The Bureau of Labor Statistics released its latest jobs report and the news is grim, grim , grim. Above is the unemployment rate over the last ten years for the US. I believe that we will get to and quite possibly surpass 8% before this crisis is done with. I wouldn't be surprised if we approached 10%. The US has lost over 500,000 jobs in the last two months. Keep in mind we need to add upwards of 100,000 jobs a month to keep up with population growth. Unemployment is especially bad among Hispanic and Black populations and average weekly wages have plummeted as well - so those that work are doing so for less. There is a spike in the number of underemployed - part time workers looking for full-time work - and job losses in manufacturing are especially large and troubling (manufacturing jobs tend to be a bit slow to recover).
I think two things are called for and quickly: fiscal stimulus in the form of increased unemployment insurance and a transfer of federal funds to states for investments in infrastructure and other such projects. We have to let go of our conventional thoughts about how best to manage an economy and immediately come to terms with the fact that we are in full-blown crisis and every day that we delay we risk risk extending the crisis by months. Also troubling are the potential effects on the more serious long-term challenges that face the world: climate change. Willingness to address these problems will wane in the face of economic hardship across the world. This is why yesterday I argued for an alignment of the spending on infrastructure and on things that will improve our energy consumption: in other words invest in mass transit, not roads. Many economists, myself included, have been quite astonished at how quickly this deterioration in the economy has happened. For my part, I have generally more focused on long term challenges like education and the environment and less focused in short term challenges. But everyone now understands how serious a situation we are in and we simply must act immediately, failure to do so threatens sending us in to a real depression.