The worst is yet to come: Unemployed Americans should hunker down for more job losses

[Winehole23]

The worst is yet to come: Unemployed Americans should hunker down for more job losses

BY Nouriel Roubini
Sunday, November 15th 2009, 4:00 AM




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 weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.



As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial ins utions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.



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

http://www.nydailynews.com/opinions/...#ixzz0X28mAZNl

[boutons_deux]

job losses continuing for another 14+ months means the consumer-dependent economy won't recover, and income tax revenues won't recover.

Business will figure out how to operate without those bothersome, unreliable slacker inputs/costs called employees, so that many good jobs will never come back.

low-cost money and govt spending is the Dems approach to try to ease the destruction by the Banksters.

We know the All-Bad-Faith-All-The-Time Repugs will blame it all on Magic Negro, but what would the Repugs do if they controlled the Exec and Legislative branches?

[BacktoBasics]

when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

Pointless statistic.

[MannyIsGod]

Yet more pleading for further stimulus.

[Winehole23]

Yep. The pleading is probably too late. Obama had one shot at stimulus, and half-assed it.

[MannyIsGod]

I guess thats where the buck stops. History isn't going to remember the party of NO blocking the attempts to get things done properly. Ultimately it only matters who was in charge.

[Winehole23]

History isn't going to remember the party of NO blocking the attempts to get things done properly.

The attempt to block the stimulus didn't work. I don't really see how half-assing it falls on the GOP.

[MannyIsGod]

It wasn't simply a win or lose proposition Winehole. Even the winners of war come home battered and wounded. The process of opposition itself weakens the bill with every compromise necessary as public perception of what should and should not go into a bill changes.

On one hand Obama deserves to be chastised for being unable to get a Stimulus package in the proper scope but some context is necessary when considering what was actually politically possible.

[Winehole23]

On one hand Obama deserves to be chastised for being unable to get a Stimulus package in the proper scope but some context is necessary when considering what was actually politically possible.

Obama didn't ask for enough money to start with; so say Krugman and Stiglitz. At any rate, the magnitude of stimulus was known to be far short of of the anticipated GDP gap before the fact. Laying this at the feet of the GOP is disingenuous.

[DarkReign]

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.

As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial ins utions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.

Hmmm, wonder why.

[boutons_deux]

The howling mob of the Repugs and their fake tea-baggers very probably limited what the Dems thought was politically possible in stimulus size. So the Repugs share some blame if the stimulus were too small.

Now they Repugs and their mobs are saying the stimulus failed, rendering more stimulus effectively impossible.

Absolving the Repugs is disingenuous

Repugs are now going after otherwise-popular Crist/FL for supporting the stimulus as he tries to run for Senate.

[MannyIsGod]

Obama didn't ask for enough money to start with; so say Krugman and Stiglitz. At any rate, the magnitude of stimulus was known to be far short of of the anticipated GDP gap before the fact. Laying this at the feet of the GOP is disingenuous.

I'm sorry but you saying I'm laying it at the feet of the GOP is false. I've been critical of Obama on this subject for quite some time and I'm fairly certain I'm one of the few in ths forum who has taken the stance that we had too little stimulus.

What Obama asked for publicly and what they floated around capital hill are probably two completely different figures for starters. Given the political climate present at the time of the stimulus package getting what Krugman and others have termed as what was nessecary was fairly unlikely if not impossible.

But also, I'd like to point out the recession and job loss did not begin on 1/20/2009. Lets not forget the months of waiting by a GOP president content to let his term merely run out so he could run back to home to Texas.

There is plenty of blame to go around.

[Cry Havoc]

Yep. The pleading is probably too late. Obama had one shot at stimulus, and half-assed it.

Realistically, I think the corruption was too rampant among corporations to truly fix the problem with anything this quickly. There was just no way to really fix a problem when there is such a huge corporate "in-scene" right now.

Really, it is a war we are fighting on our own turf. Corporate greed and deceit vs. the government and the American people (mostly the latter).

Corporations will continue to do anything they can to hornswoggle money from any source they can get it, which they then distribute to the board members and administrators. I worked for a non-profit in Chicago, and the administration (basically an entire section of the office) made close to or over 6 figures. No one has ever been able to explain to me why people working for a non-profit should be borderline upper-class income earners.

[Wild Cobra]

I guess thats where the buck stops. History isn't going to remember the party of NO blocking the attempts to get things done properly. Ultimately it only matters who was in charge.

And who had congress when this started.

[Wild Cobra]

Now they Repugs and their mobs are saying the stimulus failed, rendering more stimulus effectively impossible.

Hmm...

Some say too little, so why was so little spent of what was authorized?

The people like me said a stimulus would do no good, that we are doomed as long as we don't fix the root problems.

