[yummyfajitas]

You are completely ignoring the point - if demand increases but producers don't need to hire people to produce more, employment does not increase. I.e., demand may be correlated with production, but production need not be correlated with employment.

If you looked at the fed stats I cited, they show precisely a lack of correlation between production and employment.

Nothing you have cited disputes this fundamental point. Krugman doesn't even try, he just declares victory and insults those who disagree.

[jellicle]

>if demand increases but producers don't need to hire people to produce more, employment does not increase.

If fishes rode bicycles... but they don't.

Productivity growth doesn't change that much year over year:

http://www.bls.gov/lpc/prodybar.htm

And recessions are generally times of low change, since it doesn't make sense to invest in labor-saving technology when labor is cheap.

> production need not be correlated with employment.

In a speculative robot-filled future, that could be true. On Earth in 2012, if you want something done, you hire a human to do it.

[yummyfajitas]

If fishes rode bicycles... but they don't.

Nonsense. Should I post the graphs again? The graphs clearly demonstrate increased production without a corresponding increase in employment. This is the "jobless recovery" that many columnists lament. Some graphs again:

http://research.stlouisfed.org/fred2/series/PAYEMS

http://research.stlouisfed.org/fred2/series/INDPRO

http://research.stlouisfed.org/fred2/series/GDPC1

http://research.stlouisfed.org/fred2/series/MANEMP

http://research.stlouisfed.org/fred2/series/IPMAN

And recessions are generally times of low change, since it doesn't make sense to invest in labor-saving technology when labor is cheap.

Labor is more expensive than ever before. Another graph for you to ignore:

http://research.stlouisfed.org/fred2/series/ECIWAG

According to Keynesians (e.g. Krugman), recessions are caused by labor not becoming cheap in response to exogenous shocks (due to sticky nominal wages). Do you disagree with this theory?