Summers: Unemployment Will Remain 'Unacceptably High' for Years

Consumer debt is now $14.5 trillion, or 34% greater than total consumer income each year. With the housing market crash, home equity fell from a high of $13 trillion in 2006 to just $8 trillion today. Consider where it would be without the massive government intervention and 80% ownership stake in US mortgages! Then consider that nearly 10% of all these government owned mortgages are in default, and 23% of the current FHA portfolio is already in default! In the last year 2.6 million Americans slipped from a tenuous position in the Middle Class into the ranks of the impoverished. Another million joined the ranks of those without health insurance--an astounding 46 million now. Another 1.3 million will lose unemployment benefits by year’s end. According to the Gallup daily tracking poll, job creation is down 35% over last year, so don’t expect a lot of new hiring. Teen unemployment is now 25.5%. A third of all workers under 35 are now living with their parents to make ends meet. USA Today reports that national bankruptcy filings are up 22% over 2008. More than 35 million Americans now rely on food stamps to feed themselves. Consequently consumer spending is now down a remarkable 33% over the previous year.

Marketwatch reported on Sept 9: “Employers' hiring plans for the upcoming fourth quarter dropped to their lowest level in the history of Manpower's Employment Outlook Survey, which started in 1962.” US Job openings fell to a record low in July this year. An article by G. Washington for Naked Capitalism painted the real picture: “Projections of former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart, U-6 unemployment could rise to 22% within the next 4 years or so.”

As of now, the unemployment is the highest it has been in almost 27 years! Let's think about that: Back in 1982, the unemployment was higher: it was over 10%. Who was president then? Ronald Reagan. In fact Reagan took over a poor economy left behind by Carter, but the unemployment at the time Reagan went into office was only 7.4%, and over the next 2 years it had raised up to 10.7% despite the fact that tax cuts were put in immediately. So those who point the finger at Obama for unemployment should be fair to mention that the unemployment situation that Obama has had is not nearly as bad as the one Reagan had if we look restrict to the time they first entered office. And if one does not admit that, then they are either spreading disinformation, or else down right stupid.

Timmy and Barry are so busy patting each other on the back they forgot to look at the calculators on their desks. It is WAY to early to claim this country has avoided anything, much less a depression. The pols in Washington, D.C., are completely and utterly out of touch with reality; or they know exactly what they are doing blundering and baloney slicing, ad nauseam. The latter is probably the most accurate of the two.

JFK would be a considered a rabid right-wing nutjob.

Posted by: Jenn | Sep 12, 2009 9:03:38 AM

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Okay, that's pretty funny. Nice try, but, uh, no. By today's standards, John Kennedy might be a blue dog, a moderately conservative Democrat but the right wing nutjobs have moved the GOP much farther to the right than they once were.

Government regulation is never going to prevent such bubbles--because politicians will never allow bubbles to be deflated prematurely...

A bubble represents a kind of wild party. Everybody is drunk on paper wealth.

No President or any other government official wants to tell the participants that the party's over.

Posted by: sinz54 | Sep 12, 2009 9:56:54 AM

On this I would think (though you never know) that everyone can agree. We never seem to learn from our mistakes on this one.

Posted by: david | Sep 12, 2009 10:35:46

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Oh sure, I was being disingenuous. Eyeroll. I cite the report so anyone can look it up. I don't go into grand conjecture. And elsewhere on this blog, you can read posts of mine that describe exactly why and how I still hold Bush accountable for his decisions (cutting taxes without cutting spending,borrowing money to fund war rather than asking for sacrifice from Americans beyond the troops, appointments at the Fed, HUD, SEC, Fannie, Freddie and so on), actions and monetary, economic and fiscal policies.

Also, who said the stimulus plan isn't stimulating and won't as it picks up pace, Lonely Star Ruler? You? And you know this how? It's pretty hard to find a consensus on this yet, at least among experts rather than demagogues who cling to ideology no matter what. But, let me guess, that doesn't matter. Neither does the substantial argument that needs to be had in serious terms regarding whether the bailouts and huge stimulus packages that were launched by governments around the world accompanied by central banks furiously printing money pulled us away from the brink of depression and are now working to lift the global economy out of recession OR whether they are setting us up for the the next big crisis — hyper-inflation and a worse economic disaster. It's a pretty big argument and there really isn't a consensus on this-- and yet, you supposedly have ALL the answers??? We need soberness of mind folks-- to be honest about everything, the past, the present, the weaknesses of the arguments of our own ideologies, and figure out how to the best thing for our children and the future.

So let me get this straight - the Stimulas Plan is not stimulating and its Bush's fault? (because Obama & company inherited these problems)

Guess what? That plan is never going to stimulate jobs -

9.5% unemployment, debt will be 2 million more than the administration thought, thank god biden says the stimulus is working better than expected. the administrations plan is to simply say things are getting better and the main stream media will report that and ask no questions...

Given that the combined intelligences and capabilities of Obama, Summers, Geithner, Biden, Reid, Pelosi and Frank amount to that of a idiot, the 'unacceptably high' jobless rate is unsurprising!!

