Unemployment Forever!

[Joanne98]

No quick end to joblessness

Feb 1st 2010, 17:24 by R.A. | WASHINGTON

LAST week, I wrote:

In a conference call that just concluded, Deputy Director of Office of Management and Budget Rob Nabors responded to a question on how the freeze might conflict with efforts to return the economy to full employment. Mr Nabors noted that in 2010, the adminstration was focused on putting Americans back to work. Then in 2011, when the economy is on a more stable footing, the president will turn his attention to working toward a sustainable budget situation.

This is utter foolishness. Fiscal 2011 begins in October of this year. At that point, according to CBO, unemployment will be above 9.5%. At the beginning of fiscal 2012, according to CBO, unemployment will still be at or near 9%. This is an important point; one of the primary factors causing current high deficits is the revenue-reducing effect of a weak economy combined with the automatic increase in spending on social programmes associated with the weak economy. It's very difficult to balance a budget while the economy is weak, because every contractionary policy move further reduces economic activity, thereby trimming revenues and putting upward pressure on automatic stabiliser spending.

OMB head Peter Orszag is giving a press conference just now with Christina Romer, head of the Council of Economic Advisors, on the president's Fiscal Year 2011 budget. Ms Romer explained the economic assumptions underlining the budget forecasts. She noted that expected fourth quarter-over-fourth quarter real GDP growth would be 3% in 2010, 4.3% in 2011 and 2012, and would average 3.8% in the five years thereafter. These figures are in line with Fed projections.

She then gave the unemployment forecast. At the end of 2010, the unemployment rate, according to the administration's forecast, will be 9.8%. At the end of 2011, the rate will be at 8.9%. And at the end of 2012, after the next presidential election, the unemployment rate will be 7.9%.

Meanwhile, here's the historical context from Carmen Reinhart and Kenneth Rogoff:

Continued>>>
http://www.economist.com/blogs/freeexchange/2010/02/high_unemployment_sticking_around

[county worker]

1. I'll help the jobless situation and no kidding too!

I'm 63. I'm in good health. I have over 30 years accounting experience. I'll quit today if the government will pay me my current salary until I am 70 which is the age I wanted to retire. I am in good health and could just bank the social security until I reach 70 when I may get a pension.

Along with paying employers to hire people, pay older workers to quit. I'll quit so someone with the experience can take my job. I won't trade places with someone who is less economically well off than I am though. I may get laid off though then all bets are off.

[tonysam]

6. Seven years to go 'till I am 62,

and the job market is not looking good for me after having had my career robbed from me. Going back to college at my age would be stupid. I'd love to have my full Social Security right now, and just pack it in.

[JDPriestly]

7. I met an elderly woman about 83 in 1976 in Austria.

She had "retired" (taken her pension) during the 1930s when younger people were encouraged to "retire" instead of getting jobs. She was single and never returned to work. Truth be told, she was paid a very small amount of money to not work. At least that was her claim. Local people told me that, yes, in the 1930s during the Depression, younger people were pensioned early.

We may reach that point. We are not yet there.

At this time, you take lower Social Security payments if you retire early. That's all you get. Many, many people who find themselves unable to compete in the job market because of their age have been forced to take Social Security early. I went back to school at 50 intending to work until I am 70 but cannot compete with younger people in my field. It's very disappointing. I enjoyed my work, but my field is too stressful to do for free or nearly for free.

Because I was more or less forced to retire, I am very angry when I hear that the Obama administration wants to cut Social Security or Medicare benefits. The average Social Security benefit in December 2009 was around $1,064 per month. There is no fat in that kind of a monthly benefit. Cutting Social Security is unrealistic.

It wouldn't be so bad except that, unless they were paid very high salaries when they worked, even seniors who saved as much as they could are reduced to greater dependency on Social Security because the stock market crash depleted the value of their "investments" and 401(K)s.

For example, on about $13,000 in a savings account, I earned all of a little over a dollar in December of last year. So, don't preach to me about "You should have saved your money or prepared." Unless you are earning a lot of money, you cannot save enough to continue earning much on it in times like this. If GDP grew so much in the last quarter of 2009, why didn't seniors' savings.

Worst of all, investing in the stock market is sheer folly for seniors. It is too risky. The "investments" are too far removed from real economic value. I want no part of it.

The big investors are doing too much gambling and game playing with massive computers. With brokerage houses betting against their clients, how is a small investor to achieve even modest games. The market is rigged. In my view, a senior might as well go to Las Vegas as "invest" in the stock market at this time.

So, we seniors need to fight for strong Social Security for the future. Social Security was conceived during an economic depression and was designed to help seniors precisely in times like this. Young people need to support Social Security because if they don't they will be responsible for supporting their parents and, horrors, living with them. My children might not mind so much, but I think most young Americans would feel a little cramped if they had to live with their parents until death did them part.

[DJ13]

2. Once again Obama is too quick trying to appease conservatives

You dont worry about deficits with high unemployment.

[Craftsman]

3. If the economy does not return soon there will be a load of Dem congressmen uneployed

[Kurt_and_Hunter]

4. Every word I have heard in the selling of this budget is transparent crap

If it is super-effective political genius then that's cool, but it's not very amusing for adults.

Real "fool all the people all the time..." stuff. (Which, as the saying goes, cannot be done.)

[Larkspur]

5. Obama's Admin has be wrong about predicting the unemployment rate so far

They first projected it would not get above 8%, it's now at 10%.

I have no faith in their "fuzzy" unemployment numbers. I expect unemployment to be worse than what the Obama Admin predicts they will be.

[Hannah Bell]

8. "debt reduction" is going to make it worse, too. i bet 9-10% at the end of o's term,

if he stays on this track.

i'll bookmark my prediction.