12 reasons unemployment is going to (at least) 12 percent

November 11, 2009

Gluskin Sheff economist David Rosenberg, formerly of Merrill Lynch, thinks the unemployment rate is going to at least 12 percent, maybe even 13 percent. Optimists, Rosenberg explains, underestimate the incredible damage done to the labor market during this downturn. And even before this downturn, the economy was not generating jobs in huge numbers. If he is right, all political bets are off. I think the Democrats could lose the House and effective control of the Senate.  I think you would also be talking about  the rise of third party and perhaps a challenger to Obama in 2012.

So here is what I gleaned from Rosenberg’s latest report (bold is mine):

1. For the first time in at least six decades, private sector employment is negative on a 10-year basis (first turned negative in August). Hence, the changes are not merely cyclical or short-term in nature. Many of the jobs created between the 2001 and 2008 recessions were related either directly or indirectly to the parabolic extension of credit.

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.

6. The number of permanent job losses this cycle (unemployed but not for temporary purposes) increased by a record 6.2 million. In fact, well over half of the total unemployment pool of 15.7 million was generated just in this past recession alone. A record 5.6 million people have been unemployed for at least six months (this number rarely gets above two million in a normal downturn) which is nearly a 36% share of the jobless ranks (again, this rarely gets above 20%). Both the median (18.7 weeks) and average (26.9 weeks) duration of unemployment have risen to all-time highs.

7. The longer it takes for these folks to find employment (and now they can go on the government benefit list for up to two years) the more difficult it is going to be to retrain them in the future when labour demand does begin to pick up.

8. Not only that, but we have a youth unemployment rate now approaching a record 20%. Again, this is going to prove to be very problematic for employers in the future who are going to be looking for skills and experience when the boomers finally do begin to retire.

9. The gap between the U6 and the official U3 rate is at a record 7.3 percentage points. Normally this spread is between 3-4 percentage points and ultimately we will see a reversion to the mean, to some unhappy middle where the U6 may be closer to 15.0-16.0% and the posted jobless rate closer to 12%. This will undoubtedly be a major political issue, especially in the context of a mid-term elections and the GOP starting to gain some electoral ground.

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.

12. After all, the recession ended in November 2001 with an unemployment rate at 5.5% and yet the unemployment rate did not peak until June 2003, at 6.3%. The recession ended in March 1991 when the jobless rate was 6.8% and it did not peak until June 1992, at 7.8%. In both cases, the unemployment rate peaked well more than a year after the recession technically ended. The 2001 cycle was a tech capital stock deflation; the 1991 cycle was the Savings & Loan debacle; this past cycle was an asset deflation and credit collapse of epic proportions. And economists think that the unemployment rate is in the process of cresting now? Just remember it is the same consensus community that predicted at the beginning of 2008 that the jobless rate would peak out below 6% this cycle.


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Why can’t the Dems understand that we need more small business stimulus such as tax incentives. And that’s it. We would be well on our way to a quicker recovery. It is unfortunate.

Posted by Jason | Report as abusive

“when the boomers finally do begin to retire” In their 90s.

Posted by E L | Report as abusive

Jason — Federal tax receipts for 2008 were lower as a percentage of GDP than anytime in the last 50 years. What’s more, the Obama stimulus package included the biggest 2-year tax cut in history, including several targeting small businesses generally and others boosting specific industries like housing. Obama just signed a whole new set of business tax cuts, now targeting bigger businesses.

With taxes so low, you would think that you would see higher private investment with all that freed-up capital. But you don’t, not so far.

Talk to small business owners, as opposed to their lobbyists in Washington, and most will tell you tax cuts are great but they won’t lead to more hiring until consumers start buying their products again. And many business owners unfortunately have seen such steep losses these past two years that they owe no taxes to cut.

This recession isn’t about over-taxation. It’s about a society, public and private, that is totally bankrupt after years of bingeing on cheap money. Tax cuts — serious tax cuts — are being tried, along with spending. And taxes paid are lower than most of us have seen in our lifetimes. So unless you can come up with a compelling reason why more tax cuts is the answer when the lowest taxes since 1950 aren’t doing the trick, your argument isn’t an argument. It’s magical thinking.

Posted by scarpy | Report as abusive

Can someone explain #9 to me? What exactly requires there to be some natural spread between U3 and U6? If anything, I would expect the gap to expand as people roll off of U3 onto U6 (statistically speaking, of course). I don’t know what the final U3 number will be, and frankly I don’t really care… to me U6 has always been a more accurate reflection of reality.

Posted by krid | Report as abusive

We could drastically reduce unemployment, real quick and easy. Deport all those ILLEGAL ALIENS who are doing “the jobs Americans don’t want”. I’ve been drawing unemployment since January – while ILLEGAL ALIENS continue to work in the plant. Why aren’t any of our politicians addressing the fact that 6% of the people in this country today are here ILLEGALLY?!?!

Posted by Runaway1956 | Report as abusive

[…] fact, James Pethokoukis says it could go as high as 12% by next summer: Gluskin Sheff economist David Rosenberg, formerly of Merrill Lynch, thinks the unemployment rate […]

Posted by Hot Air » Blog Archive » Reid tossing cap-and-trade under the bus? | Report as abusive

scarpy-what alternative universe are you living in? Taxes are high and going higher and businesses have to factor in the tax hikes that ARE coming starting with the expiration of the Bush 2003 rate reductions. Corporate taxes are higher than average driving business overseas. Property taxes, local sales taxes and myriad other taxes are hurting business both directly and by impoverishing their customers. Increased regulations are a hidden tax.
Small business owners don’t have lobbyists-that is why they are abused by Washington.

Tax RATES are high and every single item on Obama’s agenda includes higher ones.

Posted by Pat Duggan | Report as abusive

Scary! But Obama and Nanny Pelosi want to turn us into a Third World country so they are happy about this! And if they nationalize health care, there will be even more unemployment. They and Mayor Bloomberg in NYC want to punish small business owners with onerous taxes and regulations. Shame on the people who voted for these socialists. Don’t forget that in many European countries, the unemployment rate is always 11 or 12%.

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Pat — I’m sorry, but you’re the one in an alternative universe. Federal taxes are not high here historically , even talking about top marginal rates (I’m leaving out state and local b/c that’s a different kettle of fish). And again, when you talk about revenue as a share of GDP — what people actually pay — we’re at a 59-year low. 59 years!

Tax cuts are not magic. They have decreasing marginal utility just like any other intervention. And when the country is paying only 15.4 percent of GDP, I would argue that the burden of proof is on tax cutters to show why this time will be different and they’ll really get that engine humming again. I’d also say the 2001 and 2003 cuts were ineffective at best in stimulating broad prosperity. The last ten years have been a waste for just about everybody except the top 20% or so.

