High jobless number here to stay
Posted on November 11, 2009 at 11:26 amEconomist David Rosenberg, who thinks the jobless rate will soon top 12 percent, breaks down the dynamics of the unemployment rate and the bleak prospects of it falling anytime soon.
Think about it. We haven’t yet hit bottom on employment but that will happen at some point. Employment is not going to zero, of that we can assure you. But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first? Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began.
So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over — perhaps even years.
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One Responses to “High jobless number here to stay”
I agree that the unemployment rate is going to continue to rise, but I am also seeing unprecedented entrepreneurship by the unemployed middle class and upper middle class. I am not so sure that this work respite won’t lead to an explosion in new products, services and attitude in the United States. For me, I am not seeing any additional pain from a double digit unemployment rate - there seems to be a make up factor.