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AP: High Jobless Rate Is ‘New Normal’

From an utterly shameless Associated Press:

Higher jobless rates could be new normal

By Tom Raum, Associated Press Writer Mon Oct 19

WASHINGTON – Even with an economic revival, many U.S. jobs lost during the recession may be gone forever and a weak employment market could linger for years.

That could add up to a "new normal" of higher joblessness and lower standards of living for many Americans, some economists are suggesting.

The words "it’s different this time" are always suspect. But economists and policy makers say the job-creating dynamics of previous recoveries can’t be counted on now.

Here’s why:

The auto and construction industries helped lead the nation out of past recessions. But the carnage among Detroit’s automakers and the surplus of new and foreclosed homes and empty commercial properties make it unlikely these two industries will be engines of growth anytime soon.

• The job market is caught in a vicious circle: Without more jobs, U.S. consumers will have a hard time increasing their spending; but without that spending, businesses might see little reason to start hiring.

Many small and midsize businesses are still struggling to obtain bank loans, impeding their expansion plans and constraining overall economic growth.

Higher-income households are spending less because of big losses on their homes, retirement plans and other investments. Lower-income households are cutting back because they can’t borrow like they once did

"This Great Recession is an inflection point for the economy in many respects. I think the unemployment rate will be permanently higher, or at least higher for the foreseeable future," said Mark Zandi, chief economist and co-founder of Moody’s Economy.com…

"Many factors are pushing against a quick recovery," said Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute. "Things will come back. But it’s going to take a long time. I think we will likely see elevated unemployment at least until 2014."

At best, many economists see an economic recovery without a return to moderate unemployment. At worst, they suggest the fragile recovery could lose steam and drag the economy back under for a double-dip recession

To many economists, such a goal seems unreachable given today’s altered economic landscape.

"It’s a new normal that U.S. growth is going to be anemic on average for years. Right now, the prospect is bleak for anything other than a particularly high unemployment rate and a weak jobs-creating machine," said Allen Sinai, president of Decision Economics Inc. He says he doubts that unemployment will dip below 7 percent anytime soon.

Many economists consider a jobless rate of 4 to 5 percent as reflecting a "full employment" economy, one in which nearly everyone who wants a job has one. After the 2001 recession the rate climbed to 5.8 percent in 2002 and peaked at 6.3 percent in 2003 before easing back to 4.6 percent for 2006 and 2007.

Will unemployment ever get back to such levels?

"I wouldn’t say never. But I do think it’s going to be a long time," said Bruce Bartlett, a former Treasury Department economist and the author of the book "The New American Economy: The Failure of Reaganomics and a New Way Forward." …

Look at what AP’s list of forces behind this ‘new dynamic.’

Who is running the US car industry? Who destroyed the housing industry? Who is running the US banking industry?

And why would higher income families suddenly be reluctant to spend?

For some historical perspective, here are some excerpts from an article we posted last May from an outraged Associated Press:

Employers cut fewer jobs in April, jobless rate falls

By JEANNINE AVERSA, AP Economics Writer

May 2, 2008 

WASHINGTON – Employers cut far fewer jobs in April than in recent months and the unemployment rate dropped to 5 percent, a better-than-expected showing that nonetheless reveals strains in the nation’s labor market.

For the fourth month in a row, the economy lost jobs, the Labor Department reported Friday. But in April the losses totaled 20,000, an improvement from the 81,000 reductions in payrolls logged in March. Job losses for both February and March turned out to be a bit deeper than previously reported.

The latest snapshot of the nationwide employment conditions — while clearly still weak — was better than many economists were anticipating. They were bracing for job cuts of 75,000 and for the unemployment rate to climb to 5.2 percent.

The unemployment rate, derived from a different statistical survey than the payroll figures, fell to 5 percent from 5.1 percent in March. That survey showed more people finding employment than those who didn’t.

Businesses are handing out pink slips as they cope with an economy that is teetering on the edge of a recession, or possibly in one already. A severe housing slump, harder-to-get credit and financial turmoil have forced people and businesses to be more cautious in their spending. And that has hurt the economy…

The economy advanced at a snail’s pace of just 0.6 percent in the first three months of this year as people and businesses clamped down on their spending. It marked the second quarter in a row of such feeble growth.

A growing number of economists believe the economy is in a recession and is indeed contracting now

Lest we forget, a 5% unemployment rate was considered "full employment" during the salad days of the Clinton administration.

Yet in May of 2008 the Associated Press tried to paint it has the harbinger of a second ‘Great Depression.’

And now that they have finally gotten what they wanted, they are trying to spin it as ‘the new normal.’

This article was posted by Steve Gilbert on Tuesday, October 20th, 2009. Comments are currently closed.

11 Responses to “AP: High Jobless Rate Is ‘New Normal’”

  1. Reality Bytes

    So is eutanasia of the elderly & not so elderly, nationalized journalism & energy. Hell! The only things the government wants to downsize are the military & national defense.

