And many economists point out that the length of time people are remaining unemployed is skyrocketing. As the Washington Post notes:
Another disturbing development was that the number of people out of work for 27 weeks or longer reached a record 5 million, accounting for a third of the unemployed. That suggests to some economists that those job losses were caused by structural changes in the economy and that many of those people won't be called back to work once the economy picks up. The longer people are out of work, the harder it becomes for them to find jobs and the more likely they are to exhaust savings or lose their homes to foreclosure.
No wonder even Paul Krugman writes:
That slight dip in the measured unemployment rate last month was probably a statistical fluke.Where Is Unemployment Going From Here?
Unemployment is a "lagging" indicator. In other words, if the economy crashes in one month, unemployment will not peak until several months or years later.
1) How bad were conditions in 2008 and early 2009?
and
2) What will conditions be in the future?
A look back at how bad conditions were shows that they were probably worse than those at the beginning of the Great Depression.
Says who?
Fed Chairman Bernanke and many other top economists (and see this).
Indeed, former Secretary of Labor Robert Reich wrote in April that the unemployment figures show that we are already in a depression.
And Chris Tilly - director of the Institute for Research on Labor and Employment at UCLA - points out that some populations, such as high school dropouts and African-Americans, are hit much harder than other populations. In other words, regardless of the population at large, these people are already experiencing depression-level unemployment. And see this and this.
Europe's largest bank - RBS - warns:
Even if the economy starts to turn up the headwinds will be formidable," [the company's CEO] warned. "The green shoots are short in duration and you need to be cautious about interpreting them. Even if growth returns, unemployment will rise for some time afterwards ...What Will Future Conditions Look Like?
When he was presented with the July unemployment numbers, even President Obama tempered his enthusiasm by saying that the official unemployment numbers will rise to 10% later this year.
And the Federal Reserve predicted in July that high unemployment
will cause the eventual economic recovery to be drawn out and weak for
years to come. In other words, the Fed is worried that we're trapped in
a vicious cycle, where a poor economy will lead to high unemployment
numbers, and unemployment will lead to less consumer spending which
will worsen the economy.
Unemployment is always a lagging indicator, and given the record low number of average hours worked, it will turn around especially slowly this time. Until then, people will continue to lose their jobs and wages will remain flat, and any small rebound in housing prices is unlikely to help more than a few people refinance their way out of unaffordable mortgages. So unless the other part of the equation -- monthly payments -- changes, the number of foreclosures should just continue to rise.
And see this.
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