Defining “Rosy” Down

Under the header “Will the economy save Obama’s job?,” CNN reports:

Unemployment currently stands at 9.6%, just a pinch below the 10.1% peak hit last October. Economists surveyed by CNNMoney.com expect unemployment will still be barely over 9% a year from now. But the long-term outlook is rosier -- overall, they forecast unemployment to drop to about 8.1% on Election Day 2012, with some predicting it’ll drop as low as 7% by then.

Welcome to the new normal: The jobs situation has been so lousy for so long that the media portrays two more years of the unemployment rate exceeding 8 percent as a “rosy” outlook.

From 1948 through 2008, there were a total of 40 months in which the unemployment rate was 8 percent or higher. Forty months, total, in sixty years. The longest streak of 8+ percent unemployment was 27 consecutive months from November 1981 to January 1984.

Under the “rosier” long-term outlook CNN’s economists forecast for the next two years, by Election Day 2012, the unemployment rate will have been at 8.0 or higher for 46 consecutive months. That’s more than the total number of months the unemployment rate was that high from 1948-2008.

I’m not sure people in DC -- reporters or pols -- get how bad that is.

Comments

[Boloboffin]

People in D.C. -- reporters and pols -- do not get how bad it is because they have jobs. They can all sit around blithely joking about Slurpee summits because they can purchase Slurpees if they like.

[Dave in NYC]

From 1948 through 2008, there were a total of 40 months in which the unemployment rate was 8 percent or higher. Forty months, total, in sixty years. The longest streak of 8+ percent unemployment was 27 consecutive months from November 1981 to January 1984.

This isn't a coincidence, though. We had such a long period of high employment in part because of
a huge economy-wide growth in borrowing.

We're now basically in the process of correcting for 30+ years of unsustainable, debt-driven growth. The mistake was in originally thinking that doing so would be a short and relatively painless process. If there's anything we've learned so far, it's that everyone should have a "plan B" -- what will they do, not if unemployment is still over 8% in two years, but what if it's still over 9% then? What if it's over 10%?

[Dave in NYC]

I see that you don't allow HTML formatting in comments. The chart I was trying to link to is located here:

http://websitebuilding.biz/wp-content/uploads/2009/08/total-us-debt-vs-gdp.png

[RickD]

I like this

"We're now basically in the process of correcting for 30+ years of unsustainable, debt-driven growth."

It takes chutzpah to use the phrase "30+ years of unsubstainable, debt-driven growth." Sure, that's how the economy has been since the 1960s, but it must be inevitable that it stop! We must return to the economy of the 1920s! Or, better yet, the economy of the 1890s! Now those were good times!!

[Dave in NYC]

"It takes chutzpah to use the phrase '30+ years of unsubstainable, debt-driven growth.' Sure, that's how the economy has been since the 1960s, but it must be inevitable that it stop! We must return to the economy of the 1920s! Or, better yet, the economy of the 1890s!"

I don't know what you're talking about. Economic growth driven by ballooning debt levels didn't really start until the 80s, as that chart shows (unless you are taking issue with the data itself). The 1920s were actually pretty similar to what we have experienced since the 80s, with predictable results. Politicians who expect the economy to suddenly start growing at pre-2007 levels again are like the homeowners who expect their houses to start appreciating again.

Economic growth that depends on being able to borrow ever-increasing amounts relative to your income can't work forever. It's what happened on a micro level in the mortgage crisis (home price appreciation depended on ever-expanding credit in the mortgage sector) and it's what's happening at a macro level, with the federal government borrowing tremendous amounts (both directly and through Fannie and Freddie) in order to slow down the deleveraging process.

[Michelle Williams]

The interesting information, the tonic on a note! Forty months, total, in sixty years. The longest streak of 8+ percent unemployment was 27 consecutive months from November 1981 to January 1984.

[property inventory services]

What about the last Wall Street protest? I think that the unemployment will go beyond 10%. Anyway, good piece of information.

[Furnace Reviews]

The unemployemnt rate is only increasing even if you have a high education doesnt mean you are going to get a job

[www.gasfurnacereview.com]

Thanks for the informative post. Unemployment rating has increased significantly throughout the past years, combating this problem is a long hard process.

[Charmed girls]

I think, this theme is quite actual now. but it must be inevitable that it stop! We must return to the economy of the 1920s! Or, better yet, the economy of the 1890s! Now those were good times!!

[LPN Salary]

Describing a 9% unemployment rate as being rosy is a rather bleak outlook for what is yet to come.

[Inventories London]

too bad these are just statics with numbers. how about the situation out of it?

[ptc]

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