And I want someone to tell me why a business would invest tax savings in the US now, with demand here plunging, rather than banking the money or sending it overseas to someplace like China where growth has slowed but not stopped.

You have something of a point that the top corporate rate is pretty high now on the international scene, and I’d like to see it lowered and the code cleaned up of all its ridiculous deductions and credits. But the effective rate is still relatively moderate for an industrialized nation. And the idea that tax policy is the major reason we’re losing jobs overseas is laughable — we’re losing jobs because our costs of living and labor are so much higher here than most other places, and because there are more and better growth opportunities elsewhere. Tax cuts won’t change those fundamentals. I’m not sure what will, frankly.

You’re also right that taxes will rise, and yeah, Obama’s disingenuous to say he won’t raise them on folks earning less than $250K. But here’s the nastier secret: whoever wins in 2012 will raise those taxes, Democrat or Republican, and they’ll slash spending. They’ll do both or they’ll preside over the worst fiscal collapse in this country’s history, as the bond market drops us like a hot stone.

Actually I kind of think the collapse is the more likely scenario. I don’t see either party summoning the cojones to do anything painful enough to make a difference.

Posted by scarpy | Report as abusive

Can we drop the New Speak in calling it a Recession.

Stop pretending already and use the “D” word.

Posted by bryan | Report as abusive

I don’t know where you are getting your facts, Scarpy, but you are terribly misinformed. Are you reading too much Krugman, perhaps, or just a White House paid troll?When all the income (U.S., state and local)taxes, property taxes, and sales taxes are added together, the average wage-earner is paying a higher percentage of income in taxes to government than at ant time in our history. Percentages paid in federal income taxes for high income earners during the fifties and beyond (until Reagan) were terrible but for much of that period there were many deductions (and loopholes) in place that do not exist today. Let me make it clear that I am not for huge tax cuts, but I am a believer in cutting the spending that comes from the vast government overreach into our lives. Then, targeted tax cuts for small businesses (whose job creation will lead us out of this recession) would be a good idea.

Posted by buquet | Report as abusive

I think we gave our industrial base to Asia because politically dominant free trade ideologues and corporate profiteering were in sync.

That means we don’t have the economy we used to have. We destroyed it, on purpose. This is what the rise of the corporate, ‘give business everything it wants’, Republican party did to America. It is Reagan’s long lasting stink.

Corporate America ate its children – us. And our children’s children will suffer the consequences.

The problem with Obama is (this is so obvious, what is wrong with you people?) that he is not ‘left’ enough. He is not challenging American capitalism, the finance industry, free trade, or globalization. Until the elites are shaking in their boots, we will face unemployment or worse.

Posted by lark | Report as abusive

Scarpy is right. New tax cuts (must make 2003 cuts permanent) are unlikely to create much growth. The huge consumer spending spree fueled growth here and in China was funded by borrowing against today’s earnings using phantom real estate equity as collateral. Earnings can’t really be spent twice, so even when the economy rebounds, consumer demand will be down by the amount that was overspent.

Business can only be made more competitive by reducing costs. Health care “reform” will just increase labor costs, eliminating compensation flexibility. Cap and trade will increase the cost of energy (any “green” jobs created will all be in China). Card check will surely lead to more labor instability. More regulation of Wall Street leads to higher cost of capital (results of Sarbanes – Oxley). Lots of bad options are being pursued by the current administration.

Several million jobs could be opened by cracking down on illegal aliens. Employer penalties should be CIVIL rather than criminal. The govt could give a free trp home (with household goods) for anyone who wants to self deport. One possible mechanism would require employers caught with illegal workers to post a bond of $10000/each redeemable on deportation (forfeited if they run). Using eVerify in good faith creates a “safe harbor”. To sweeten the pot for local and state govts, the bond could make claims against the bond for expenses incurred by that particular worker.

Posted by TK | Report as abusive

TK, Scarpy can’t possibly be right. Where is he getting his number of 15.4 % of GDP? This figure seems ludicrously lower than the reality. I have never seen an accurate assessment of total taxation in the U.S. I lived and worked in Europe for several years and it was much easier for the average worker to track there. To not count the explosion of all the other taxes and fees placed by governments across the country does not further the discussion. I was taxed at a very high rate in Europe but, I can now say that my total taxation here in the U.S. is higher than the soft socialism I left behind.

Posted by buquet | Report as abusive

[…] JAMES PETHOKOUKIS: 12 reasons unemployment is going to (at least) 12 percent. […]

Posted by Instapundit » Blog Archive » JAMES PETHOKOUKIS: 12 reasons unemployment is going to (at least) 12 percent…. | Report as abusive

Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas.

“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.” . . . Farr, in his presentation, also said manufacturers are being hurt by taxes and regulation. He said companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something.”

Yeah, I think Scarpy’s right!?

Posted by TomT | Report as abusive

Looming over all this is a Fed that will sooner than later have to begin raising interest rates to prevent the rampaging inflation our governments unhinged fiscal policy is inevitably going to cause. This will slow if not stop any business/employment rally in its tracks.

Posted by Boyd | Report as abusive

While tax hikes (or the lapsing of Bush tax cuts) are certainly cause for concern for small businesses, what is equally disturbing is that Obama’s policy aims, as articulated by his administration, offer little predictive utility. In other words, the administration’s emphasis on healthcare reform and cap-and-trade, regardless of one’s stand on the merits of these ideas, introduces another risk to business planning. We know that these policies are important to Obama, but that’s all we know. We have no basis for assessing the relative impact on our businesses, in part, because there is a lack of clear leadership on Obama’s part. Tax hikes are not good, but at least we can plan for them if a non-triangulating Democrat is in the White House. Obama, on the other hand, seems disinterested in making the kinds of clear distinctions businesses need to plan for the future. I understand the politics is the art of the equivocal, but I don’t think many politicians understand the paralyzing effect that unclear signaling has on business.

Posted by Nate | Report as abusive

I think everyone assumes that the dems are either entirely incompetent or completely out of touch w reality (crazy) and are attempting to right the ship of the US economy based upon what they feel is the best way to do it. WRONG-WRONG-WRONG!!! The real reason is that they are doing it ON PURPOSE! You got it, the dems are purposely trying to run the dollar and the US economy over a cliff so as to facilitate the standing up of “The new world currency” by finally driving a spike into the heart of the old US buck. This also works into their plan of finally cutting out the last wind of the free-market and making a government controlled central economy seem reasonable (read Communism come to America). Most Americans are so dammed dumb these days, most will think it a good idea and embrace it. Kind of like a drowning man grabbing at what ever passes by. Too bad it will be like seizing into a cement block, but by then it’ll be too late. God help us :-( YIKES!!!!

