Even though I fully supported -- and still support! -- the latest extension of jobless benefits, this is still a terrifying statistic. The new bill extends unemployment benefits by 20 weeks for those living in states with unemployment rates greater than 8.4%, which means "the maximum a person in one of those states could receive is now up to 99 weeks, or nearly two years -- the most in history." Just as strikingly, more than a third of the nation's unemployed have been out of work for more than six months.
This statistic is tragic, and it has short and long term implications for our economic policy and our national identity.
Regarding our economic policy, the unprecedented duration of unemployment highlights the well-reported fact that the Great Recession has been marked by average firing rates and much lower than average hiring rates, creating a job market that's literally as competitive as Harvard University's undergraduate application process. The takeaway for fiscal policy should be that it's too early to start thinking about paying down the deficit with TARP funds and over-eager spending cuts. Vast and lasting unemployment is eating into private sector demand and the most sensible recourse is public outlays to fill the gap. The takeaway for monetary policy is that inflation is really, truly not a risk.