The Worst is yet to Come

[j_b]

The Worst is yet to Come: Unemployed Americans Should Hunker Down for More Job Losses

Nouriel Roubini

 

Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

 

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

 

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

 

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.

 

There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.

 

The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.

 

This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.

 

Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.

 

Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.

 

[..]

 

The damage will be extensive and severe unless bold policy action is undertaken now.

 

http://www.rgemonitor.com/roubini-monitor/257978/the_worst_is_yet_to_come_unemployed_americans_should_hunker_down_for_more_job_losses

[mkporwit]

[video:youtube]5vOudBOsyxE

[prole]

[video:youtube]

[KaskadskyjKozak]

 

Thanks Barry!

[prole]

Thanks Barry!

 

[Choada_Boy]

I deny these facts.

[G-spotter]

Shouldn't this horsecock be in the new Bacon Sausage forum?

 

[Peter_Puget]

So I guess he discovered employment is a laggin' indicator! Bravo J_B!

[Peter_Puget]

From the LA Times:

 

Confused about President Obama's stimulus package? The administration may not be the place to find clarity. The White House leadership has made statements about the stimulus that often are inconsistent -- and at odds with facts put out by the administration.

 

Effect of the stimulus

 

* Vice President Joe Biden on Friday: The stimulus "is responsible for

 

over 1 million jobs so far."

 

* White House senior advisor Valerie Jarrett on Oct. 18: The stimulus "really staved off a disaster and we saved millions of jobs around the country."

 

* White House release June 2: "Just over 100 days in, over 150,000 jobs have been created or saved."

 

* White House senior advisor David Axelrod on June 7: "The stimulus itself has produced hundreds of thousands of jobs."

 

Purpose of stimulus

 

* Vice President Biden on June 2: The stimulus is "an initial big jolt to give the economy a real head start."

 

* Biden on July 26: The stimulus "was intended to provide steady support for our economy over an extended period -- not a jolt that would last only a few months."

 

Life span of stimulus

 

* Obama on Jan. 28, two weeks before passage: "Most of the money we're investing as part of this plan will get out the door immediately and go directly to job creation."

 

* Obama on July 11: "But as I made clear at the time it was passed, the [stimulus] was not designed to work in four moths -- it was designed to work over two years."

 

Jobs saved or created by the stimulus

 

* Christina Romer, Council of Economic Advisers chairwoman, on July 13 when asked if she knew the number of jobs that had been saved or created: "It's very hard to say exactly, because you don't know what the baseline is, because you don't know what the economy would have done without it."

 

* Romer and vice presidential advisor Jared Bernstein released a report Jan. 10 that included a graph titled, "Unemployment Rate with and without the Recovery Plan." The graph showed that with the stimulus, unemployment would not exceed 8%, and without it, unemployment would reach about 9%. Unemployment is now 9.8%.

 

* Bernstein on June 8 said of the report: "Looking back, it was clearly too optimistic."

[jon]

Krugman posted a similar thing in his blog last week. There is not enough stimulus money to curb rising unemployment. I just recently interviewed 3 people for a job opening. 39 applied for the job and made it through HR vetting, likely more applied. All of the 3 were pretty much overqualified and were taking substantial (30%) pay cuts from their previous work.

[jon]

From the LA Times:

 

Life span of stimulus

 

* Obama on Jan. 28, two weeks before passage: "Most of the money we're investing as part of this plan will get out the door immediately and go directly to job creation."

 

* Obama on July 11: "But as I made clear at the time it was passed, the [stimulus] was not designed to work in four moths -- it was designed to work over two years."

 

 

Peter are you really THAT BIG of an idiot? There is nothing contradictory about this. The money did go out the door immediately to the agencies that disseminated the money. It still takes time to figure out how to use it responsibly. The NIH put out RFAs almost immediately upon Congress giving them the money, applications were due for the most part at the end of May (it normally takes up to 4 months to write an application) notices of awards were given out in September. For one set of grants they had 20,000 applications for 200 grants. The turnaround was lightening quick to the normal application process. We are just getting to hiring for the grants we received. One figure I've heard is there is still 70% of total stimulus money to be spent. You just can't realistically disseminate that much money, responsibly, that quickly. Well unless you are Bush and you just give it to Blackwater and Haliburton.

[olyclimber]

trucks loads of cash. just show up and start throwing it out of the back of the truck in LA.

[prole]

I love the new found concern for the unemployed from the crowd that a few months ago was suggesting that we should "let it all burn". Of course I know they don't give a shit about the unemployed, they're all about the costs, the "skyrocketing deficits". Problem is, they're the same people that a few months ago didn't give a shit about that either. Pretty soon they'll be demanding an end to US imperialism.

[KaskadskyjKozak]

I love the new found concern for the unemployed from the crowd that a few months ago was suggesting that we should "let it all burn". Of course I know they don't give a shit about the unemployed, they're all about the costs, the "skyrocketing deficits". Problem is, they're the same people that a few months ago didn't give a shit about that either. Pretty soon they'll be demanding an end to US imperialism.