Posted by JM | Report as abusive

The 15.4% seems to be somewhat low, but current estimates put the Federal tax burden at around 17%. Total taxes run something like 27%, which is one of the lowest of all “developed” countries (hey, Mexico is lower). That indicates that the claim we are overtaxed is bogus. The overall tax rate hasn’t changed much between 1995 and 2006, so the claim that taxes are increasing is bogus.

I have not even seen anecdotal evidence that corporations are abandoning the US for tax reasons (I have seen evidence that they desert the US because we lack national health care). Most of the buzz about the corporate tax rate relies on comparing the US statutory rate against other countries but ignores numerous loopholes that result in fewer taxes being paid. In fact, The OECD average for corporate taxes is about 50% higher than the US, so that claim is bogus, too.

If we managed to do as well as most other countries on Health Care, we would actually save money with a national plan – as much as 10% of the GDP.

Posted by McDruid | Report as abusive

I’m in agreement with those here who see the overall tax rates and government takeaways at the highwater mark. Besides the credit lockdown and higher taxes, American-based businesses, and the consumers they depend upon, are further gouged by a severe dillution of their spending power due to all of the newly minted money placed in circulation over the past 12 months. The money supply has more than doubled, seriously eroding the earning power in all wages, savings, and investments. Adding insult to injury will be the coming period of hyper-inflation and the flight of America’s debt-holders. Just about the time this country begins to see the crest of it’s unemployment numbers, some 18 to 24 months hence, many of those still holding down jobs will be struggling to make ends meet on what, at one time, would have been comfortable earnings.

Posted by William in AZ | Report as abusive


Tax receipts are low because profits and capital gains are taxed and both are way down. Tax rates have not gone down. Obama is currently pushing two trillion-dollar tax hikes on top of the expiration of the Bush tax cuts; one will also drive insurers out of business and the other will also destroy the energy sector.

Obama has declared war on the American economy. It’s no surprise the country’s employers are going Galt in response.

Posted by TallDave | Report as abusive

http://en.wikipedia.org/wiki/Tax_rates_a round_the_world

U.S. already has the highest corporate tax rates in the world.

Posted by TallDave | Report as abusive

I’m a small business owner living in California and my combined taxes are over 50%. Not counting real estate taxes. I have seen no Obama tax cut. When I read about health care “reform” pushing health costs to small business, I start thinking about how many jobs I’ll cut to reduce the health care costs. Of course I hire from the immigrant community and don’t question too much their status. I’d love to hire true blue American’s but my area is awash with the “immigrant community”.
So for now, I’m in the cutting job mode and will wait till this health care thing works itself out before deciding future expansion and hiring.

What I described is the true Obama effect. Small business are freezing investment and hiring because we are worried about the extra costs associated with this health care thing. After all, we aren’t Lehman Brothers, B of A, Citibank with their billions of bailout (slush fund) dollars. We’re not rain makers to the elect Obama committee. We’re running scared right now.

Posted by small business owner | Report as abusive

WE need a PAYROLL tax holiday to enable households to repair their balance sheets – suspend the payroll tax for 2 years. this tax cut will result in more consumers spending, the repair of banks impaired assets – as peole can afford to make loan payments and incraesed employment. when agregate demand picks up the tax can slowly be reimposed to damped the inflationary impact of the increased demanmd.

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[…] around in time to save the Dems in time for the 2010 election, I note that Gluskin Sheff economist David Rosenberg, formerly of Merrill Lynch, now thinks the unemployment rate is going to at least 12%, maybe even […]

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[…] James Pethokoukis » Blog Archive » 12 reasons unemployment is going to (at least) 12 percent | Blo… If he is right, all political bets are off. I think the Democrats could lose the House and effective control of the Senate. I think you would also be talking about the rise of third party and perhaps a challenger to Obama in 2012. […]

Posted by Daily Pundit » My Bet | Report as abusive

The Federal budget this year is three times what it was when Gerald Ford was president. In constant dollars, adjusted for inflation.

This is the problem. Nothing else.

Posted by tab | Report as abusive

Scarpy clearly doesn’t know what he’s talking about. For example, he writes:

“Talk to small business owners, as opposed to their lobbyists in Washington,…”

Huh? Since when do SMALL business owners have lobbyists in Washington? They don’t . . . so we can write off Scarpy’s statement as simple nonsense, that was invented out of thin air in order to sound savvy.

And what about this doozy:

“What’s more, the Obama stimulus package included the biggest 2-year tax cut in history, …”

WHAT! The Wall Street Journal pointed this out long ago during Obama’s campaign: these “tax cuts” are NOT tax cuts as those words are normally understood. They are “rebates” paid to a very large segment of the population that DOESN’T PAY FEDERAL INCOME TAX ANYWAY…and yet, they get a “tax cut”; i.e., wealth has been REDISTRIBUTED away from profitable productive uses into PURE CONSUMPTION. IT’S WEALTH REDISTRIBUTION VIA TAX REBATES TO THOSE WHO WOULDN’T BE PAYING FEDERAL INCOME TAX ANYWAY; NOT A NORMALLY UNDERSTOOD TAX CUT. (Good grief! Not only is the economy in shambles, but language itself is falling apart!)

Scarpy’s “15.4%” number is spurious, invented no doubt to sound as if he has facts and figures at his fingertips, ready to dispute all who disagree.

Several things have to occur to reverse our decline into a depression:

1. Dramatically cut taxes across the board and at all levels — federal, state, and local. The reason federal revenues are lower than they have been is precisely because of high taxes — the Laffer Curve proves this and explains why as well. Lower taxes, revenues go up; raise taxes, revenues go down. Charles Gibson of ABC pointed this out to Obama during a debate he had with Hillary Clinton before the election. Obama was honest enough to admit that he didn’t care: for him, the purpose of a tax hike was NOT to increase revenues; the purpose was to “level the playing field” and cultivate “social justice.” It’s especially imperative to drastically cut the corporate tax rate and the capital gains tax. The present administration must stop punishing capital.

2. Dramatically cut government spending across the board and at all levels — federal, state, and local.

3. Do NOT re-inflate the money supply by adopting an easy-money, easy-credit policy. That’s what Bernanke is doing now — essentially trying to re-inflate the asset bubble we had just before the crash (that’s the Keynesian’s idea of “normal”: a permanent bubble-economy). Do NOT attempt to maintain high government spending with low taxes by means of printing money, or printing government bonds and selling it. Don’t inflate; cut spending; cut taxes.

4. Abolish all minimum wage laws. They increase the marginal cost of labor especially for small businesses and do nothing but lead to unemployment in the very sector they’re supposed to help: young people just entering the work force.

