Fed: Unemployment Wouldn't Be So High If People Weren't So Darn Uncertain About Economy

When I was a tiny little lad, my coach said the only thing keeping me from being a great soccer player was confidence… and my utter inability to kick the ball in anything resembling a straight line, but also my confidence. Now some number-crunchers at the Federal Reserve Bank of San Francisco say that the country’s unemployment rate would be a touch lower if we had all just been less uncertain about the economy.

“Our statistical model suggests that uncertainty has pushed the unemployment rate up at least one percentage point in the past three years,” write the researchers.

One possible reason for the uncertainty could be that nominal interest rates simply can’t go any lower, thus “[monetary] policy is less able to counteract uncertainty’s negative economic effects.”

“The private sector responds to rising uncertainty by cutting back spending,” explains the Fed, “leading to a rise in unemployment and reductions in both output and inflation.”

The Fed researchers constructed a model to calculate what would have happened if there had been no increase in uncertainty since 2008. The result of their study is that the “unemployment rate would have been closer to 6% or 7% than to the 8% to 9% actually registered.”

The study also found that higher uncertainty has more of a lasting impact on unemployment that it does on inflation. According to the Fed model, a higher level of uncertainty leads to an increase in unemployment that peaks in about 15 months but persists for around three years. Meanwhile, inflation hits bottom after about 12 months and begins inching back upward more rapidly than unemployment.

Last week, the Federal Reserve said it plans on keeping interest rates right above 0% through at least mid-2015.

Uncertainty, Unemployment, and Inflation [Federal Reserve Bank of San Francisco]

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  1. dush says:

    “nominal interest rates simply can’t go any lower”

    Artificially low prices with no where to go but more expensive in the future.

    • frank64 says:

      I wonder what is going to happen to housing prices when rates go up to 5% or 6%.

      • who? says:

        All other things being equal, if interest rates go up, housing prices go down, by roughly the amount it takes for the payments on a 30 year mortgage to equalize.

        That said, if interest rates are moving, all other things probably aren’t equal.

  2. aerodawg says:

    Businesses won’t hire when economic times are uncertain?

    This John Madden moment brought to the by the US Federal Reserve…

  3. deathbecomesme says:

    I know! Let’s give them more tax breaks! They won’t shore up all that money for a rainy day! I promise!

    • AcctbyDay says:

      http://ntu.org/tax-basics/who-pays-income-taxes.html

      Considering the top 50% of income earners pay 97.75% of the Federal Income Taxes, I’m not surprised when the only people who *actually pay* federal income taxes ask for a break. Hell, the top 25% pay 87.30% of the Federal Income Tax. You know why the “rich” are always asking for tax breaks, because they are the only ones actually paying the taxes.

      You want to talk about class warfare, let’s talk about how the “haves” pay all the taxes and the “have nots” get refunds for just being “have nots”. Talk to a tax accountant in person and ask them if the system is really fair. I’ll give you a short answer, if you work you’re paying taxes. If not, you’re getting paid, as in money is being paid to you in excess of your federal withholdings, NEGATIVE TAX RATE, through the earned income credit and other programs/credits.

      I’m not saying it’s bad to have programs or credits to help people, but I’m sick and tired of seeing people complain that the rich aren’t paying their fair share. If half of America is only paying 2% of the income tax, then you have a combination of several things. One, they are in poverty and have no income to pay taxes on or the money they are making qualifies them to credits that make their tax due either zero or a refund in excess of their withholdings.

      I know your comment was meant in jest, but it points to a deeper misunderstanding of the tax system in America. It is progressive, which means at it’s very core that you are progressively taxed as you make more.

      The guys at the top are asking for tax breaks because they are the only ones who you can give a tax break to. I probably repeated myself several times, but I cannot stick this point any harder. The system is designed unfair, unfair to those who make more money. Why do I say that you say? The people who aren’t paying taxes and are reaping the benefits of aid programs and credits complain that the rich aren’t paying “their fair share of taxes”. Kind of hard for me to agree with someone who isn’t paying any taxes that is bitching that other people aren’t paying enough.

