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The danger of a lost generation


– Christopher Swann is a Reuters columnist. The views expressed are his own —

NEW YORK, July 24 (Reuters) – For the first time in three generations, Americans across the nation are facing the threat of long-term unemployment. Already more than one in four jobless Americans have now been out of work for more than six months, the highest level since records began in 1948.

For both individuals and national economies, long-term joblessness has proved to be extremely corrosive. Skills atrophy after extended periods of enforced indolence. Then, when an economy recovers, these workers are no longer in a position to fill new jobs.

As a result the potential maximum speed at which the economy can grow declines, and the workers themselves come to be seen as “damaged goods.” Those unlucky enough to be graduating in 2009 may find that their salaries never match those of similarly qualified peers who finished in 2006.
To his great credit, President Obama has been quick to spot the danger. Under the administration’s stimulus package, the unemployed can now claim benefits well beyond the standard six months. In some badly afflicted states, insurance will last up to a year and a half.

Federal Reserve – The long way home


– Christopher Swann is a Reuters columnist. The views expressed are his own —

NEW YORK, July 21 (Reuters) – Seldom in its history has the Federal Reserve faced the challenge of articulating how it might conduct monetary policy a year or more ahead. But with the Fed balance sheet at an unprecedented 14 percent of GDP, markets and lawmakers are demanding assurances that the central bank will be able to slim down quickly when the time comes.

Gloomy employment milestones


There is normally something for both optimists and pessimists in the monthly employment report.

When the payroll figures are disappointing, the unemployment rate is frequently better than expected. This month is no exception. While payrolls plunged by nearly half a million, unemployment barely budged.

Live Fed blog


The Federal Reserve is entering a period of transition as a two-day meeting concludes today. Many questions remain on whether a recovery can take hold and on whether the central bank should start withdrawing from the extraordinary measures it took during the financial crisis. This may also be the beginning of the end of the Bernanke era at the Fed: President Obama must decide by next year whether to renominate the Fed chairman, whose term expires at the end of January.

Today’s statement from the Fed’s policy group, the Federal Open Market Commitee, may show changes in the Fed’s view of the economy and may also give hints of an exit strategy. Starting at 2 p.m. on this blog, Reuters columnists will discuss the Fed, the economy and the Fed statement, due out at 2:15 p.m. Please join us.

from Paul Taylor:

Sarkozy dons burqa to camouflage reform agenda

Treasury yields all the rage


A plethora of articles are circulating this morning as the handwringing intensifies whether the rise in U.S. Treasury yields – the world’s debt benchmark – will kill the green shoots of an economic recovery.  Wall Street Journal weighs in here and the FT here and here. All eyes will be on today’s $11 billion reopening of the 30-year bond to see if the hammering continues.  Auction results due out around 1 pm and can be found here.

Supply matters in Treasurys


If there was any question, Wednesday’s auction of $19 billion Treasury 10-year notes shows that supply matters. The reopened notes priced with a yield of 3.99%, up steeply from the 3.19% yield on the notes issued just one month before.

The spectacular rise in Treasury yields in recent weeks has caused a round of speculation that the U.S. economy is on the cusp of recovery. Earlier this week, talk grew louder that the market was signaling a rate increase from the Federal Reserve.