Just because the economy has been improving doesn't mean it is completely fixed. In fact, two commentators, both Obama-loving liberals, suggest it's about to get worse. Debate over the economy's future is hinging on unemployment. Now that it's below 10 percent, is it going to continue decreasing or rise again?
Positive Trend Continues The Wall Street Journal's Justin Lahart argued yesterday for a resurgence, noting that "so many of the job losses have been at the service-related companies that have come to dominate U.S employment." Lahart suggested that unemployment will fall rapidly. "Many service-related firms may have a more pressing need than manufacturers to rehire workers as demand comes back."
Nate Silver wrote that unemployment rates will continue to fall. "If the labor force grows at its typical post-recessionary rate of 0.44 percent over the next six months, that means that the economy will need to avoid losing 375,000 more jobs between now and January for unemployment to stay below 10 percent," he wrote, concluding that employment "will win the race against the growth of the labor force."
No Way This Lasts The New Republic's Noam Scheiber disagreed with Silver's optimism, predicting that unemployment would be back above 10 percent soon enough. The "large piles of debt" burdening consumers will "dramatically slow the rate at which consumption and hiring rebound." In addition, he argued that "companies are going to worry about the sustainability of the rebound precisely because of all that consumer debt."
New York Times columnist Bob Herbert wrote today that "the economic ship is still sinking" and things are "bad, bad bad." Herbert noted that one third of unemployed have been so for over six months--the highest proportion on record--and many young folks are among the jobless. Such a condition "corrodes communities," he wrote. Including part-time workers and the unemployed who have ceased to search for work, Herbert concluded that the actual unemployment rate would be 19 percent.
Political Implications The New Republic's Jonathan Chait worried about the Democrats. "To be sure, the economy is likely to remain poor for most people for a long time, and the Democrats are going to bear the brunt," he wrote. "But how bad, and how much of a brunt, is the big medium-term question in American politics." Scheiber expressed pessimism about the timing. "You could easily imagine unemployment rising another point or so during the first year to year-and-a-half of the recovery," he wrote. "Which, unfortunately, brings us well over 10 percent heading into next year's midterm elections. "