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Tell the NYT: The Downturn Is WORSE and Longer Lasting Than Had Been Expected
An NYT piece discussing the Obama's administration's plans to provide further stimulus to the economy implies that the economy is somehow doing better than expected. At one point commenting that: "the $787 billion recovery plan was intended to stretch over two years, partly in anticipation that the downturn would be prolonged." This sentence appeared after it told readers: "Democrats in Congress generally agree with the White House that a second full-blown stimulus package is not needed, barring an economic relapse."
In fact, the economy is performing considerably worse than CBO and most other analysts had projected when the stimulus package was designed last winter. They had expected unemployment to peak at a bit over 9.0 without stimulus. Instead, unemployment is virtually certain to peak at a level well over 10.0 percent even with the benefit of the stimulus package.
If the Democrats in Congress agree that a full-blown stimulus package is not needed then they believe that it is okay that unemployment averages 10.2 percent next year, 9.1 percent in 2011 and 7.7 percent in 2012, at least if they accept CBO's projections. It might have been worth pointing out that the baseline projection shows the unemployment rate will be above the peak of the last year recession for close to four years.
It would have been helpful to include some longer term economic projections in this discussion. No one could make any sense of a decision to support further stimulus without a knowledge of these projections. It is unlikely that most NYT readers are aware of these projections.
--Dean Baker
COMMENTS (4)
Reading between the lines of all the coverage earlier this year, I figured we'd see unemployment hit the teens.
Dean, like me, I think people, "analysts" included, thought of the Great Depression when the meltdown happened. They thought we could have 15 or even 20% unemployment. Things do look pretty OK compared to this.
I really am surprised you can't read this re: the expectations game.
Posted by: David Mercanus | October 6, 2009 12:12 AM
Dean, I really admire your thoughts here and in your recent article http://www.truthout.org/10050911 .
I agree that the time is now to arrest unemployment. The administration's ideas of pumping up unemployment insurance and COBRA is necessary, and your ideas of injecting funds into state and local government are all part of a good program.
I do also believe reducing the American work week is a very merit worthy idea. Americans work an insane percentage of their lifespan, and a good 15-20% of it is not productive. But is it really feasible to think employers, workers, could accept a 38 hour work week in this particular country?
As a corollary, my current employer defines 39 paid hours as a work week. Yet this is widely ignored and in fact 40 hours are the scheduled work days, and even more is expected from salaried staff. Such shortening of the work week is already abused.
Posted by: deanx | October 6, 2009 5:50 AM
Because of all the easy money, a lot of people were employed doing things that they should not have been. Ideally, over time, these people will be redeployed to different tasks that are more useful. I see some benefit to making this transition less painful and slowing it a bit, but it must occur and our goal should not be to keep people in these jobs for years.
Posted by: Erik L | October 6, 2009 9:15 AM
As shown by the BLS data graph here:
http://guerby.org/blog/index.php/2009/01/24/193-l-inexorable-ascension-de-la-population-sans-emploi-aux-usa
"unemployment" as measure is not reliable, even more so for comparing point in time.
As for the situation now the male aged 25 to 54 year old employment ratio is 81.3% in september
2009, the second lowest reading on record (starting 1948).
This means 100 - 81.3 = 18.7% jobless rate.
Of all the five years age range, the best situation is for males aged 35
to 39 where the employment ratio is 84.3, so 15.7% jobless rate.
15.7% is currently the *smallest* jobless rate of all 5-years segment of
the USA population.
You have to add about 5% part time. So the jobless or underemployed rate is currently approaching 25% for the better off sex/age categories.
Posted by: Laurent GUERBY | October 6, 2009 5:07 PM