5. Abolish all coercive pro-union legislation. Just as it is necessary to cut both spending and taxes, so too is it necessary to abolish both minimum wages and coercive union legislation. The former creates a disincentive for businesses to hire workers whose marginal revenue product is going to be low — they’re inexperienced and don’t have a lot of value to add to the firm; this puts pressure on the labor market “from below.” The latter forces the employer not to hire as many employees as he otherwise would in the absence of pro-union legislation since union wages are coercively made higher than wages that would otherwise be set voluntarily between buyer and seller. Since this must lead to unemployment, we can say that coercive pro-union legislation puts pressure on the labor market “from above.” It’s quite interesting what happens: skilled laborers capable of earning, e.g., $60/hour but who cannot find a job at that rate (because available payrolls are used up paying for fewer but higher-priced union labor) work down the pay-scale ladder until they find a job at, e.g., $35/hour. But this has the same effect on workers who would usually make $35/hour…Some of them are now out of work. They, too, work down the pay-scale ladder until they find a job at, e.g., $18/hour; etc., etc. You can see that this process continues until it works all the way down to the minimum wage level — and the person most likely to get a minimum wage job will be someone of above-minimum-wage capability (because of all the pressure put on the job market starting with the highest skilled labor in the coercive pro-union labor market). Clearly, the ones who will stagnate with no chance at getting into the workforce will be the young beginner; unskilled labor.

Until 1997 when mainland China took it over, Hong Kong had no minimum wage laws and no pro-union legislation. Guess how much unemployment they had? Approximately 1%-2%. That’s simply “frictional” unemployment: workers quitting one job and taking some time off in order to look for another job, which they found quickly. Additionally, there were no “subsistence wage” jobs. Because of high growth, there were always slightly more employers than workers, so wages tended to be bid up to the maximum within that skill category.

Everyone has heard of the Great Depression of 1929, but few know about the depression of 1920. I believe Harding was President at the time, and he did the right thing: absolutely nothing. Actually, I believe he cut federal spending and did not start a policy of money expansion. Result? The entire thing was over in less than a year and the economy turned itself around with no “stimulus packages” or “bailouts” or “shovel-ready government jobs.” The Great Depression started off as an ordinary recession; the economy was actually poised to recover by 1931 but the recovery kept getting subverted by idiotic policies both by Hoover and Roosevelt. Hoover kept prices high and U.S. industry uncompetitive by imposing tariffs; Roosevelt keep food prices high through farm subsidies and actual physical destruction of food. He also prevented the labor market from recovering by supporting pro-union legislation.

It was not WWII that ended the Great Depression. What really happened was that the war created the political excuse that was necessary to lift wage controls. The war years themselves were lean and not ones of economic growth and expansion. It was only AFTER the war, with the homecoming GIs and the vastly increased labor force which, combined with wage and price freedom, led to an enormous expansion of output. It was this enormous expansion of output that created a tendency toward LOWER PRICES for all goods, and thus a higher standard of living for everyone. It was high-output/low-prices that created the post-war boom.

Posted by Economic Freedom | Report as abusive

[…] Heading Over 12%? Reuters reports “12 reasons unemployment is going to (at least) 12 percent” with an ominously compelling argument.  A key point to this analysis – unemployment […]

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Lark: “we gave our industrial base to Asia because politically dominant free trade ideologues and corporate profiteering were in sync.”

Funny thing, corporate profiteering, do you expect corporations do things for free? Who in the world would be so stupid to invest in corporations without the corporations making profits for them? Do you expect interest from your savings you deposit with the bank? (Not much, lately.) Why, you profiteer, actually profit from not doing anything except putting your money in a bank! How outrageous! Do you work for free? No? Heck, you profit from your labor.

Why free traders want to trade with Asia? The Asians produce things cheaper. If it costs us $20 to produce a coat, $5 for the Asians to produce one. If the “profiteers” do not profit from the coat, it costs a construction worker $20 to buy that coat. But only $5 to buy the same coat from the Asians. Will he buy locally or from the Asians and saves $15? He can treat his family of four to MickyD with that $15, generating jobs for local high school kids.

You know who the profiteers really are? Those who make tons of money without working or producing anything. Who could those be? The high and mighty politicians. What do the god damned politicians produce?

Another question: Who benefits the world more: Mother Teresa, or Bill Gates? (I stole this question from someone.) (Hints: One of them creates millions of jobs around the world, profits mightily, gives billions to the poor, and enjoys life as the richest man in the world; the other one suffers with the poor in India, living on donations from the profiteers.)

Before you admire those who “give back” to the community, “organize” the community, ” empower” the community, ask one question: Where does the money come from enabling the smugs to do their community organizings? (Hints: From those profiteers, from those who work for their money and give to charities, from the taxes the govt. confiscated from those who work for their money, from those profiteering corporations. Who don’t pay taxes that they are so happy to make others pay? Politicians, the connected, the Secretary of Treasury, Tom Daschle, Charlie Rangle. Who is the most well known profiteer: Al Gore, the soon to be first green billionaire. What does he produce to make such huge profits? Hot air and fear mongering.)

“Until the elites are shaking in their boots, we will face unemployment or worse.”

Yes, the elites are not only shaking in their boots, they are hiking in their boots out of the country with their billions, the billions that they could have invested in the country creating jobs to lower unemployment.

A worker seeks employment from an employer who pays him the most, a capitalist invests his money in industries/ countries that pay him the most. An unwanted worker gets in the unemployment line. An unwanted shaken capitalist gets the hell out of the country.

Posted by ic | Report as abusive

Does anybody think we couldn’t turn this whole slow motion ‘bad behavior bailout & ongoing stimulus’ trainwreck around in 3 months if we decided to stop the nonsense and “spent” 1.5 Trillion on a 1 year long Federal payroll & corporate tax holiday?

It would be like an instantaneous, 30-40% boost in take home pay and investment capital, with a parallel surge in consumer discretionary spending and business investment, including hiring.

When the holiday ended we could keep the momentum rolling with an idea proposed by Sarkozy:

No fed income taxes beyond 45 hours per week. (i.e., all you’d owe is FICA & UI)

Work hard, get rewarded. What a concept.

That said, with the exception of a socialist like Skarpy, some well educated comments here. Perhaps the sane people that work for a living are ready to retake their government in 2010? Only if the GOP figures out it’s time to follow the fiscal conservatives like Sarah Palin back to power and leave the god stuff in church where it belongs.

