The Obama administration issued an official update on the US economy Friday that projects that unemployment will remain high for the next decade. The unemployment rate stood at 5.0 percent in April 2008, before the Wall Street crash triggered by the bankruptcy of Lehman Brothers. Even in the best-case scenario laid out in the White House report, the unemployment will remain above that level into 2022.
In other words, for those who are now unemployed, and particularly for the new generation of young people who have come of age since the 2008 crash, the prospect is for the continuation of mass unemployment more or less indefinitely.
The Mid-Session Review issued by the White House Office of Management and Budget (OMB) assumes a relatively quick return to rapid economic growth in the United States, with GDP expanding by more than 4 percent a year in 2014 and 2015, and a worldwide economic recovery rather than depression.
The OMB economic projections were already disproved as unduly optimistic while the Mid-Session Review was being printed. While the OMB projects a 2.6 percent growth in GDP in 2012, the second quarter growth rate reported by the Commerce Department fell to only 1.5 percent, below even the 2.0 percent growth reported in the first quarter.
Even under the OMB’s unrealistic assumptions, it would require a full decade to return to the levels of unemployment that prevailed in the early stages of the current economic slump. Given the reality of global slowdown, new financial shocks from the bankruptcy of European countries and financial scandals involving the banks and hedge funds (LIBOR, JP Morgan Chase), the relatively small decline in the US unemployment rate over the past two years, from 10.1 percent to 8.2 percent, is likely to be wiped out by a surge of mass layoffs.
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