US Recovery: Audio Interview with UCLA Economist Lee Ohanian

Audio Podcast: EconTalk Interview with UCLA professor of economics, Lee Ohanian from August 2012

"Lee Ohanian of UCLA talks with EconTalk host Russ Roberts about the recession, the recovery, and the state of labor market. Ohanian describes the unusual aspects of this recession and recovery in the United States as shown by the labor market and the unusual performance of hours worked, productivity, and wages. He also discusses the behavior of business investment and speculates as to why this recession and the recovery has been so different in the United States. The conversation closes with a discussion of the role of the foreclosure process in encouraging unemployment."

Excerpt from audio transcript:

Ohanian: Typically those big companies [e.g., GM] are not the big job creators. The big job creators are the small companies that then take off. Job creation at those small startups is way, way down. Not just today, but if you look at 2002, 2003, 2004, through 2007, it's not nearly as vibrant an economy during those expansion years as it was during the 1980s and the 1990s. When I look at that data from a long run perspective I'm much more concerned about the future of the U.S. economy than simply saying: We still haven't quite gotten it right from the most recent recession.

Russ: I assume you are saying that because it suggests there are some structural issues that this recession might be masking; that it's not just the recession. There's other stuff going on that's making things not so great.

Ohanian: Yeah. Earlier you asked me what was really different about our current episode. And the recovery now really jumps out. So, you asked me about this paper I wrote for the JEP a couple of years ago. It was a really interesting project. Chad Jones, the Editor of the JEP —

Russ: That's the Journal of Economic Perspectives —

Ohanian: Asked me if I'd be willing to write something, and I kind of specialize in economic crises, so I said, sure, this sounds fun. So there was a symposium in the JEP, Bob Hall, Mike Woodford, Ricardo Caballero, and I think David Laibson were the other papers in there. They were all very different . . . For listeners, all of them are really interesting reads. But when I wrote that, the conclusion I reached was it's not so much about a financial crisis. It's more about labor market issues. Or, if you want to think about financial crisis, it's: Why does that impact labor markets so much? . . . the labor market looks the same today, or perhaps even worse than when I wrote this first two years ago. Which is really disturbing. So, it's really unprecedented to have literally no return to normal employment levels. As I mentioned, employment in the population today is lower than it was in June 2009 when the NBER defined the "trough".

Russ: That's the start of the recovery.

Ohanian: Yeah . . . So, you look at that performance and that's not only abysmal, but it's unprecedented. I know we'll talk about the Great Depression a little bit later, but even in the Great Depression recovery you had at least some job recovery. In this one, you are not seeing any at all.

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