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White House Sees Elevated Unemployment for ‘Extended Period’

Posted by Larry Doyle on March 16, 2010 11:43 AM |

Is the White House reading Sense on Cents?

While I ask that question in a self-effacing fashion, I will allow others to pass muster as to whether my commentary deserves attention in Washington. Why do I ask that question now though? I wrote this morning, “What Happened to Focus on Jobs?”:

The ‘talking points’ utilized by those in Washington project that our economy and markets are experiencing cyclical unemployment. I firmly believe they are wrong. Our economy and markets are experiencing structural unemployment.

Now it appears as if the White House ‘talking points’ have changed.

Bloomberg reports Obama Aides See Jobless rate Elevated for Extended Period:

U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today.

The percent of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.

“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee.

I find this statement very interesting on a number of fronts, including:

1. An effective admission by the administration that the economy is experiencing structural unemployment as I highlighted above. Does this admission mean the administration will merely accept this elevated unemployment reality, while focusing on other initiatives, including healthcare, education, cap and trade, and financial regulatory reform?

2. The use of the phrase “extended period” is directly taken from the Federal Reserve in its approach to keeping interest rates low for an “extended period.” Oh, by the way, the Fed is meeting today. In light of the White House statement this morning, I certainly expect the Fed to reiterate that phrase this afternoon.

3. With the expectation that the Federal Reserve will keep the liquidity flowing, Wall Street will celebrate given the cheap funding and easy money from the Fed, but regrettably Main Street’s condition will not benefit in concert.

Jobless recovery? On Wall Street yes, on Main Street, no!! We would be wise not to think there is a connection between these two thoroughfares at this time.

Please tell me if you think differently. What is happening in the job market in your corner of our economic landscape?


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