late in the economic cycle. And maybe that’s right. But the biggest lesson when you contrast where the labor market stands at the end of 2019, versus where smart people thought it would stand just a few years ago, is that there’s a lot we don’t know about just what is possible and how strong the United States economy can get.

For the full story, see:

Neil Irwin. “In Hindsight, Economy Is Stronger Than It Looks.” The New York Times (Saturday, December 7, 2019): B3.

(Note: ellipses, and bracketed year, added.]

(Note: the online version of the story has the date Dec. 6, 2019, and has the title “How a Strong Job Market Has Proved the Experts Wrong.”)

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