Unemployment: Fair & Balanced

[Dr. Shane]

The story from both sides:

U.S. Jobless Rate Surges to 10.2 Percent

Quote:

"Unfortunately, the problem is becoming deeper and more protracted," Mohamed El-Erian, chief executive of bond giant Pacific Investment Management Co (PIMCO) told Reuters.

"It's not just the increase in the headline number," he said. "It's also about the longer-term nature of unemployment, the increase in underemployment and the prospect for only a very gradual recovery," he said.

While Obama sees job creation as his top priority, the scope for further steps to boost the economy is limited by record budget deficits.

Rising unemployment could pose problems for the Democrats who control Congress as they head into elections in November 2010. This week, Republicans wrested control of two state governorships away from Democrats in races where the weak economy figured prominently.

"President Obama promised jobs during his campaign for president and the elections in Virginia and New Jersey on Tuesday were a clear referendum on his failure to deliver on this promise," Republican National Committee Chairman Michael Steele said in a statement reacting to the jobs report.

Unemployment's black October

Quote:

Paul Krugman is repeating his usual refrain: Obama should have pushed for a bigger stimulus at the beginning. Perhaps, in the most Rooseveltian of all possible worlds, he could have come into office and immediately orchestrated a massive WPA-like jobs program. But even if one accepts the rather unlikely possibility that Obama could have pushed through a budget deficit even larger than the $1.4 trillion we are currently looking at, I think there's good reason to believe that it would have been very difficult to materially alter the shape of the unemployment curve in the first nine months of the presidency. Remember, Obama came into office at the absolute height of the crisis -- the shock to the economy that hit a year ago had barely begun to work its way through its system.

There are definitely some bad future scenarios lying in wait. One possibility is that high unemployment next year leads to a Republican takeover of the House, and complete government paralysis ensues. Then we might find out for sure what happens when the government does not stimulate an economy as sick as ours. That is an experiment I am not looking forward to. But for the moment, we do have a White House committed to fiscal stimulus, even if it is operating under budgetary constraints -- not of its own making -- that severely reduce its freedom of action.