Ed Leamer, director of the UCLA’s Anderson Forecast, summarizes the latest:
The forecast for GDP growth this year is 3.4 percent, followed by 2.4 percent in 2011 and 2.8 percent in 2012, well below the 5.0 percent growth of previous recoveries and even a bit below the 3.0 percent long-term normal growth. With this weak economic growth comes a weak labor market, and unemployment slowly declines to 8.6 percent by 2012.
Kevin Drum remarks: “And what is the United States Congress doing about this? For all practical purposes, absolutely nothing. It must be nice being a congressman.”
What’s so terrifying this is to contemplate what the long-term unemployment situation is going to look like by 2012 if this forecast comes to pass. We’re going to be talking about a simply stupendous number of people who’ve been out of work for three or four years, and it’s going to be nearly impossible to get these people back to work. The Depression Era teaches us that the manpower needs of a major global war would suffice, but otherwise who even knows. And we’re also looking at the wastage of a massive cohort of young people who are going to graduate from high school and never have the experience of being pulled into the workforce by manpower-hungry employers who teach them the basic skills you need to get by in the modern economy.