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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?

LD

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  • Sunup

    Larry, This from our local paper the Desert Sun in Palm Springs CA dated March 11, 2010

    The unemployment rate in Riverside County climbed to 15.1 percent in January, up from 14.3 percent the previous month, according to monthly labor force data from the California Employment Development Department.

    Tom Freeman, spokesman for the Riverside County’s Economic Development Agency, said the unemployment numbers are the highest seen since World War II and indicate the recession continues for county workers and their families.

    “I think it is pretty clear that by July of this year (the beginning of the next fiscal year), we will see significant layoffs in the government sector as cities and counties tighten their belts,” he said.

    Today there was another story about the high number of Food Stamp users. How could it be otherwise.Plus the food banks are overwhelmed. That’s how it is here.

    • Always Learning

      Those are ugly numbers, Sunup.

      Here’s a report from the Northeast: my family and I went out for a bite to eat last Thursday night. The restaurant is moderately priced, casual, Italian cuisine. The place was empty at prime time dining hours.

  • RICK

    WHY WE GO WITH OUT FOOD AND MAY SOON BE HOMELESS THE FAT CAT SAT HIGH IN HIS AND HER SADDLE POOR BITCHES DONT NO WHAT CARMA IS ?WERE IS LONG TERAm unpolyment now not tomorrow today soon we can in jpy are easter also fat cat do you no the word must not the day will come wean you will say i shll of but i did car now it to late you sinner aman

    • LD

      Clarity helps. …welcome aboard.

  • RICK

    mr obama i need a car so i can find work please help us with a car and a house we need help we live in daytona beach fla

  • fred

    Rightsizing.

    A business should not have more or less employees than it truly needs to maintain conservative long term growth targets. If productivity teaches nothing else, there is alot of elasticity in the labor component. Maybe our cyclical model of hiring as the economy expands and layoffs as the economy contracts is flawed.

    What if the layoff of any employee, triggered a mechanism of rightsizing which would include executive salary reductions to < 200 times the least paid employee and a minimum company wide pay reduction of 10%. Do you think companies would make a better effort to rightsize? Do you think pay disparities between the high and low paid employees would be so large? Companies would be doing more cross training and retraining to avoid triggering the pay reduction mechanisms. Self reliance rather than societal burden, what's wrong with that?






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