Today the National Bureau of Economic Research determined that the recession officially ended in June 2009. While this statement was in line with expectations, it should be remembered that the unemployment rate in June of 2009 stood at 9.5%. In August of 2010, a full 14 months later, the unemployment rate was 9.6%. The recession may be over, but the real work of recovery has just begun. –Josh Bivens
If you enjoyed the last two years, you will really love the next two years. According to the CBO Director unemployment is going to remain at these high levels for another two years. Which happens to be the next Presidential election year.
A look at the CBO projection will remind you that when the President took office, unemployment was at 7.7 percent. We were promised that if the stimulus was passed unemployment would not top eight percent. Today unemployment rate is at 9.6 percent and according to the new projection, unemployment will not drop below the promised level until after Obama’s first term:
“CBO expects that the economic recovery will proceed at a modest pace, leaving the unemployment rate above 8 percent until 2012,” said CBO Director Douglas Elmendorf at a Sept. 16 policy seminar.
Elmendorf said that long-term unemployment was the highest it had been in six decades.
“Weak economic growth has serious social consequences. About 9½ percent of the labor force is officially unemployed, but many other people are underemployed or have left the labor force,” he said. “The incidence of unemployment lasting longer than 26 weeks has been the highest by far in the past 60 years.”
Elmendorf directly addressed the contention that the federal government is out of policy options for dealing with this problem, given the failure of the Recovery Act to hold down unemployment.
Congress’ chief accountant said that both fiscal and monetary options for attempting to spur the economy carried risks that policy makers must take into account.
In other words the deficit is scary, more deficit is scarier.
“Although there are no magic cures, we do think there are both monetary and fiscal policy options that, if applied at a sufficient scale, would increase output and employment during the next few years (but not overnight),” Elmendorf said.
“Such options would have costs though—in particular, expansionary fiscal policy would increase federal budget deficits and debt relative to current baseline projections, which are already quite worrisome.”
Elmendorf said that policymakers thinking about additional stimulus needed to pair those policies with specific efforts to reduce the medium-term and long-term debt.
“Aye, thars the rub!” Unemployment is going to suck for two more years, but we don’t have the funds to fix it. What makes thing even worse is that the progressives that run our government have little desire to cut back on the expensive programs they just passed, or any of the other “nanny state” programs that are driving the our country into bankruptcy. To solve the unemployment problem, we need new leaders who will take the steps necessary to grow business, which doesn’t always cost money, sometimes it takes a little freedom.