It’s always a bit of a bummer to report that things aren’t getting better, but it’s worse when you keep saying it like a broken record and no one is paying attention. This has been the life of some of the smartest economists over the last several years. And for those who, like me, hoped the change in political administrations would see a change in that trend are finding ourselves disappointed that these bright minds are continuing to be ignored.
Such the life of men like Nouriel Roubini, a well-connected, yet overlooked mind when it comes to making decisions on the fate of the U.S. economy. Roubini latest piece, published in the New York Daily News, is a sobering look at the future of the economy if the unemployment rates continue to rise (and there is little reason or evidence to persuade one to think otherwise). His take?
So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
…
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.
This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.
Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.
This is in no way good news, particularly during the holiday season, but my own thoughts are that I’d rather have a better picture of the future and plan for it, than stumble around in the dark, hoping for brighter days.
Related articles
- Secondary Sources: Sold-out Hamsters, Roubini Sees 11% Unemployment for Two Years (blogs.wsj.com)
- Roubini: The Job Loss is Permanent (mydd.com)
- Roubini: “The Worst Is Yet To Come” (econotwist.wordpress.com)
- U.S. job losses wake-up call for optimists (financialpost.com)
- Companies doing more with fewer workers (msnbc.msn.com)
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