It really makes one understand why the public often dismisses academics as out of touch in their ivory towers. One has to imagine that neither Mulligan nor Mankiw ever held a real summer job. Nor, apparently, have they looked at any other nonseasonally adjusted data. Nor do they appear to have much understanding of the basic ebb and flow of US economic activity over the course of the year….
It seems to entirely escape them that aggregate demand has a very predictable season pattern – a seasonal pattern that exists in a recession or expansion.
These seasonal patterns in demand activity are not new. Indeed, I imagine that if the data existed, we would see the pattern has remained virtually unchanged since the dawn of human existence, as least in parts of the world where seasonal weather patterns govern economic life. Indeed, it is the reason we have an influx of teenage labor in the summer. It is a throwback to the days of America’s agricultural past, when the DEMAND for additional labor in the summer months necessitated closing schools for the summer.
As sure as the sun rises each day and winter turns to spring, sales spike at the end of the year as the holiday season approaches, collapse at the beginning of the year, rise in the summer, and then decline in the fall…
You can set your clock to this trend. Every retail analyst knows this trend. Every teenager who has ever held a summer job knows this trend. And a huge swath of data follows similar trends, albeit usually without the pronounced end of year impact. Building activity, waste disposal, tourism, you name it, it has a seasonal demand pattern. I only have to look out my ivory tower to see it – stuff grows faster in the summer, and the city hires crews of teenagers to cut it back. The pool down the road is open and staffed by teenage lifeguards only in the summer. Not because the lifeguards are available, but because there is no demand for an outdoor pool most of the year in Eugene.