Folks, the most horrific prediction was given by the Federal Reserve. Six, count 'em, six years of high unemployment. From the Federal Open Market Committee:
Somewhat more than half of the participants judged that, in the absence of any additional shocks to the economy, the economy would converge fully to its longer-run rates of output growth, unemployment, and inflation within about five or six years; the rest indicated that it could take longer for unemployment to fall back to its longer-run rate or for inflation to rise back to the level they deemed desirable in the longer run.
It's not what the Fed is saying is inaccurate, it's more to our government, and it's refusal to get off of it's corrupt and special interests agenda and do something.
Imagine how many skills will atrophy, how many people will never financially recover with these kind of projections.
Below are the Fed's consensus for new GDP, unemployment and core inflation revisions. As we can see, they were lowered and the FOMC minutes are loaded with pessimism. The only good news is how often the Federal Reserve gets it wrong in economic forecasts. Unfortunately, this time, they probably are right on the money.
Even worse, the Fed believes unemployment could increase:
Participants agreed that progress in reducing unemployment was disappointing; indeed, several noted that the recent rate of output growth, if continued, would more likely be associated with an increase than a decrease in the unemployment rate.
So, what the hell is the problem? Why, beyond giving the banksters carte blanche, offshore outsourcing our jobs, committing labor arbitrage at every turn, selling people over-inflated houses that they now take away....what is the reason employers won't get off of their asses and hire some people?
Bloomberg quotes productivity gains as the cause, completely ignoring the fact offshore outsourcing business is booming, China imports are soaring and corporations are investing overseas. Others try to claim there is a skills mismatch, that somehow, magically the United States workforce is less than what it is, instead of acknowledging the great worker squeeze.
It is true that corporate profits have come from cost cutting, but this has been happening since 2000, when corporations started in mass treating U.S. workers as disposable commodities and offshore outsourcing anything that wasn't nailed down. It's more a continuation of the same ole thing, only the same ole thing was temporarily masked by a housing bubble. From the Federal Reserve meeting minutes:
With respect to business spending, contacts generally reported that they were investing to reduce costs but were refraining from adding workers or expanding capacity in the United States. Energy producers were an exception.
But what is the real problem? In a word, growth. That's highly targeted U.S. domestic growth. The economy isn't growing enough to generate jobs.
There is a way to increase economic growth and that is by reducing the trade deficit. Anyone reading GDP reports can see imports wipes out GDP. Even the Federal Reserve mentioned the excessive imports:
But construction activity in both the residential and nonresidential sectors remained depressed, and a significant portion of the rise in domestic demand was again met by imports.
Since the housing bubble popped, resulting in a greater than 20% unemployment rate in construction, there probably is a little structural unemployment. That said, there are a host of highly skilled individuals who need a job right this minute, else those skills will atrophy and be lost. On this score one can blame globalization, offshore outsourcing and labor arbitrage. U.S. workers sit idle, while their jobs are moved offshore and nowadays, created offshore instead of in the United States.
Bottom line the United States need a major economic shot in the arm and unfortunately that shot is under the control of the government, the executive branch and Congress versus the Federal Reserve. While the Federal Reserve secretly met to even consider unlimited quantitative easing, the bottom line is trade, taxes and Stimulus as well as modifications in corporate and labor law, is under the purview of Congress.
Waiting for Americans to become homeless, fall of of the labor participation count is not the answer to these long term unemployment problems and yet that seems to be the only real strategy identified.