Posted by Mark M. | Report as abusive

[…] formerly of Merrill Lynch, thinks about what’s really going on and distills Rosenberg in 12 Reasons Unemployment Is Going To (At Least) 12 Percent, It’s not […]

Posted by Running in Place for No Reason « Just Above Sunset | Report as abusive

One needs to take into account that many business owners (small and mid-sized) are not going to “invest” in anything until they know exactly how much Health Care, Cap-in-Trade/Carbon Credits and the other government programs are going to cost. Everyone, companies included, should be hanging on to their cash and only spending the bare minumum to keep their companies and their households afloat. It would be unwise to do anything else.

“The problem with socialism is that eventually you run out of other people’s money [to spend].” Margaret Thatcher

It’s getting close…

Posted by Scott L | Report as abusive

I’ve had businesses for 30 years.

This is all very simple. Businesspeople are not stupid. They aren’t hiring because:

1. They don’t know what tax increases are coming.

2. They don’t know what new burdensome regulations are coming.

3. They don’t know what changes to the health care system are coming, and if perhaps they will be responsible for everyone’s COBRA or similar for years.

4. They don’t know if it will be harder to fire people in the future.

5. They don’t know if every employee will be allowed to join a union, increasing costs and headaches.

6. They don’t know what new procedures will be invented to upend the bond markets completely, overturning centuries of settled law.

7. They don’t know if Washington will unilaterally cut their compensation.

8. They don’t know if cap-and-trade will double their energy costs.

And on and on and on and on and on and on and on.

I can’t imagine hiring anyone until all this nonsense shakes out. I wouldn’t be surprised to see unemployment above 13%.

I can hold off generating taxable activity a lot longer than Democrats can retain Congress, that’s for damn sure.

Posted by Chester White | Report as abusive

Retire? Oh, that’s a quaint concept that my parents, and Government employees get to do. Seriously, I’m either (depending on how you look at it) December of the last year of ‘boomers’ or the first of ‘gen-x’, and I expect ot work till my final illness – be it die at my desk, or into the hospital, and die there

Wish I was kidding

Posted by KG2V | Report as abusive

[…] Going To 12-13%? Disturbing: James Pethokoukis

Posted by Unemployment Going To 12-13%? – US Message Board – Political Discussion Forum | Report as abusive

Chester White is correct, along with most of the other posters.
Obama’s “stimulus” plan has no tax cuts whatsoever, it was a slush fund for democrat social waste, government employee and welfare plantation vote-buying.
You can’t continue to grow the government at the expense of the private sector.

Obama has spent us into oblivion.
He has his banks now monetizing the debt using borrowed money that does not exist.
It’s called insanity.

We are also going to pay dearly for not tapping our own vast oil reserves, because the transformation to “electric” cars is going to take decades.
Even when we do start to recover, the concurrent rise in the price of gasoline is going to kill any meaningful momentum.

Posted by ghost707 | Report as abusive

scarpy wrote:
“This recession isn’t about over-taxation. It’s about a society, public and private, that is totally bankrupt after years of bingeing on cheap money. Tax cuts — serious tax cuts — are being tried, along with spending. And taxes paid are lower than most of us have seen in our lifetimes. So unless you can come up with a compelling reason why more tax cuts is the answer when the lowest taxes since 1950 aren’t doing the trick, your argument isn’t an argument. It’s magical thinking.”

Utter Horse Shit… Wake up you moonbat. Or at least show some data that proves these ridiculous assertions! If you read something other then the DU or Daily Kos, maybe then you’d realize what freak’n maroon your are!

Posted by BobM | Report as abusive

About the only way American jobs and prosperity will return is to promote the manufacturing industry (remember your Samuelson?). No other fixes are available irrespective of those who find manufacturing as mundane and not green enough.

Posted by Albie | Report as abusive

[…] http://blogs.reuters.com/james-pethokouk … […]

Posted by dispatches from TJICistan » Blog Archive » scary stuff | Report as abusive

Unemployment, both in the U.S. and the world as a whole, marches ever higher because the field of economics doesn’t account for the relationship between population density and per capita consumption.

Following the beating the field of economics took over the seeming failure of Malthus’ theory, economists adamantly refuse to ever again consider the effects of population growth. If they did, they might come to understand that once an optimum population density is breached, further over-crowding begins to erode per capita consumption and, consequently, per capita employment.

And these effects of an excessive population density are actually imported when a nation like the U.S. attempts to trade freely with other nations much more densely populated – nations like China, Japan, Germany, Korea and a host of others. The result is an automatic trade deficit and loss of jobs – tantamount to economic suicide.

Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

If you‘re interested in learning more about this important new economic theory, then I invite you to visit either of my web sites at OpenWindowPublishingCo.com or PeteMurphy.wordpress.com where you can read the preface, join in the blog discussion and, of course, buy the book if you like. (It’s also available at Amazon.com.)

Pete Murphy
Author, “Five Short Blasts”

Posted by Pete Murphy | Report as abusive

Socialism and communism are concepts driven by the belief that there is a free lunch somewhere if things are arranged just so. Children and Democrats believe that a free lunch exists. That’s why children and Democrats glom onto these two concepts.

We need leadership that knows how to foster a business climate where we can earn our lunch by recognizing America’s competitive advantage in the marketplace and nurturing it. This current group of “leaders” isn’t even close to that.

Posted by RDG | Report as abusive

It’s much worse than all that. The myriad of regulatory agencies such as OSHA, EPA, etc and the NIMBY lawsuits pretty much guarantee that any new manufacturing jobs are going to be created overseas.

If you are surprised, you haven’t been paying attention. Yes, manufacturing employment is shrinking worldwide due to automation. However, it’s shrinking faster here, and it’s not coming back. I’ll not live long enough to see the public wake up and realize what we have done to ourselves.

It’s going to be interesting, watching all those government workers striking against the government for better wages and working conditions that they have to pay for because there is nobody else to tax.

Posted by MarkD | Report as abusive

[…] Jimmy Pethokoukis says UE is going to 11-12% see his column here […]

Posted by Market Mover Thursday: Weekly Jobless Claims; IMF director says UE will continue to rise for next 10-11 months « Moderate in the Middle | Report as abusive

[…] to go nuts today. 12 reasons unemployment is going to (at least) 12 percent link to the article: James Pethokoukis

Posted by Unemployment Benefits: extensions after EB, part 3 – New Jersey (NJ) – Page 355 – City-Data Forum | Report as abusive

[…] 12 reasons unemployment is going to (at least) 12 percent. […]

Posted by Obama delays again « A Conservative Shemale | Report as abusive

Hey James, unemployment will be much worse than 12%. And it will probably last a decade or so.

These lost jobs aren’t coming back. They were all dependent upon irresponsible extensions of credit, like you stated. And that’s not coming back.

If it WERE to come back (out of control credit), the world collapses. Actually the world is probably going to collapse anyway!

Posted by Rip | Report as abusive

We voted for hope and change and we got it. We hope that things will not get too much worse as we endure the change of an ever increasing rate of unemployment.