 

I'd really love for you to get a job, Prole. Those loans will be tough to pay off otherwise!

[prole]

Pipe down, Cut n' Runner!

[Peter_Puget]

Here is Obama's entire statement: ( Link )I bolded the quote used by the LA Times. In the post above I copied the entire LA Times story. I think claiming that "out the door" means a bookkeeping entry authorizing cash expediture years in the future is somewhat tortured logic. Remember at the time one of the major criticisms of the Obama stimulous was the clain that the expeditures were in fact not timely. Remember all the claims of "shovel ready" projects.

 

REMARKS BY THE PRESIDENT ON THE ECONOMY

AFTER MEETING WITH BUSINESS LEADERS

White House East Room

January 28, 2009

 

THE PRESIDENT: Thank you. I want to thank Sam and David for their outstanding words. I want to thank all of you for being here today.

A few moments ago, I met with some of the leading business executives in the country. And it was a sober meeting, because these companies and the workers they employ are going through times more trying than any that we've seen in a long, long while. Just the other day, seven of our largest corporations announced they were making major job cuts. Some of the business leaders in this room have had to do the same. And yet, even as we discussed the seriousness of this challenge, we left our meeting confident that we can turn our economy around.

But each of us, as Dave indicated, are going to have to do our share. Part of what led our economy to this perilous moment was a sense of irresponsibility that prevailed in Wall Street and in Washington. And that's why I called for a new era of responsibility in my inaugural address last week, an era where each of us chips in so that we can climb our way out of this crisis -- executives and factory floor workers, educators and engineers, health care professionals and elected officials.

As we discussed in our meeting a few minutes ago, corporate America will have to accept its own responsibilities to its workers and the American public. But these executives also understand that without wise leadership in Washington, even the best-run businesses can't do as well as they might. They understand that what makes an idea sound is not whether it's Democrat or Republican, but whether it makes good economic sense for their workers and companies. And they understand that when it comes to rebuilding our economy, we don't have a moment to spare.

The businesses that are shedding jobs to stay afloat -- they can't afford inaction or delay. The workers who are returning home to tell their husbands and wives and children that they no longer have a job, and all those who live in fear that their job will be next on the cutting blocks -- they need help now. They are looking to Washington for action, bold and swift. And that is why I hope to sign an American Recovery and Reinvestment Plan into law in the next few weeks.

And most of the money that we're investing as part of this plan will get out the door immediately and go directly to job creation, generating or saving 3 to 4 million new jobs. And the vast majority of these jobs will be created in the private sector, because, as these CEOs well know, business, not government, is the engine of growth in this country.

But even as this plan puts Americans back to work it will also make the critical investments in alternative energy, in safer roads, better health care and modern schools that will lay the foundation for long-term growth and prosperity. And it will invest in broadband and emerging technologies, like the ones imagined and introduced to the world by people like Sam and so many of the CEOs here today, because that's how America will retain and regain its competitive edge in the 21st century.

I know that there are some who are skeptical of the size and scale of this recovery plan. And I understand that skepticism, given some of the things that have happened in this town in the past. That's why this recovery plan will include unprecedented measures that will allow the American people to hold my administration accountable. Instead of just throwing money at our problems, we'll try something new in Washington -- we will invest in what works. Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made public on the Internet, and will be informed by independent experts whenever possible.

We will launch a sweeping effort to root out waste, inefficiency, and unnecessary spending in our government, and every American will be able to see how and where we spend taxpayer dollars by going to a new website called recovery.gov -- because I firmly believe what Justice Louis Brandeis once said, that sunlight is the best disinfectant, and I know that restoring transparency is not only the surest way to achieve results, but also to earn back the trust in government without which we cannot deliver the changes the American people sent us here to make.

In the end, the answer to our economic troubles rests less in my hands, or in the hands of our legislators, than it does with America's workers and the businesses that employ them. They are the ones whose efforts and ideas will determine our economic destiny, just as they always have. For in the end, it's businesses -- large and small -- that generate the jobs, provide the salaries, and serve as the foundation on which the American people's lives and dreams depend. All we can do, those of us here in Washington, is help create a favorable climate in which workers can prosper, businesses can thrive, and our economy can grow. And that is exactly what the recovery plan I've proposed is intended to do. And that's exactly what I intend to achieve soon.

Thank you very much for being here.

[j_b]

So I guess he discovered employment is a laggin' indicator! Bravo J_B!

 

'lagging indicator', the euphemism of the moment to have people believe that the recovery has started whereas it is likely that once the stimulus money runs out, the economy will start losing steam again.

[j_b]

Krugman posted a similar thing in his blog last week. There is not enough stimulus money to curb rising unemployment.

 

Krugman, Reich and many others have been saying since January that the stimulus was too small and mostly ineffective to jump start the economy because half of it was tax cuts that are at best break even, and it didn't include retooling industrial capacity.