12 reasons why unemployment will top 12% - or higher

Rick Moran
James Pethokoukis has a post on Reuters blog Political Risk that should be a wake up call to those Democrats counting on the jobless rate coming down before the 2010 mid terms.

Pethokoukis quotes economist Gluskin Sheff who gives 12 reasons why this recession is different than any other since the depression, and why the unemployment rate will not come down significantly for years.

Here are a couple of those reasons:

2. During this two-year recession, employment has declined a record 8 million. Even in percent terms, this is a record in the post-WWII experience.3. Looking at the split, there were 11 million full-time jobs lost (usually we see three million in a garden-variety recession), of which three million were shifted into part-time work.

4.There are now a record 9.3 million Americans working part-time because they have no choice. In past recessions, that number rarely got much above six million.

5. The workweek was sliced this cycle from 33.8 hours to a record low 33.0 hours - the labour input equivalent is another 2.4 million jobs lost. So when you count in hours, it's as if we lost over 10 million jobs this cycle. Remarkable.

And what about a jobs turnaround? Nope:

10. 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.

11. 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.

The Democrats will make a supreme effort to blame this on Bush. I think it a losing proposition but it's really all they have. Because if America blames the Democrats for 12% unemployment, it is almost a certainty that the GOP will make dramatic, perhaps even historic gains in 2010.

Whether the Republicans can take full advantage of the opportunity and flip the House is another question. There are only so many Democratic vulnerables and the GOP would have to win nearly all of them to take control. But if things are going to get worse between now and election day, it very well may stampede the voters into kicking the bums out and giving the Republicans a chance to see what they can do.

 

James Pethokoukis has a post on Reuters blog Political Risk that should be a wake up call to those Democrats counting on the jobless rate coming down before the 2010 mid terms.

Pethokoukis quotes economist Gluskin Sheff who gives 12 reasons why this recession is different than any other since the depression, and why the unemployment rate will not come down significantly for years.

Here are a couple of those reasons:

2. During this two-year recession, employment has declined a record 8 million. Even in percent terms, this is a record in the post-WWII experience.

3. Looking at the split, there were 11 million full-time jobs lost (usually we see three million in a garden-variety recession), of which three million were shifted into part-time work.

4.There are now a record 9.3 million Americans working part-time because they have no choice. In past recessions, that number rarely got much above six million.

5. The workweek was sliced this cycle from 33.8 hours to a record low 33.0 hours - the labour input equivalent is another 2.4 million jobs lost. So when you count in hours, it's as if we lost over 10 million jobs this cycle. Remarkable.

And what about a jobs turnaround? Nope:

10. 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.

11. 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.

The Democrats will make a supreme effort to blame this on Bush. I think it a losing proposition but it's really all they have. Because if America blames the Democrats for 12% unemployment, it is almost a certainty that the GOP will make dramatic, perhaps even historic gains in 2010.

Whether the Republicans can take full advantage of the opportunity and flip the House is another question. There are only so many Democratic vulnerables and the GOP would have to win nearly all of them to take control. But if things are going to get worse between now and election day, it very well may stampede the voters into kicking the bums out and giving the Republicans a chance to see what they can do.