Posted by nohype | Report as abusive

[…] We moved out of VT for economics and better schools. Had to find a new home for our husky it was tough but my daughter did fine. She still talks about VT and misses the bigger place and our dog but has a better school more kids, more stuff to do all around, and employed parents. My advice is to chase jobs to the extent required but don’t sacrifice school quality on the way. As nice as VT is the deck is stacked against economic vitality. Good luck. James Pethokoukis

Posted by Really debating whether to try North(Burlington) or get out of Vermont – (VT) – Page 3 – City-Data Forum | Report as abusive

Chester White is correct. Anybody who hires or invests in a business right now is engaged in a crapshoot. Worse, actually: a crapshoot that is heavily rigged against you. As for taxes, collections are low right now because wages, profits and investment returns are depressed. Yes, federal revenues are comparatively low as a share of GDP. But investments are made based on marginal tax rates, not average revenue divided by GDP. My program to jump start the economy:

1) Kill the health care bill. The last thing we need is more uncertainty and higher employment costs.
2) Kill cap&tax. We need cheaper energy, not more expensive energy.
3) Undo the hike in the minimum wage that went into effect this summer. (I’d undo all three legs that went into effect the last three years, but that would be harder politically).
4) Eliminate the corporate income tax. Make the US the most attractive place in the world to base a business.
5) Take the personal income tax structure back to the 1986 code — top marginal rate of 28% with few loopholes.
6) Open up all promising areas of on-shore and off-shore US territory to oil & gas development.
7) Radically streamline the permitting process for building new nuclear plants with a goal of getting at least 100 new plants on line within ten years.

Posted by Dark Helmet | Report as abusive

Just remember this is the same guy who predicted the S&P
500 would trading at 600 in October 2009……

Posted by bill | Report as abusive

[…] James Pethokoukis explains 12 reasons unemployment is going to (at least) 12 percent. […]

Posted by Fausta’s Blog » Blog Archive » Coming up: 12% unemployment | Report as abusive

Some of the confustion on taxes can be explained by Reagan if you like or you may choose Kennedy. It is paradoxical but true that simultaneously tax revenues are too low and tax rates are too high. This is the lesson of the Laffer Curve, much reviled but perpetually proven. It’s pretty simple, if you are familiar with a standard bell curve. The line across the bottom is tax rates. At 0% obviously you get zero revenue but at 100% taxation you also get functionally zero revenue, especially on an income tax because no one is going to intentionally work if 100% of their pay goes straight to taxes. Some will inadvertently do so but that is not enough to run a coffee service on, much less a nation. The UK briefly actually had 100%+ tax rates for their highest earners. It was not a big revenue generator. The problem is the spending. It is astronomical. And it is paid with borrowing which soaks up capital that might actually be invested in machine tools and paper cups and turned into business profits. Oh no, we can’t have that! But above all the would-be investor or entrepreneur looks forward and sees a customer pool with much less disposable income whether due to boosted taxes to cover todays derangement or the necessarily skyrocketing energy costs that Obama and others seek to inflict upon us to remedy the warming of a cooling world. Genius.

Posted by megapotamus | Report as abusive

To scarpy: You don’t see employment going up because employers are scared to death of the things Obama’s proposing such as unknown health care costs, unknown cap and trade taxes, etc. You’d have to be a fool or have a death wish for you business to go hire at a time like this. We have no leadership at the national level. Everything Obama has done is to punish those that create jobs and make the economy function. If that point is not obvious to you, it’s a good thing you’re a liberal and not a businessman. Dreams of liberals die hard, huh?

Posted by EdH | Report as abusive

[…] not-comics link of the day] Twelve reasons unemployment is going to (at least) 12 […]

Posted by Journalista – the news weblog of The Comics Journal » Blog Archive » Nov. 12, 2009: An affront to human decency | Report as abusive

Obama and Pelosi are determined to ratchet the nation to the left, the consequences for citizenry or even party be damned. They know that the 2008 election opened a rare window of opportunity, and they’re trying to ram as much through as they can before that window closes next November. They are perfectly willing to see unemployment rise to 20%, states go bankrupt, Muslim terrorists command our military, U.S. manufacturing suffer rigor mortis, and scores of Congressional seats disappear in 2010, but they don’t want to suffer another 1994, when they lost all those elections after accomplishing nothing for the glorious cause.

Remember the sixties mantra?: “We have to destroy the country in order to save it!!”

Can anyone explain to me how having William Ayers as President and Bernadine Dohrn as Speaker of the House would have been any different?

Posted by Renfield | Report as abusive

[…] unemployment rate is two percent over his own economic teams’ worst forecast and may end up hitting 12 percent before we’re done. Meanwhile, the economy is repelling jobs like an oliphaunt throws off […]

Posted by Oh, So He Wants Job Creation Ideas, Does He? | Report as abusive

scarpy said:

“This recession isn’t about over-taxation. It’s about a society, public and private, that is totally bankrupt after years of bingeing on cheap money. Tax cuts — serious tax cuts — are being tried, along with spending. And taxes paid are lower than most of us have seen in our lifetimes.”

The problem is and has always been the spending not the taxation. It doesn’t matter what you set the tax rates at you will never climb much above 20% of GDP collected by the federal government. If left to expire the top marginal rate will go back to 39% and when including the state rates that put the top rate near 50%. Any increases in those rates will lower the revenue to the treasury not increase it.

Our system is far too dependent on the top 5% of earners. Since most of the top 5% are heavily dependent on profits we naturally see a reduction in taxes collected because of the economic decline. Nearly 50% of workers now pay nothing or get money back from the Federal government. Until that balance gets fixed with either a flat tax, tax reform or value tax the system will be broken.

The funny thing is that when you rob Peter to pay Paul you always have the support of Paul. Obama convinced the majority of voters that 95% of us are Paul and we won’t “pay one single dime” in additional taxes to get all that he has promised. Does anyone still believe that now?

Posted by noc | Report as abusive

[…] this predicting that the unemployment rate may well rise over 12%: 10. But when we do start to see the economic clouds part in a more decisive fashion, what are […]

Posted by Confidence Value | Report as abusive

[…] to go nuts today. 12 reasons unemployment is going to (at least) 12 percent link to the article: James Pethokoukis

Posted by Unemployment Benefits: extensions after EB, part 3 – New Jersey (NJ) – Page 357 – City-Data Forum | Report as abusive

You missed reason 13. The Obama program has done everything it can to protect government employment and little to grow private sector employment. The sponge of government will continue to absorb the resources necessary for growth of the private sector and private sector employment for years to come.

Posted by Garland Tschudin | Report as abusive

Business would hire today with all the uncertainty mentioned in tax and environmental law changes coming, if they could sell their products, keep their property leased, etc.