      Sorry for the long rant, but seriously. The dinner metaphor fits this the best. If someone buys your meal for you, don’t bitch about the quality of the meal. If someone else is paying taxes and you aren’t, shut your mouth and eat your free steak.

      • dolemite says:

        You want all the money, you pay all the taxes.

        • AcctbyDay says:

          What about those of us who make a fair amount of money, say the middle class, who the democrats want to raise taxes on. I don’t “make all the money” and yet the Democrats want to raise my taxes too.

          I’ve got a newsflash for you, the government is requiring companies to put on your W2 how much your employer paid for your health insurance which to date has been non-taxable.

          I guarantee once they get enough data on how much tax-free benefits are being paid out through paying for a portion of peoples health insurance the Democrats will vote to tax it.

          This affects you, me and everyone. That kind of tax hike is on the way that every person who works and has health insurance will be affected by.

          Don’t think it affects you, the Democrats passed a law requiring employers to offer health insurance, which right now is a non-taxable benefit to you.

          It will be taxed and you and everyone else is going to have to pay a bunch more tax, EVERYONE.

          • kathygnome says:

            “What about those of us who make a fair amount of money, say the middle class, who the democrats want to raise taxes on.”

            If you’re making over 250k, you are most certainly not middle class, and you can afford to pay more. By setting the bar at 250k, the democrats put it so far above the real middle class it’s not funny. There is no reason for anyone to be whinging about the democratic tax plans.

            • AcctbyDay says:

              If they vote to tax health insurance paid on your behalf, but only tax people who make over 250,000 it will not bring in enough tax because the number of people in that category is not enough to generate enough tax.

              I guarantee they are going to tax health insurance benefits once they have enough data and see how much money it will generate in taxes.

              It’s going to affect everyone. If you work they are required to pay for your health insurance, if they pay for your health insurance your taxes go up. Can you see how this might be a problem?

              • quail20 says:

                someone’s been reading the email sent by their odd uncle.

                • AcctbyDay says:

                  *sigh*

                  Why collect the data unless you are going to use it as justification to tax it. “We can collect 50 Billion a year if we vote this tax increase in, it will pay for x or y.”

                  Why pass that law in the first place? To provide employees more information? I highly doubt anyone in Congress was thinking about the access of information for the rest of America. If you believe they passed a law in our better interest I have news for you. Democrats and Republicans are both out for themselves. I don’t like either, but I really don’t like Democrats because I can see them raising my taxes under the justification that I don’t pay my fair share which is bullshit.

                  • RandomHookup says:

                    A lot of information gets collected in DC that never amounts to anything. Whoever is President is unlikely to have a big enough majority in both houses to pass anything controversial.

                  • Torgonius wants an edit button says:

                    Of course, those with no health insurance or crappy insurance will be all for this, because it won’t affect them and it will ‘stick it’ to those ‘haves’ who got jobs with good insurance.

                    Then, companies will decide that the taxes are too high, so the good insurance will soon become crappy or no insurance, and then almost everyone will be without, paving the way for fully socialized medicine.

                    Gods Bless America.

                  • SeanMacATL says:

                    So, you’re an accountant by day and don’t see how the IRS could already determine what the cost of healthcare is? It seems logical they could make a reasonable determination by just matching up your employer’s tax ID number with your W2 (or similar form). #imjustsaying

                • Not Given says:

                  So you’ve met Uncle Larry?

              • quail20 says:

                Until there are bills before Congress, you’re worrying over nothing.Save your energy for the fight then.

                • AcctbyDay says:

                  Once the election is over whoever wins is going to have bills in Congress they want passed. It’s going to take maybe one year at minimum for enough data to be collected and sorted for Congress to realize how much money they can increase revenues with by taxing health insurance benefits.

