Why growth will stay too weak to ease unemployment
By Paul Wiseman
Nov. 1, 2010
Associated Press
Boston.com
http://www.boston.com/business/articles/2010/11/01/why_the_economys_growth_isnt_easing_unemployment?mode=PF

WASHINGTON --An economy growing 2 percent a year might
be tolerable in normal times. Today, it's a
near-disaster.

A growth rate of 5 percent or higher is needed to put a
major dent in the nation's 9.6 percent unemployment
rate. Two reasons why that's unlikely well into next
year and maybe beyond:

-- Construction -- both residential and commercial --
collapsed last year. And it isn't expected to regain
its strength for years. Typically after recessions end,
construction booms and powers a new economic expansion.

-- The recession that began in December 2007, after the
housing bubble burst, became the Great Recession once
the financial crisis erupted in September 2008.
Economic recoveries that follow a financial crisis are
typically sluggish. Banks usually take years to resume
lending normally.

"To really get 'Morning in America' and get people
feeling like jobs are really coming back, I would want
to see something close to 5 percent" annual economic
growth, says economist Josh Bivens of the Economic
Policy Institute, referring to the iconic 1984 Reagan
re-election ad.

That isn't likely to happen soon. Macroeconomic
Advisers doesn't expect the labor market to recover all
the lost jobs until at least 2013. Other economists say
it could be 2018 or longer.

The government reported Friday that the nation's gross
domestic product, the broadest measure of goods and
services produced, grew at an annual rate of 2 percent
from July through September. GDP had risen at an annual
rate of 1.7 percent in the second quarter.

Economists say it takes GDP growth of 3 percent a year
just to keep the unemployment rate from rising as more
Americans reach working age and immigrants enter the
country. It would take 2 additional percentage points
of growth for a year to reduce the unemployment rate by
1 point.

(For the full text, go to http://www.boston.com/business/articles/2010/11/01/why_the_economys_growth_isnt_easing_unemployment?mode=PF)

PortsideLabor aims to provide material of interest to
people on the left that will help them to interpret the
world and to change it.

Submit material: email [log in to unmask]
Frequently asked questions: portside.org/faq
Subscribe: email [log in to unmask], subject 'portsidelabor subscribe'
Unsubscribe: email [log in to unmask], subject 'portsidelabor unsubscribe'
Account assistance: portside.org/contact
Archives: http://lists.portside.org/cgi-bin/listserv/wa?A0=PORTSIDELABOR