But they can’t because the average working and middle class American has been put into unemployment by trade policies which allow production to move to the lowest cost production labor nation.

That sort of stratagy can work for some businesses for a short while, but ultimately it causes an international depression which is what we have now.

You can not expect Americans who live in and pay for the US infrastructure to live as cheaply as Chinese, Mexicans, etc. that is not going to happen not for several decades in the worst sort of outcome.

Unless, our labor and products markets are protected there is no way out of this international depression.

The Chinese refuse to allow their Yuan to appreciate and as Krugman has correctly pointed out they are as a result stealing US jobs.

And as incredible as it may seem to some, even when you give every possible benefit to corporations, and people at the top of the economic pyramid when the average American is either living in his car, or a tent or in fear of the same, the entire economic system is going to collapse, from banks to retail to autos, to pension funds, to fictitious capital schemes like derivatives.

We have had three plus decades of a suicidal economic policy favoring job exports, and the “Free Trade” BS which has inevitably led us exactly to where we are today, 31 million Americans unemployed and no way to re-inflate the economic bubble.

Let businesses invest all they want in Asia, Western business will still find cultural barriers to their products, much lower profit levels and their IP constantly stolen, until they themselves are driven out of business by their native Asian competitors.

Trade must be controlled and balanced otherwise it is an irretrievable race to the bottom.

Posted by Leslie Schwartz | Report as abusive

The Obama “tax cuts” were not cuts, they were rebates. In other words the tax rate was not changed, they just gave some of the money back. Which means that businesses knew better than to invest for the long term because they knew their taxes were going to go up. With the Democratic majority in office, the sunset clause of the tax reductions under President Bush will be allowed to activate, thus raising taxes on the small business owner and the most wealthy in the country.

And since most of the stimulus money went to either repaving roads and building government building projects, the remainder going primarily to “green” projects which are not profitable, the small business owner who drives the US economy gained nothing from it all. The bulk of the stimulus money went to states with the lowest unemployment numbers – in other words it wasn’t targeted to where it might theoretically have had some limited short-term benefit.

All of that, plus the multi-trillion dollar printing of money from nothing to pay for TARP and the Stimulus package means that business owners are clinging to what they have hoping they’ll survive the coming years, not investing, expanding, and hiring. What they can cut back, they’re cutting back.

In my own town I can’t go out without seeing another business or more closed. They’re dying out there and the present administration and congress has done nothing to help and a lot to do damage.

Its gonna get worse, I fear. This article is largely correct, but it leaves out the most important part:

#13: we have leftist cranks in charge of the federal government.

Posted by Christopher Taylor | Report as abusive


Revenue is down because high real incomes are down due to unemployment. Hence, aggregate tax collections are down.

Example: Mr A. has income (y) of $100. Mr B. y = $50.

The first $50 is the standard deduction. Tax rate is 10%. Tax revenue collected is $5.00

Now Mr A. goes to partime and earns $50. No change in rates nor standard deduction. Tax revenue collected is $0.00.

Hence, tax revenues as a % of income (GDP) have fallen. This is not a consequence of low taxes but falling incomes.

Rates are still high and going higher on income, property and consumption. It is the tax rates that matter not aggregate revenue collected.

Posted by bri | Report as abusive

Your argument about tax is way off the mark.

The economic activity that is in steep decline is not due to marginal tax rates on any class of tax payers, its the loss of a normal level of economic activity due to the huge unemployment numbers we have and the lack of job security for those who still do have a job, today.

Consumers are 66% of the market, when they can’t spend from income or borrow, the economy collapses.

There is no way to re-inflate this economy on Wall Street fictitious capital schemes, and with employment scare and uncertain people will spend as little as they can manage.

And given the ludicrous idea we have been sold that you can build international prosperity by giving away the jobs of Americans to low wage nations, its absolutely no mystery why we are in the fix we are in.

If you want a solution, find a way to put those 31 million Americans back to work and you will have a solution, but it will not be computable with off shoring jobs to the worlds lowest wage nations and allowing millions of Americans to go perpetually unemployed.

Posted by Leslie Schwartz | Report as abusive

[…] James Pethokoukis outlines a dozen reasons why unemployment will get worse before it gets better, even if the economy improves. That is IF the economy improves. 1. For the first time in at least six decades, private sector employment is negative on a 10-year basis (first turned negative in August). Hence, the changes are not merely cyclical or short-term in nature. Many of the jobs created between the 2001 and 2008 recessions were related either directly or indirectly to the parabolic extension of credit. […]

Posted by » Unemployment Heading to 12% | Report as abusive

it does not take an economics professor to see that the agenda is to eliminate small business that is non union and create big government to add union jobs to support it.socialism and redistribution of wealth encourages unemployment then welfare.why has unemployment benefits been extended past election year in 2010? this is the plan to spend the stimulus to bribe and pay for the re-election votes from special interest and unions.next year’s elections to congress will determine if socialism and big government will be stopped before taking over the country.when the public starts seeing the results of the liberal spending stupidity,it will be over. even all the brainwashed college kids and free American dreamers that put obama in office are beginning to realize the disaster of their votes.

Posted by jlott | Report as abusive

Missed two big reasons. Politicians don’t seem to realize:
1.) Capital is global now. It will go somewhere else where the ROI, regulation and taxes are better. That will slow down re-investment here.
2.) Work is global now. Doesn’t anyone realize how easy it is to outsource jobs? A percentage of those jobs are never coming back; They’ll add the work on the purchasing end from a foreign country. Forget about cheaper; it’s easier that way. You don’t have to manage them, or pay their health care.

Posted by Jim | Report as abusive

You want significant and immediate employment numbers, allow drilling for oil and building refineries, nuclear plants. Now that global warming has been exposed as a hoax beyond all shadow of a doubt (Google Lord Moncton) we need to get back to energy independence. Good jobs too.

Posted by Jim | Report as abusive

scarpy: yes, the “little guy” pays no Federal income tax, but he or she pays through the nose for FICA. And don’t whine that State and local taxes “are a different kettle of fish.” These states are meeting Federal spending standards. They are paying into state employee pensions at rates that will destroy the communities that once hired them. This, too, is part of our inability to reform Social Security. (note: giving SS cancer is NOT reform.)

A 40% tax on medical procedures and equipment is in the healthcare plan. That *is* a future tax on “the little guy.” The spendulus (stimulus) contained even more spending requirements, never mind the deficit (and the future taxes) it has incurred. Everyone is preparing for capital gains and income taxes to go up.

We were not living in a magical land of free money. Monetary policy did not cause the mortgage bubble. We were living in a land of magical rates on securitized mortgages.

