US jobless rate to stay high: Bernanke

Source: Economic Times India

27 Jul 2009, 0658 hrs IST, AGENCIES

KANSAS CITY: The US jobless rate is likely to stay high even once the nation exits recession some time in the next few months, Federal Reserve Chairman Ben Bernanke said on Sunday.

In a taping of the "Bernanke on the Record" special that will air on television station PBS this week, Bernanke said it takes GDP growth of about 2.5 percent to keep the jobless rate constant.

Bernanke said economic growth was likely to resume in the second half of this year, but it would not be robust enough to bring down the jobless rate.

The unemployment rate was 9.5 percent in June, latest government data show. Speaking to an audience drawn from local citizens, Bernanke said the Fed is doing all it can to turn the economy around. "The Federal Reserve has been putting the pedal to the metal," he said, adding that "recessions happen."

The US central bank supports a strong dollar policy, Bernanke said, adding, "the best way to have a strong dollar is to have a strong economy."


Read more: http://economictimes.indiatimes.com/International-Business/US-jobless-rate-to-stay-high-Bernanke/articleshow/4824059.cms

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Umm...So, what's the plan?

;)

YES I DO :o

commercial paper is defaulting right and left as well as prime loans. I can't see how you can have this happening and say things are improving.

We are not even included in the plan.

'nuff said.

so we can appoint someone else to take over your idiotic policies and make it correct for the United States. This is the United States of America, not the United States of Bush.

Hawkeye-X

Knowing the DLC tentacles dug deep into Obama's WH the next Fed Chairman would likely be Larry Summers.

Were just cattle to feed them.

yes, it really is that simple.

how we can come out of a recession (or whatever this is) with high unemployment? Yes, I know we've had "jobless recoveries" before, but back then there was an active credit market, house values were going up, and this country had a huge manufacturing sector that could re-hire and even expand.

If enough people don't have money to spend because they're not working, how will the economy grow? And apparently our economy is like a shark in that it has to swim forward or die...

High unemployment has to be dealt with if we expect to get out of this. Its not rocket science. It is very frustrating to see this hugely important point overlooked time and time again by those who ought to know better.

A recession ends when positive growth replaces the negative. Growth is measured by an increase in the total national value of all goods and services. Employment is an indicator, but not a benchmark. We can have positive growth in Gross Domestic Product but rising unemployment, or at least, stubbornly high unemployment. Generally that happens when the economic future is uncertain, and therefore, full of risk. Expectations of inflation can also lead to depressed employment, despite an expanding economy.

Generally, employment has "momentum" and "inertia." Think of a freight train. If it's barreling down the tracks, it takes miles to stop it. If it's pulling out of the freight yard, it takes miles to get it up to speed. Due to economic momentum, employment stays higher than is justified by demand in the months leading up to a recession, and during its first phase. After six months to a year, unemployment begins reaching its worst levels. Employment gains then lag recovery as the economy ramps up.

Businesses that laid off workers run very lean in the beginning of a recovery, until they are sure the recovery is solid, and they can see a month-over-month increase in demand. Recessions suppress or even eliminate profits, leaving little margin for error in taking on new obligations. Hiring people is costly not only for the resources needed to support them, and the additional tax burdens, but also because it takes months for many employees (especially in skilled or professional positions) to become productive enough at their jobs to begin contributing positively to the company's bottom line.

For that reason, most hiring is done on a look-forward basis.

Long-term high unemployment rates are not likely to help Dems in the next round of elections.

We may not have any job creation but we sure as hell are going to have corporate bailouts, a corporate economic recovery and insurance industry friendly health care reform (if any).

Once again the flesh and blood citizens are fucked.

Hope? Change? Not from my window.

I'm not even seeing anything that looks like much of an effort to change....

"the best way to have a strong dollar is to have a strong economy."

And who is going to do that? Wall Street is pocketing it all.

let them eat cake.

Read up on macro-economics and the business cycle sometime. That's not to say Republican policies made this recession a lot worse than it could of been, but to say "Recessions are caused by Republicans" is simply moronic.

There is an underlying business cycle. But there are also well tested counter-cyclical Keynesian policies that western governments have adopted since the Great Depression.

For ideological reasons, Keynesianism is distasteful to Republicans -- although they use them in a backdoor kind of way through defense spending and tax cuts.

The result is that there is a statistical correlation between Republicans being in power and recession. This is not simply correlation, but causation. So it's not incorrect to say "Republicans cause recessions." It is wrong to say republicans being in power alone is sufficient to cause recession.

I keep hearing this crap about how protectionism extended the depression, well, without protectionism right now the corporation WILL NOT reinvest in the US until they do not have a choice. If they want to sell their product here they have to start making some here.

While we're at it, let's just cut the money supply, too.

Reinvestment only happens when there is a robust demand for product. Slice off a chunk of that demand, and you have
high tariffs AND unemployment.

I know we have hearts and stars...do we have, like, black dots or something for ignoring facts, too?

When Obama was in Ghana he urged rich countries to keep their markets open to African exports to help economic development there. I doubt that he will favor high tariffs on goods from African countries (or any other really poor countries in the world).

