The Hiring Crash

Mark Thoma directs our attention to a chart from Julie Hotchkiss at the Atlanta Fed (it’s in this PDF):

This is from a discussion of the Job Openings and Labor Turnover Survey (JOLTS) from the Atlanta Fed (much of the discussion is about the southern region; also, the unemployment rate is on the left-hand side, not the right-hand side as indicated in the graph).

Notice the crash in the hiring rate coinciding with changes in unemployment. The policies that were used to battle the recession didn’t put enough emphasis on turning this around.

I think this goes back to what Scott Sumner keeps saying about Nominal GDP expectations. Probably nobody sits around thinking about their expectations about nominal GDP. But the fact of the matter is that business owners and managers had been going along in a climate where the rate of nominal GDP growth was pretty constant. Then suddenly it crashes and for all the emergency measures taken in 2008–2009 nothing was really done to stop its plummet. Even now, policymakers seem to have just decided to accept the idea that future growth should settle on a permanently lower trend. Obviously that doesn’t encourage new hiring.