The law stated: if you have 10,000 mortgages, you must have x% of their value in reserve. Unless you have 10,000 mortgage shares, in which case you can squeak by with only 40% of x.

And then Barney Frank took the fake profits from Fannie and Freddie (now bailed out to a greater amount than all the private banks and AIGs combined: don’t forget the Federal Reserve bought trillions in Fannie bonds) and gave it as a bonus to renters… to subsidize them… to make up for the subsidies of our govt. guarantees to Fannie and Freddie…

Didn’t work, did it?

Posted by Peter Buxton | Report as abusive

[…] reasons why national unemployment will peak at 12 percent. Or maybe 13 percent. Written by John Crowell – Visit […]

Posted by The dirty dozen | Worth Reading | Report as abusive

[…] Oh, and just to cheer you up: there are some good reasons to think things will get even worse. […]

Posted by What A Great Job On The Economy! « Tai-Chi Policy | Report as abusive

[…] has been like no other in terms of the damage it has done to the fabric of our economy. Here is a terrifying list of the many ways this recession is historic, and why the lame liberal fantasy of vast government […]

Posted by The Strata-Sphere » DC Liberals Have Bankrupt America After Only One Year In Power | Report as abusive

I’ve read some of the comments from some of these people on here. Some of them said that companies outsource jobs because of high taxes or some say that it is due to lack of health care. Words of advice…STOP MAKING EXCUSES FOR CORPORATE AMERICA! While some of you CARE so much about US companies, US companies do not care about you! Sure lower the taxes or improve the health care, does that really matter to a short-sighted, greedy business man? Really? Does that really matter to him? He wants cheap labor so he can have MORE money in his pocket! Do you people understand? Corporate America does not care about you! When the system tells you all that you have to have an education to get a good job, you know what they really mean? Let me tell you. It means you only can be educated enough to do the paper work, run a machine, or get your boss’s coffee, BUT Corporate scums are not interested in you being well educated and have critical thinking at the same time! They rather want you to have slave mentality and not question them as they make bad decisions!

Posted by anonymous | Report as abusive

[…] James Pethokoukis, a Reuters blogger, has a post based on an analysis by economist David Rosenberg suggesting that official unemployment may go well above 12% — this means that real unemployment that includes those who have given up looking for work and those severely underemployed may hit 20%.  Here is part of Pethokoukis’ take on this forecast: Optimists, Rosenberg explains, underestimate the incredible damage done to the labor market during this downturn. And even before this downturn, the economy was not generating jobs in huge numbers. If he is right, all political bets are off. I think the Democrats could lose the House and effective control of the Senate.  I think you would also be talking about  the rise of third party and perhaps a challenger to Obama in 2012. […]

Posted by Unemployment May Get Much Worse » Peer Marketing Group | Report as abusive

Since bit business is not spending the money they have and banks will not loan money, the economy is contracting, as it often does in a recession because of fear of investing. What Obama should do is spend more to spend American out of the economic crisis. Give the money to retirees, the unemployed, to businesses that want to expand, to whomever will spend the money. That is the way the U.S. got out of the last severe recession (depression)– spending in WWII got us out of it, and nothing else worked.

Posted by Peter777 | Report as abusive

[…] You can read the rest of James’ article at Reuters Blogs […]

Posted by Unemployment to hit 12 percent: analysts | Coming Depression | Report as abusive

I went to see Paul Krugman speak in Manchester, Vermont in October. After speaking for an hour, he started taking questions from the audience. A man a few feet away from me stood up and asked him where the jobs were going to come from for his children and grandchildren.

Paul answered that he didn’t know, but green jobs might be an answer. He also said that something might come along that we haven’t invented yet, that will revolutionize things similar to computing and the internet. But, in the end, he just didn’t know from where the jobs were going to come.

I don’t think we can sit around and wait for something to be invented that doesn’t exist yet and green jobs could put people to work now. Why, as far as I can see, is nothing being done to create green jobs? What about all of the crumbling infrastructure in this country? Roads, bridges, water pipes that are 100 years old and leaking? We spent billions of dollars to save the casinos on wall street. Can’t we spend a few billion to put some people back to work?

I am extremely disappointed that President Obama is not addressing the unemployment problem.

As Paul Krugman said, “We need a better government than we’ve got.”

Posted by John Tedder | Report as abusive

[…] side of pessimism, but that’s an awfully long way off — especially if unemployment goes higher still in the meantime — and much too close to November for […]

Posted by Unemployment and the Midterms – Ross Douthat Blog – NYTimes.com | Report as abusive

[…] a lot can be communicated within those restraints. Which brings me to my story. After reading an insightful (and frightening) post by James Pethokoukis, Reuter’s money and politics blogger, about why America’s […]

Posted by What You Say in 140 Characters? « Hiar Learning | Report as abusive

This is definitely more than cyclical unemployment. I think there’s structural unemployment at play there. With so many jobs outsourced to developing economies, the structural unemployment only adds to the problems of current cyclical unemployment.

Posted by scheng1 | Report as abusive

[…] This piece on the Reuters blog points out that there are several reasons why unemployment may top 12% before it begins to come down and why recovery will be incredibly slow – no matter how many tax cuts you can come up with: 1. For the first time in at least six decades, private sector employment is negative on a 10-year basis (first turned negative in August). Hence, the changes are not merely cyclical or short-term in nature. Many of the jobs created between the 2001 and 2008 recessions were related either directly or indirectly to the parabolic extension of credit. […]

Posted by Right Wing Nut House » PALIN AND HER SUPPORTERS IN A TIME WARP | Report as abusive

I don’t know how you see a bright side to more life under the U.S. nation as is. The good days are gone for this nation unless masses of people begin to force changes in laws and policies. how many of you accept the notion that we’re in a globalized economy and there’s no good reason to move our society against that, toward local energy and food independence?

Posted by Tod | Report as abusive

[…] Merrill Lynch analyst David Rosenberg, whom I think has done a great job assessing the economy, believes we get to 12% or higher, and will continue to creep up for at least a year after the recession ends. One of his key […]

Posted by Is Unemployment Sending the Wrong Signals? | Report as abusive

Interesting article. Were did you got all the information from… ?

Posted by neolengob | Report as abusive

[…] This guy is betting we see 12.0%. […]

Posted by dispatches from TJICistan » Blog Archive » 12 reason unemployment is going to top 12% | Report as abusive

According to the latest U6 measure of unemployment, the number already stands at 17.3% and passed the 12% a long time ago.

Posted by Matthias Wayland | Report as abusive

[…] Reuters, James Pethokoukis reviews a report from economist David Rosenberg, who says that unemployment will get worse. Gluskin […]

Posted by Pickerhead :: Pickings from the Webvine ::November 18, 2009 | Report as abusive