[Winehole23]

I'm sorry but you saying I'm laying it at the feet of the GOP is false. I've been critical of Obama on this subject for quite some time and I'm fairly certain I'm one of the few in ths forum who has taken the stance that we had too little stimulus.

Fair enough.

My point was that Obama and the Dems low-balled the stimulus, knowing full well it would fall short of the demand gap, even before presenting it in Congress. Suggesting the GOP is somehow responsible for that, or somehow deserves to be remembered in connection with that -- as you did -- is mistaken IMO.

What Obama asked for publicly and what they floated around capital hill are probably two completely different figures for starters. Given the political climate present at the time of the stimulus package getting what Krugman and others have termed as what was nessecary was fairly unlikely if not impossible.

If they really believed in Keynesian medicine they ought to have at least tried, don't you think? They'd at least be able to argue now that the stimulus didn't get us to the finish line because the GOP stood in the way. Instead, they half-assed it, knowing full well the amount wouldn't be sufficient bridge the GDP gap and the political will to do it again might be lacking. That's piss poor leadership.

But also, I'd like to point out the recession and job loss did not begin on 1/20/2009. Lets not forget the months of waiting by a GOP president content to let his term merely run out so he could run back to home to Texas.

There is plenty of blame to go around.

I couldn't agree with you more. But you chose to defend Obama and the dems on a point on which they're actually pretty week. Suggesting that the GOP fairly deserves to share the blame for the size of a stimulus they did not even vote for, is a bit ridiculous IMHO.

[panic giraffe]

Hmm...

Some say too little, so why was so little spent of what was authorized?

The people like me said a stimulus would do no good, that we are doomed as long as we don't fix the root problems.

i kind of agree, the money was sent to the wrong people. instead of the working man, who would have immediately put the money back into circulation, the money got sent to banks, who reinvested the money and are now in the process of re-couping it. which does little good in the dept of saving jobs.

but you're also kinda right about the root problem too. maybe i'm an economical novice, but i think the heart of the problem is in our dependence of using foreign goods, so that we can turn a bigger profit. call me old fashioned but if we want jobs to return, we need a shot in the arm to make it happen. raise the tariffs on all foreign manufactured goods to basically make the costs of bringing in a product just as high as paying american minimum wage, use the tariff money to fund real brick and shovel projects like new highways, buildings, high speed rail, new electrical grids, etc. or if a foreign company wants access to one of the largest consumer market in the world, make them open a plant here.

then we would keep our money here, if someone wants a foreign good, make them pay the price for it by also funding growth here at home.

but maybe i'm just crazy.

[Winehole23]

WC's crack about the "trickle-down stimulus" was spot on. There were, and are ways to get the money in the hands of consumers, where it will do the most good. As far as I can tell, none were seriously considered.

[TheProfessor]

Yep. The pleading is probably too late. Obama had one shot at stimulus, and half-assed it.

Pretty much.

[admiralsnackbar]

WC's crack about the "trickle-down stimulus" was spot on. There were, and are ways to get the money in the hands of consumers, where it will do the most good. As far as I can tell, none were seriously considered.

If we were still a country of producers, I'd agree with you, but I'm not convinced putting money directly in consumers' hands would have been any more successful given the trifling amount each individual would have received. Those who needed the money wouldn't have spent it, and those who didn't need it probably would have bought imported goods (because everything is imported now). In the latter case, the vast majority of the money would have ended up in corporate coffers, and, given most corporations fit into the former category, the money would have stayed put.

At least by keeping most states solvent, the stimulus was able to keep public services (education, police, etc) available and keep some money in the middle class to add some stability to the market and keep grocery stores and other quotidian private services afloat.

But I haven't been to bed yet, so the preceding may all be horse

[jack sommerset]

Blame Bush!

[boutons_deux]

"Blame Bush"

his Repug tax cuts for the super-rich liberated 100s of $Bs that very definitely inflated the bubble in search of profits (eg, like into non-bank, non-regulated, private mortgage lenders that wrote most of the sub-prime mortgages). Sorry, just love to slap you ers every possible chance you hand me.

[MannyIsGod]

WH what you call defending Obama isn't defending Obama but just providing reminders that the GOP does have a hand in this as well. Semantics maybe, but an important distinction to know where I'm coming from.

As I said earlier, ultimately when you have the power you eitehr use it or you suffere the consequences. The Dems and Obama have obviously left it short here and they'll pay the price for that but it must also be noted that this was more than likely an unattainable proposition to begin with.

We can be critical of them failing to meet the goal but I think we should also leave open the possibility that given the political climate and the oppositions actions that reaching a higher level of stimulus was simply politically impossible.

[spursncowboys]

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.

More government jobs will not fix inflation rates, or the decreasing value of the dollar. Bailing out states loaded with special interests spending will not balance their budgets. Also rasing the taxes and then giving companies a tax credit will not help the difference of the tax hike.

[MannyIsGod]

You completely misunderstood the article if your concern is inflation.