Thursday, July 2, 2009
US Unemployment Rises to 9.5%
Though a lagging indicator the fact that the US unemployment rate has risen to 9.5% on the the wave of another 467,000 job losses is a pretty dismal showing for an economy everyone thought was starting to bottom out. It still may, be but the number of job losses is still very severe - quite a bit higher than most economists were hoping for. This graphic from the NY Times does a nice job showing the reversal in the local trend. Average unemployment spells are increasing and wages are flatlining - raising real fears of deflation.
This will inevitable lead to questions of whether the stimulus plan is working and whether it was a good idea. I'll be another of the many commentators that remind you that the bulk of the stimulus money has yet to be spent, it will be over the next six months and beyond where it will have its effect. I will, however, harken back to something I said quite a while ago, which is that the stimulus spending, while a lot of dough, is probably woefully insufficient, and that our ability to spend such money quickly and effectively makes me a bit of a skeptic. I believe in the economics behind the theory, just not in the politics and bureaucracy behind the reality.
What this national number means for Oregon is pretty depressing: already with a shockingly high unemployment rate, Oregon looks to get still worse in the next few months. And though I didn't chime in on this debate as it was ongoing, I share the Governor's caution when it comes to spending and the economic prospects in Oregon, however, I think the legislature did the right thing. Pre-commitments are important signals about the values of the state, and pre-committing to a school budget that is not criminal is the appropriate thing. Our future lies in the human capital investments we make today.