What recovery? Unemployment shoots past 10 percent

When the Associated Press sees it like this, you know Obama is in trouble.

What recovery? Unemployment shoots past 10 percent
Joblessness at 10 percent for 2nd time since WWII; millions of unemployed feel no recovery
By Jeannine Aversa and Christopher S. Rugaber
AP Economics Writers
Friday November 6, 2009

WASHINGTON (AP) -- Just when it was beginning to look a little better, the economy relapsed Friday with a return to double-digit unemployment for only the second time since World War II and warnings that next year will be even worse than previously thought.

The jobless rate rocketed to 10.2 percent in October, the highest since early 1983, dealing a psychological blow to Americans as they prepare holiday shopping lists. It was another worse-than-expected report casting a shadow over the struggling recovery.

President Barack Obama called it "a sobering number that underscores the economic challenges that lie ahead." He signed a measure to extend unemployment benefits and to expand a tax credit for homebuyers.

Economists had not expected the 10 percent mark to come so quickly and immediately darkened their forecasts. Mark Zandi, chief economist at Moody's Economy.com, and Joshua Shapiro, chief U.S. economist at MFR Inc., predicted the rate will peak at 11 percent by mid-2010. They earlier had projected 10.5 percent.

What recovery? Unemployment shoots past 10 percent - Yahoo! Finance

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Grim17 said:

When the Associated Press sees it like this, you know Obama is in trouble.

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Not my Messiah.

Every competent economist predicted that job loss would continue to bleed well into this year and maybe next year. The Repubs have no answer and they don't like the fact that Obama's answer will eventually turn things around. The Dems just have to hope it happens substantially before Nov 2010.:mrgreen: And we all know the Repubs want unemployment to get worse until Nov 2010, because after all "Obama must fail" is their motto, and to hell with the unemployed.

tjinta ibis said:

Every competent economist predicted that job loss would continue to bleed well into this year and maybe next year. The Repubs have no answer and they don't like the fact that Obama's answer will eventually turn things around. The Dems just have to hope it happens substantially before Nov 2010.:mrgreen: And we all know the Repubs want unemployment to get worse until Nov 2010, because after all "Obama must fail" is their motto, and to hell with the unemployed.

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Eventually turn things around? well, eventually we'll have nowhere else to go but up, is that what you're referring to?

EpicDude86 said:

Eventually turn things around? well, eventually we'll have nowhere else to go but up, is that what you're referring to?

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That was the way FDR and Carter saw things.

tjinta ibis said:

Every competent economist predicted that job loss would continue to bleed well into this year and maybe next year. The Repubs have no answer and they don't like the fact that Obama's answer will eventually turn things around. The Dems just have to hope it happens substantially before Nov 2010.:mrgreen: And we all know the Repubs want unemployment to get worse until Nov 2010, because after all "Obama must fail" is their motto, and to hell with the unemployed.

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Could you post a link to a study where they canvassed every competent economist to determine what every competent economist believes? Also, how was it determined who is included in the competent economist group.

Thanks in advance for providing this info.

.

Four quick points:

1. The unemployment rate is a lagging indicator. It typically continues to rise even as the economy resumes growth. In part, a return of growth leads a larger number of people who departed from the labor force to return than the job market can initially accommodate. Hence, the rate continues to rise. In part, businesses are also cautious. They want evidence that the recovery is going to be sustained so as to justify expansion. Persistence of growth is the most important factor in building that confidence.

2. A larger component of the increase in the nation's unemployment rate is structural in nature than had been the case in the most recent recessions. Certainly industries--housing, construction, finance--will likely remain smaller than their pre-recession peaks through at least the medium-term. As NYU economics professor Nouriel Roubini put it, some jobs have been lost forever.

3. Even where jobs are available, there are mismatches e.g., CNN profiled a health services employer in Rochester who had long-running staff shortages. The employer was looking for people with two years' experience. There was a glut of college graduates who didn't have two years' experience. The implicit question concerned whether the employer would have been better off hiring some of the college graduates and allowing them to develop experience than to leave positions that have been unfilled for more than a year. That is not just a local phenomenon. On the national scale, there have been news stories about large numbers of resumes, but few properly qualified persons. No government policy can remedy that kind of mismatch, even as it contributes to a degree of unemployment.

4. The career/job placement/employment services sector is fragmented. It does not provide an avenue for a rapid return to the job force for many unemployed persons.

In sum, numerous factors beside the unemployment rates's being a lagging indicator have contributed to the situation.

While government could take measures to boost aggregate demand, which would help, there is a limit to what government can do. It should be noted that some economists such as Paul Krugman have floated the idea of a new WPA. Some others have called on the government to be the employer of last resort. Either practice would raise serious questions that run well beyond this short post.

At the same time, employer-prospective employee mismatches and a fragmented employment services industry are beyond what government can remedy.

Finally, structural unemployment depends on training and education, a process that takes time and investment to accrue results.

TOJ said:

Could you post a link to a study where they canvassed every competent economist to determine what every competent economist believes? Also, how was it determined who is included in the competent economist group.

Thanks in advance for providing this info.

.

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Milton Friedman thanks you for your thoroughness, TOJ

TOJ said:

Could you post a link to a study where they canvassed every competent economist to determine what every competent economist believes? Also, how was it determined who is included in the competent economist group.

Thanks in advance for providing this info.

.

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Economics as a "science" was invented to make shrinks look good....so says the retired econ professor next door....

Looking back as what has happened and then using that info to project the future is not real science when dealing with the foibles of humans.

Even so, the human factor as applied to economics makes more sense than when we apply it to global climate change...:2razz:

Grim17 said:

When the Associated Press sees it like this, you know Obama is in trouble.

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The easiest way to cure this is to make us all employees of the government.
100% employment, and a little more work for the Pay Czar.
Worked behind the Iron Curtain.

Yes We Can.

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