OTOH, if we put tariffs on stuff from rich countries, who's going to buy our exports (we're the third largest exporting country after Germany and China). If our exporters start laying off when the tariff wars start, I hope that your predicted increase in domestic manufacturing to meet domestic needs has already started. Otherwise our economy will go from really bad to a whole lot worse.

at the expense of US jobs and manufacturing. This did not happen overnight. It took decades, that what made it possible. Imagine if every exported job happened at once, imagine the response. If I read you right you are saying oh well, too bad for us. Why? Why not think of ourself for once instead of what's good for wall street.

Apologies for the disjointed dialog, I'm doing this from a phone.

We need to straighten out our own society with an efficient national health care system, an effective progressive income tax, regulation of the financial sector, and a dependable social safety net. Germany is the leading exporter in the world (ahead of China and the US). A rich, high-wage country like Germany can do this because it has all these things.

Rather than using the Third World as a scapegoat, we should deal with the real disease we suffer from which is the lack of a national health care system, a tax system skewed toward the rich, and a shredded social safety net. I think this is how President Obama views our problems. He doesn't want to wall the Third World off, obviously intends to improve our health care system (whether he is successful or not) and I think he will work on the tax system, safety net and financial regulation.

Once we make these changes we'll be able to compete with poor people in any country, just as Germany, Canada, and others do now.

At some point we must start the hemmoraging of our jobs, all jobs, to other countries that have no interest in providing the type of things you want to do here.

I'll bet you meant we need to "stop" the hemorrhaging of jobs. We "started" many years ago.

;)

My bad.

Our educational system and culture keep many urban and rural poor unqualified and unmotivated to compete with me. I don't need legislation to protect my job from them.

Any system that condones extreme inequality in compensation is inherently unjust and unstable. My making 10 (or 100) times what my counterpart in India or the Philippines makes is as unjustifiable as a CEO making 10 (or 100) times what I make.

Most of us here believe that CEO compensation is inflated. A progressive tax system and effective market regulation would do much to bring such compensation back to more reasonable and justifiable levels. It's relatively easy for me to argue this, because I'm on the low end of this wage disparity. If we control CEO compensation, there should be more available for regular working stiffs like me.

The compensation disparity is similar between my pay and that of my Third World counterpart. The big difference is that I'm on the high end of this wage disparity, so from one perspective I have no interest in controlling the compensation of the guy on top (me). It is in my interest to pass laws (tariffs, quotas, visa regulations, etc.) that keep the guy on the low end from threatening me. My guess is that corporate CEO's want to (and often do) get legislation (tax breaks for the rich, corporate bailouts, etc.) past that protects their compensation from threats from the guy on the low end (me).

If you believe that the US couldn't compete with the Third World, even if we did achieve effective national health care, progressive taxation, a secure social safety net, and corporate regulation, then by all means wall off the Third World (keep their goods, services and people out) and see if that solves our problems.

People all over the world are just as motivated and qualified as the next guy, what they usually are not is compensated in either wages or living standards. this one of the main factors that corps move their operations overseas. So this brings us back to the question, how do we pay for our programs if we develop our services and industry here then move them to another country? We must have an economical base to provide for any project the govt wishes to implament.

Sorry bubba. Sell it somewhere else.

And get a CLUE, will ya?

so life is good for those with money.

the stock market--once they've sucked back in enough patsies, they'll drop it like a stone again.

If my husband and I don't get some kind of work soon we'll need to get food stamps.

It's just THAT BAD.

Goddamn you and your ilk for all eternity you greedy fucking rat fucks.

unless perhaps the swine flu mutates into something much more virulent and with a higher mortality rate...and it would have to target the middle-aged people more than it has been.
eliminating 10% of the available workforce would certainly do wonders for the employment numbers :evilgrin:

That's why Bernanke stated that for unemployment to go down you need a growth rate of 2.5%. This isn't rocket science. :eyes:

when their situations aren't getting one bit better.
a recovery for the investment class is NOT a recovery for the vast majority of the nation.
but- since they own the presses- they get most of the press.

Defined as when GDP starts growing again following a recession. No offense is intended. :shrug:

gives you a "growth" number when none exists.

Fed keeps telling me that we're in deflation, but

groceries,

rents,

electric rates,

water rates,

clothing for work,

are all up significantly from last year where we're at.

Now, food and energy have been removed from the CPI for just that reason, and now new houses are in there. They have fallen (but how many people buy new houses every year compared to those who buy food and electricity?)

Most of this finagling has been done under the latest Republican administration.

But the point is, want to show growth? Let nominal increases in prices stand by not deflating them properly - voila! Positive GDP, also called "growth."

:crazy:

But, really...is a reflex a bad thing?

I think the reason for this piling on is that the working man's definition of "recovery" is not the same as economists. For supply siders the definition of a recovered economy is a stabilized banking system and a robust stock market and corporations making increasingly larger profits every year.

For the average working man a recovered economy means a well paying job with a home to raise your wife and kids. It means health care you can afford and relatively stress free financial situation.

Unfortunately these things do not walk hand in hand. So when supply siders begin to quack like a duck about a recovery it is completely understandable for the working class to be bitter when they realize that a "recovery" does not necessarily include them.