In fact, given the moral and ethically poverty of all of the above (along with that of other notables like Schumer, Dodd and Waxman, et al.), I would swear that all of their activities are being done on purpose to make it that way!!

While I did not view the statistics Alyson presented I would pretty much agree with them yet you have not set forth the reasons for the declines. Life as most people knew it begin to change when easy to find jobs,some good paying begin to disappear to Asia with legislation enacted in the 90's. Also nowhere is there a mention of how much money and investment was lost after 911, the extra expenses that were incurred for security, the enormous expense for medicare prescription drugs,the no child left behind act etc. You also failed to mention the cost of all the other boondoggles set in place in the previous decades, namely Freddie and Fannie which helped set the stage for the mess we are in.

So while I agree with you that Bush didn't have a good record, spent way too much money I find you leaving out the "why's" is disingenious.

So, I assume all of you read Thursday's annual Census Bureau report on income, poverty and access to health care.
It kinda puts a dimmer on the shrill claims seen here that Obama is the one with the plan to weaken America, which thrives in part because of its middle class.

During Bush's two terms in office, the median household income declined, poverty increased, childhood poverty increased, and the number of Americans without health insurance spiked. By contrast, the country's condition improved substantially on each of those measures during Bill Clinton's two terms. It's really interesting given the current debate on what to do to fix the economy, and whether we're headed in the right, or wrong direction. The GOP and conservatives seem to insist that a similar agenda to Bush's focused on tax cuts offers the better way to revive the economy than President Obama's combination of some tax cuts with heavy government spending-- and many on here defend the GOP's actions, and blame Congressional Dems for our current situation. But the dismal economic results from Bush's two terms, spoil, to put it as cordially as possible, the idea that tax cuts represent an silver bullet, although admittedly Bush failed to pair his tax cuts with spending cuts.

While it's been pointed out to me here and many economists do, indeed, cite many reasons why presidential terms are an imperfect frame for tracking economic trends, most experts would also agree that its foolhardy to argue that national economic policy is irrelevant to economic outcomes. The Census report shows that Bush's national economic policy flunked on every relevant dimension-and, guess what? It's not just because of the severe downturn that began last year.

Bush is the only president in recent history to preside over an income decline through two presidential terms. But here's what's interesting-- even if we remove the global recession, middle class and poor families were worse off in 2007 than they were in 2000,
despite business expansion.

Also, during Bush's two terms, the number of people in poverty increased by over 8.2 million, or 26.1 per cent. Nearly 70% of that increase occurred before the economic collapse in 2008.

Many of these economic crises were caused by the bursting of a mania bubble: The Roaring '20s bubble, the "Nifty Fifty" bubble of the 1960s, the "dot.com" bubble of the 1990s, and the real estate bubble of the 2000s.

Government regulation is never going to prevent such bubbles--because politicians will never allow bubbles to be deflated prematurely. They always tout such bubbles as evidence of how THEY created "prosperity". Did the Clinton Administration ever say that "dot.com" prices were way too high? Did the Bush Administration say that real estate prices were way too high?

A bubble represents a kind of wild party. Everybody is drunk on paper wealth.

No President or any other government official wants to tell the participants that the party's over.

And wasn't ABC on of those, that pushed this guy on the entire country? Thanks

"Democrats - you used to be the party of less government, freedom for the individual, freedom of thought, power to the people (remember the 1960s and 1970s?)."

So true. Today, JFK would be a considered a rabid right-wing nutjob.

"No such 8% promise was ever made, and dimwits who repeat this nonsense are either ignorant or intentional liars."

They did state that without the stimulus unemployment would rise over 8%.

They absolutely did.

FactCheck.org:

* Without a stimulus package, Obama’s team predicted unemployment would hit 9% early next year. However, it’s already at 9.4% and climbing.
* With a stimulus package, Obama’s team predicted unemployment would max out at 8% later this year. Again, it’s already at 9.4%.

You guys throw the "liar" thing around really quickly- but you should be as quick to vet your own accusations.

People on the LEFT. Your party has been IN POWER FOR 3 YEARS NOW! 3 years you have controlled Congress. 3 Y.E.A.R.S.!!!

Yet you are still blaming Reagan?

God help us.

I HOPE this isn't the CHANGE everyone had in mind?

Let's go back to 2008. Barack Obama is giving his speech at the DNC Convention. The highlight of his speech is as follows:

"If I am elected President, unemployment shall remain unacceptably high for years to come and we will run at record deficits for as far as the eye can see..."

No, that's NOT what he promised us is it? Would he have been elected with promises like that?

Go back to 2006. If the Democrats had run on the "In 2 years, the real estate market will collapse along with our entire banking system if you elect us!" do you think they would have won?

No?

The Democrats have controlled Congress for 3 years now. Someone please let me know when all of this starts being THEIR fault?

I'm curious. Is this HOPE? Or CHANGE? Or a GREEN SHOOT?

Our national debt was $11,689,233,166,103 a few minutes ago and is rising by nearly $2 million every minute. We are watching our country die. Is Obummer purposely doing this? - yes.