Reply To: Unemployment


Here’s the data for manufacturing employment since 1939:

Manufacturing employment is sensitive to booms and busts for the entire data set. The Fed is clearly to blame for this volatility. The big drop-off in manufacturing employment, however, occurs between 2000 and 2010. From 2010 to 2019 there is a steady rise.

Here is the personal saving rate of Americans since 1959:

There appears to be some correlation between MANEMP and PSAVERT. However, the correlation is not very strong. The time of falling MANEMP (2000-2010) doesn’t correspond completely with the time of falling PSAVERT (2004-2005). The Fed’s inflationary policy since 1971, however, is strongly correlated with the decline in personal saving rates.

In any case, I think the causation between MANEMP and PSAVERT is relatively weak. One reason for the weak causation is that manufacturers in the U.S. can access world capital markets. So, even though American’s save very little, this isn’t a binding constraint on American companies as foreigners save and invest in America too.

Here are a few other points: