

Unemployment in America

Jobs gloom, with glimmers

America's jobless rate passes 10% but the job market should start to improve soon

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Readers' comments



@Quite Like Frank:
Clearly, if you know it’s an “abysmally small amount,” then you know paying a mortgage and for goods like its utilities, food, and gasoline are far from leaving much room for a surplus of savings. I wasn’t speaking to disposable income or savings rates; I was speaking to unemployment insurance being directly put back into the economy.
As for these more downtrodden numbers, to what are you comparing those numbers? Our economy’s growth over the past decade was predicated on consumer spending financed by a housing bubble. Responsibly returning to numbers we saw preceding this massive deflation won’t happen soon, with or without laissez faire market policy. Moreover, without the government having injected capital into the market, supporting its commanding heights, we’d be in even more dire straits. One can espouse fresh water economics all they want, but allowing mortgage lenders the ability to also acquire risky derivatives and over-leverage their banks only led to our being in this spot in the first place.
Voting Libertarian is better than voting Republican, but deregulation is just as much to blame for this problem as anything. The Libertarian Party hasn’t seen me advocate its position since I was in High School.


uru86, are you a communist, or just an uneducated ignorant or philosphy major or what?

herd mentality....you got that from newsweek who got it from time, who stole it from some stalinists at harvard....can you say MOO.


you are right, it is time for the government to take serious action.

dissolve and leave us the hell alone.


This crisis is transforming into a serious crisis, unless the government is wiling to take some dramatic steps. Unlike the 2001 crisis when the fiscal house was in order, which enabled the government to spend money; or the crisis of the early 80s when interest rates were close to 20 percent, giving the government room to ease the monetary base. This crisis has left the government no more real room for maneuver. The Fed cannot cut interest rates further, banks are not wiling to lend and as Orzak argues, the fiscal deficit is no longer sustainable; however, this assumes that conditions as they are, are unchangeable.

A big part of the solution is to raise taxes, which helps break the hegemony of neoliberalism/supply-side economics nonsense. Firstly, to help cover the huge budget deficit that is starting to seriously undermine confidence in the American dollar and economy; secondly, the private sector is NOT using the money effectively, it is too over-leveraged and hesitant to part with its capital. If we are dependent on what bankers and other capitalists think, we will not get out of this malaise because their mentalities are based on a self-reinforcing, pro-cyclical, 'herd' mentality.

Truthful James

Frankly, the stimus money has gone to those favored classes to prop up rather than create new jobs. The most obscene phrase used by the Administration is "saved or created jobs."

School districts got stimulus money and the NEA was ever shovel ready. At least one district in Illinois had more jobs saved than they had employees on the rolls.

The problem is that the consumer, and most of them are intelligent, has not followed the lemming like lead of the President to go further into the swamp of debt as his government has done.

Rational consumer behavior suggests that the consumer bears two types of debt -- Long Term mortgage debt aginst his sset which his his major source of savings; Short term installment debt (which with credit cards is infinite in length) used to purchase depreciating assets. As long as the value of his housing asset rose, he could in essence borrow against his increasing equity, purchasing on what the Brits used to call the Never-Never plan short lived assets. From time to time he could convert this credit card debt into home equity loans.

However, when the value of his housing asset decreased (and equity shrank), he changed his consumption patter, paid down his installment loans and created what had been thought to be an extinct bird -- actual savings.

This "unpatiotic" failure to immolate himself with hot new installment debt has had certain effects. First, the retail market crumbled, stores closed, commercial property owners found their properties in a downward value cycle, and banks raised the Cap Rates at which they valued commercial property -- driving down prices in the market up to thirty percent as the Cap rates climbed from 6% to 9% Second, the drop in sales lowered the demand for product, hitting manufacturers in the gut, both in America and abroad.

We will not see permanent relief until the supply of housing equals the number of qualified buyers. At that point there will be a more orderly increase in housing prices, consumer confidence will increase.


I am hoping that people that read the Economist are savvy enough to know that these economic stimuli are merely political gimmicks. The politician hopes that the timing of the spending aligns with the natural uptick in the business cycle, and takes credit. In 1982-1984, the upturn in the business cycle was aligned with a massive tax cut. It doesn't take an Einstein to know that, if you are a business owner or just a regular taxpayer, you are about to get smacked with a humongous tax hike. That will inhibit consumer spending...which will inhibit hiring...which will increase uncertainty in the job market...which will prolong the pain.

I hope I am wrong.

Quite Like Frank

@ MattyJohnson:

"Unquestionably, moves to extend unemployment insurance are the most fiscally prudent, humane, and go directly into boosting demand for commodities."

Not unquestionably. In fact, those collecting unemployment insurance, which for the most part is an abysmally small amount, put that money into necessities and are already saving a surplus on top of that--a condition that hardly creates more disposable income.

"...it would make sense for President Obama to continue using his speaking abilities, to both boost confidence in markets and to keep brighter days ahead in the minds of our citizens."

Spoken like a true believer in a do-nothing administration...

"While there will certainly be cynicism, particularly from the Wing Nut fringe, come rebounded numbers in 2010 showing that this President and Congress’s work to remedy our poor economic position made good sense, the Democrats will keep their majority in both the House and Senate!"

Are you willing to put money on that? I guarantee you we are not going to sustain growth anywhere close to 3.5% in the next three years. 1.5% to 2% is going to be more like it, if that. I doubt 3.5% is even accurate to begin with. If we haven't pushed away trade partners through protectionism led by the Democrats and allowed a complete Obama administration-led downward spiral of borrowing and spending, the Dems will be lucky to maintain a majority. Furthermore, looking at lower growth numbers for the next several years, perhaps even decade, is not something coming from a "Wing Nut fringe" as you put it. It's something some of the moste astute, well-learned economic minds are forecasting.

