163. The Joblessness Threat
July 19, 2009 § Leave a comment
Sond logic. The alernative logic is basically the same but ignores unemployment, claiing that all is well ecause the core has resumed action but at a lower total level, the difference being that the core has the same cash flow while the difference is paid for by unemployment. As Roubini goes on to show, this however emans less consuption and less housing. keeping the core solvent under those conditions is not easy.
Recent data suggest that job market conditions are not improving in the United States and other advanced economies. In the US, the unemployment rate, currently at 9.5 per cent, is poised to rise above 10 per cent by the fall. It should peak at 11 per cent some time in 2010 and remain well above 10 per cent for a long time. The unemployment rate will peak above 10 per cent in most other advanced economies, too.These raw figures on job losses, bad as they are, actually understate the weakness in world labor markets. If you include partially employed workers and discouraged workers who left the US labor force, for example, the unemployment rate is already 16.5 per cent. Monetary and fiscal stimulus in most countries has done little to slow down the rate of job losses. As a result, total labor income – the product of jobs times hours worked times average hourly wages – has fallen dramatically.