Recession, Recovery, and Unemployment

Now that the recession is officially over, we can all get back to work!

Except that the unemployment rate is forecast to continue to rise.  This is according to one economist who predicted the thing in the first place - Nouriel Roubini.  In an article Sunday, 11/15/09, he predicts it will rise to around 11 percent and stay there for some time.  What I find fascinating isn't the prognosis for unemployment but his setting of a specific number.  When the economy was humming along back about six years ago, that recovery was dubbed "the jobless recovery."  It is appearing that is again the case - another jobless recovery has begun.  How would anyone imagine that unemployment would dramatically decline as we now turn the corner from recession to growth?  Keep in mind, the tools used to define the beginning and end of a recession are technical and pertain to changes in overall economic output.  These do not necessarily have anything to do with employment.

According to Sean Bisceglia, CEO of TalentDrive, a Chicago-based job search technology startup, almost half of the companies he surveyed in August and September either had cut their hiring budget or didn't have one. He says that more efficient technology is replacing workers in many industries. That is one reason productivity has been rising -- and why jobs have been harder to come by.  Click here for the full text of the article.

Bank Lending and Economic Recovery

There's a news story out that Fed Chairman Ben Bernanke targets tight bank lending as a key reason for the current unemployment levels.


While I count myself among those who supported the bank and financial industry bailouts, the Bush Administration was caught in their ideology when they made a huge blunder in not being more aggressive in setting requirements on the use of those funds, executive pay caps, and regulation of derivatives.  Early in the Obama Administration, Treasury Secretary Geithner announced a plan on setting requirements on those same banks.