Wake up and smell the coffee. Vote Libertarian.


oh no, appears that Obama and his team are as dumb as Nancy Pelosi and the dems said Bush and his team were when they had their jobless recovery....

WHAT - how can it be that new taxes, new unfunded entitlements, new government coercion, new costs for business, new protectionism, and a higher minimum wage for teens DONT HELP CREATE JOBS (teen unemployment at 25%)????

We should not have expected Rahm "the hatchet" emmanuel to know this or care...but larry summers....I mean this is the same harvard guru who figured out that women are less apt to be scientists or financiers....and geitner at least was smart enough to see that his taxes would rise...so he started NOT paying them now.




One question if nearly all of the 3.5% GDP growth is from the Government sector where are the jobs coming from? Unless the Government plans on employing 14 million people there won't be any jobs; there needs to be real incentives for businesses to hire.

Here's reality:
1. We are no farther in opening more nuclear plants (none in 30 years) then we were 9 months ago reducing our need for coal-fired plants. (would generate million+ new jobs)
2. We aren't reducing our need for foreign oil no drilling off shore. Like it or not we consume gasoline and that ain't changing any time soon. (another million+ jobs)
3. We're so hyper-focused on universal healthcare that there no common sense plans for reform. Apparently it's all or nothing with Congress.

We also need the government to stop this notion that everyone deserves a house by maintaining the housing credit. Canada has it right, large down payments for home coupled with smart interest rates reduces any housing bubble.


Well said, KACEY1. Hope the government someday can respond to people's online reviews.

I always read reports like "jobless recovery" and "gloom but with glimmers." Are the media and the government living in denial or something?


"Assuming that sales keep edging higher..."
That is a big IF. Consumers are burdened by heavy debt they accumulated over the years, negative equity, high unemployment and in many areas of the country, still rising foreclosure. They would be extremely cautious when it comes to spending now. The biggest spenders in the past, who were the engine of global growth, are exactly the ones who are in debt and negative equity today. "Employment ought to recover eventually," well, duh!


'If the underlying trends are constructive, why is unemployment still rising fast? In part, it is a statistical mystery.'

what's so mystifying? with the dollar dropping like a stone, credit that tech start-ups depended on previously impossible to find, the deficit swelling, spending out of control, wars with no end, NO REAL BANK REFORM, it's obvious to me.

the one redeeming point in this article is that they actually included the data exempting the skewed birth-death model the US bureau of labor statistics always spins like mad to keep the medicated populace at bay.


I am so confused. Back in January, Obama and the Democrats said that it was urgent to pass the $900,000,000,000+ debt funded "stimulus" in order to keep unemployment at 8%. The rallying cry was that without borrowing the money and spending it, unemployment would spike up to 8.75%. Well here we are in November, we are over 10% unemployment, and we have another 900 billion dollars of debt. So what happened? Did Obama, Geithner, Nancy, Harry, etc.. lie to me? We should have simply skipped the extra borrowing and let the country work its way through the problem.


Unquestionably, moves to extend unemployment insurance are the most fiscally prudent, humane, and go directly into boosting demand for commodities. From my perch, it would make sense for President Obama to continue using his speaking abilities, to both boost confidence in markets and to keep brighter days ahead in the minds of our citizens. While there will certainly be cynicism, particularly from the Wing Nut fringe, come rebounded numbers in 2010 showing that this President and Congress’s work to remedy our poor economic position made good sense, the Democrats will keep their majority in both the House and Senate!


The nation's unemployment rate rose above 10% for the first time since 1983 in October. This was the 22nd straight month of job losses. The unemployment rate for teenagers in the labor force soared to 27.6%.

If you considered part-time workers, discouraged workers and so called “unemployable” workers, the unemployment rate is approaching 20%. Compare to 1933 (it was 24.9 percent), the real unemployment rate is worst in 76 years.

President Bush had a 750 billion dollars stimulus package, after congress added several hundreds so called “sweeteners”, that was really 821 billion dollar stimulus package. President Obama had an 870 billion dollars (may be more) stimulus package.

Without these economic stimulus packages, the unemployment could be worse.

Federal Reserve Bank is buying Treasury Bills? to keep the interest rate down.

U.S. Government has a deficit of 180 billion dollar deficits on a budget of 350 billion dollars per year, which means every one dollar the government spends; 50 cents are borrowed from China? Japan?

Perhaps, people should forget about the entitlement mentality, the fraudulent in the social welfare is rampart?

Willing to take less pay, why the person put a ‘screw’ onto a car can make $76.00 per hour in U.S.? But, the pay is less than $1.00 in China?

Move into a smaller house, the waste of big mansion is too much?

Use sub-compact cars, and improve the public transportation. I take BART (Bay Area Rapid Transit), it costs $12.00 per round trip, that is only 1/3 of the operating costs? The system was built in 1976, car is dirty and not rapid at all. I can use the brand new subway systems in Beijing, free transfer among half a dozen lines for 30 cents. Why is such a big difference?

Send the crooks in Wall Street to jail will give ordinary citizen more confidence on this economic system than bailouts?

Why pencil pusher can make millions and millions, just like you have 100 dollar in your pocket and you bet $3,500 on a gamble table. The government will pick up the tab, if you lose. You will pocket the winning, if you win. What the hell is this?

The best way to reduce the unemployment is face the reality. It took World War Two to cut down ten of millions of people, and billions of people live in poverty for decades. Let’s hope people will learn from this.

The world leaders should come out and say the truth, we created a big bubble in the past decades, now, we need to tighten out belt and help each other. Try to create another bubble by government is not the solution….


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