  2. Under the Obama administrations socialism plan this is correct. Unemployment will be the norm….until all doctors, lawyers, scientists are given a broom and their new job. Everyone will be making the same wage with 60% or more in taxes paid to the government (redistribution of wealth) and all taxpayers will be on some type of entitlement program from the central government to influence their future votes. Kid Mao has it all down pat except for one thing….in 3 years he’s out of office and the republicans will be in charge getting this mess cleaned up.

    • Rusty Shackleford

      That’s why he’s watching what just happened in Nicaragua. Dictator for life sounds pretty good, I’m sure.

  3. proreason

    This is an important article.

    It’s clarifies that there is no depth to which the msm won’t stoop.

    For those of you who held out some hope that the msm had ethics buried somewhere deep within their souls, this is clear proof that you shouldn’t waste anymore emotional energy on that one.

    But your know, there is always hope about something.

    For example, maybe O’Reilly is correct in his idea that the real reason Obamy is mad at Fox is because the child dictator hates being associated with radicals and Fox is finding them instead of little Obamy rooting them out himself.

  4. MinnesotaRush

    I guess actually believing what you write for print isn’t completely necessary over at the AP (or for that matter, in most of MSM).

    Either that, or Mr Tom Raum, Associated Press Writer, is a complete ignoramus (as well as those who hired him and buy into this bilge).

  5. BigOil

    Obama has always portrayed himself as the next FDR – and he has a point. FDR made 10%+ unemployment the new norm for nearly a decade with his raw deal government intervention in the private sector.

    Barry is actually one-upping FDR. He has grabbed control of 30% of the private sector and climbing. I have no reason to doubt he has succeeded in moving the bar up on unemployment. What private sector business will be remaining to hire anyone?

    • proreason

      FDR got over 20% unemployment, but they measured everybody back then, not just people still on the unemployment roles.

      The equivalent now is 16.7%. That number has been published.

      But that number is actually low, since it doesn’t count people who have never been on the unemployment roles, like people who were self-employed before losing their business, and seniors or mothers who now need to work but did not need to work before the Moron engineered the economic crisis. It also doesn’t count the 3 million or so workers who have entered the work force since the crisis was created.

      Add all that in, and the Moron is probably over 20% already!!

      And the boy wonder is only beginning his 10th month on the job.

      But of course, he is living quite well himself, thank you very much.

  6. VMAN

    Be a good little proletariat and accept what your overlords have decreed. You think you know better but you are sadly mistaken. The O has spoken and it shall ever be so. I DON”T THINK SO!!!

  7. Chuckk

    Why isn’t this recession like all previous recessions? Business/industry/banking over-expands during good times. The bubble bursts and a recession begins while supply and demand get back into proper balance. But that won’t happen this time.

    I guess the Obama administration has replealed the laws of economics.

    • Rusty Shackleford

      Back last Spring, the boy said he “denies business cycles” as in, he didn’t believe they existed. No further explanation was given. One is left to think that either he felt business cycles were a false assumption or, far more likely, he hated them and wanted to rid the world of their evil influence. Therefore, with a wave of his hand, he wished “business cycles” into the cornfield.

      My new name for Barack Hussein Obama (mmm mmm mmm)?

      “Dr Evil”

      “100 BIllion dollars”

      http://www.youtube.com/watch?v=jTmXHvGZiSY

    • proreason

      Chuckk, I agree with your point, but also think that there is something unique about this recession.

      Obamy’s handlers brought it on deliberately to get him elected.

      Prior to September 2008, the housing/mortgage crisis had been “happening” for at least 10 months. As late as July 2008 Henry Paulsen proudly declared that all was well with the economy, which was true. GNP was normal, employment was at historic norms, corporate profits were good, consumption was good, credit was available, etc.etc. etc. Inflation was a bit high because of the price of oil, and people were certainly aware of the issue with mortgages. But like I said, that had been well known for at least 10 months.

      And then, all of a sudden, after McCain took the lead in the polls for the first time, there was a savage raid on Lehman Bros, followed in a few days by some kind of money market run September 18 that caused Paulsen and Bernake, two lifelong Democrats, to rush into Dubya’s office and declare the end of civilization was nigh. And that isn’t an exageration in any sense.

      In quick succession, you then saw TARP, the election of a Marxist, and the demise of a free country.

      All according to plan.

      And oh, just as a side note, George Soros was convicted in Hungary of Securites fraud for his activities at that time.

      And oh, just as an other side note, Goldman Sacks, Paulsen’s ex-employer, made billions during the “crisis”.

      And oh, just as a third side note, millions of boomers lost 50% of their life savings in the “crisis”, which makes them prime candidates to apprecieate the benovolence of Universal Health Care. And of course, the banks “had” to be taken over by the government to save the credit markets. And of course, GM and Chrylser “had” to be taken over by the government to save the auto industry. And of course, Fannie Mae, Freddie Mac and the Mortgage industry “had” to be taken over by the government to save the mortgage industry. And of course, Student Loans “had” to be taken over by the government to save that industry. And of course, we needed a trillion dollar stimulaus that just happens to funnel 1/12 of the GDP to Obamy’s political backers. And of course, Health Care “had’ to be taken over by the government to save the country.

      Other than that, and marxists running the government, the recession is normal.


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