"The chances that the US will slip into another recession are 25-30 per cent", said noted American economist and former Chairman of the Federal Reserve of the United States, Alan Greenspan. Gloomy reports on gross domestic product and housing have raised fears that the fragile economy could slip back into a recession.
On August 27th America’s second-quarter GDP growth was revised down to an annualised 1.6%. The unemployment rate ticked up in August, from 9.5% to 9.6%. The numbers are deeply disturbing as the US economy has lost 8m jobs in two years starting December 2007, the official start of the recession and the bottoming out of the labour market in December 2009.
According to the Centre for Economic Policy Research even with rapid jobs growth of the sort seen in the bubble years, it would take more than a decade – until April 2021 – for the economy to catch up with the expanded labour force. As things stand, there is little prospect of the US economy creating jobs at the rate it managed before the credit crunch. The pick-up in job creation in early 2010 was much weaker and in recent months has gone into reverse. Large numbers of temporary workers hired to conduct the US census have been laid off and with the end of the tax break to buy homes the housing market has moved towards a new downward lurch.
For any country, a high level of unemployment is matter of concern. John Schmitt and Tessa Conroy, researchers at the Centre for Economic Policy Research, said it was time for action."The substantial political obstacles facing another round of economic stimulus and the Senate's decision not to extend long-term unemployment insurance benefits suggest that economic decision-makers might not understand the depth of the economic hole in the labour market." Some economists, such as Carmen Reinhart and Ken Rogoff, pointed out years ago that this downturn was always going to be worse than a normal recession, simply because banking crises are more crippling and have worse aftermaths.
No comments:
Post a Comment