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There is a big sectoral shift out of real estate, luxury goods, and debt-financed consumption.
Information on the job vacancy rate permits one to distinguish between a pure sectoral shift and a pure aggregate demand interpretation of this positive correlation.
It does not address most of the underlying problems in the real economy and as you know I see the "sectoral shift" element of this downturn as very much underrated.
Meanwhile, factors like the negative wealth effect of housing and asset price declines are hugely impactful, and it's likely that a stimulus that saves jobs through government spending and provides tax rebates to struggling households will be quite helpful on this account.And again we have Mr Cowen's sectoral shift story.
I presume his risk premia concern is related that investors begin to treat private debt as something less than toxic; that too strikes me as complementary to stimulus.The sectoral shift argument is something he's focused on in recent posts, and it's quite interesting.
Ultimately, this sectoral shift will cause ever-more Millennial men to join and reshape the pink-collar workforce.
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Recent work by David Lilien has argued that the positive correlation between the dispersion of employment growth rates across sectors (a) and the unemployment rate implies that sectoral shifts in labor demand are responsible for a substantial fraction of cyclical variation in unemployment.
Cyclical unemployment: Sectoral shifts or aggregate disturbances?
Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?
Its labour market policies aren't up to handling sectoral shifts or millions of people in long-term unemployment.
Recovery requires that zombie banks behave like real banks, that risk premia are properly priced, and that the economy undergoes its sectoral shifts toward whatever will replace construction and finance and debt-driven consumption.
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