          • dolemite says:

            I assume you make over 250k, as those are the only people Obama has wanted to raise taxes on, and he simply wants to move them back to the pre-bush tax cut days, which are are still record-low in comparison to many points in our country’s recent history. Now, under Romney, my taxes (as I am middle class) may go up around $2,000, which I really can’t afford.

            • AcctbyDay says:

              I make less than $100,000. Taxing my health insurance benefits from my employer would be very bad for my ability to pay my bills.

              • MuleHeadJoe says:

                I guess you haven’t been paying attention for very long … taxing benefits has been “on the table” for well over a decade … certain elements in Congress think it’s a great idea, others not so much.

                I started having to pay income taxes on *some* of my benefits at least 10 years ago. Life insurance comes to mind … that was ruled a taxable benefit years & years ago. They’ve been trying to get all kinds of benefits ruled as taxable income for years.

                I can see this program being reasonable if and only if the nominal tax *rates* are lowered, as the fact remains that the top income “earners” like corporate execs get huge benefit packages often worth millions of dollars but that aren’t taxed *because* they are counted as bennies and not actual cash payments (corporate provided cars, planes, mansions, healthcare for life, healthcare for extended family for life, etc. etc. etc.).

                I don’t actually want bennies to be taxed, I don’t think it’s fair at all to wage earners.

                • AcctbyDay says:

                  Now it is not only on the table, but they will have the concrete data to back it up. The data was never available before and now it will be. A stumbling block for any argument is a fact or figure to support it and if the Democrats or hell even the Republicans if they want to fund a war have something to point that they can point at to pay for something, it will get taxed.

            • dush says:

              But, in pre-bush tax cut days the federal govt took in less income tax revenue than it did last year.
              2001 income tax revenue = $1.15 trillion
              2011 income tax revenue = $1.27 trillion

              However, in pre-bush tax cut days the federal govt also spent much less money than it did last year.
              2001 budget deficit = $1.3 billion
              2011 budget deficit = $1.3 trillion

              So, if we just stopped spending so much we wouldn’t even need to raise taxes! Yay!

      • Banished to the Corner says:

        Excellent reply.

      • frank64 says:

        Also, Romney isn’t looking for tax breaks for the rich like the Obama keeps on saying. His is looking to keep the tax breaks for everyone, and it includes the rich. Most of the revenue lost due to the breaks come from the middle class, so what Obama is actually doing is singling out the rich to pay for just about everything.

        • dolemite says:

          Here’s how that breaks down. The rich will prosper *tremendously* under a flat percentage tax break (say, 20%). The middle class? You might break even or actually owe more. Why? Because to pay for this, Romney wants to cut deductions and loopholes. Dependents, mortgage deductions, etc. This invariably crushes whatever “discount” the middle and lower classes got, while the upper incomes enjoy millions in tax breaks.

          • frank64 says:

            I was talking more of extending the Bush tax cuts, and Obama’s and Dems rhetroic that they were tax cuts only on the rich, they don’t say “only” but that is what is implied.

            As far as Romney’s tax proposals, they are not specific enough to actually make a determination on. I realize some have made assumptions, I think those assumptions are disputed though. Since 2/3 of the Bush tax breaks were for the lower tiere taxpayers, any tax reform would increase those taxes. Since the middle- classes and below are paying much less than they ever did, any change is going to end up increasing taxes on some. We should take a step back and look on what is fair for everyone and I think all but the most impoverished should pay something to our federal gov in the form of income taxes.

            You are right that most loopholes are for the middle-class. On here though most use the tax loophole term as something the rich get. I rent, so I do not get the mortgage interest deduction, so I would like to see the rates lower and this deduction eliminated. Or they could give me a rental deduction.

            Proposals never end up being implemented 100%, mostly like 45%. Whoever win the election, the other side is going to be strong enough to have a strong say, we may end up with nearly the same result no matter who is elected.

            • Coleoptera Girl says:

              “Whoever win[s] the election, the other side is going to be strong enough to have a strong say, [so] we may end up with nearly the same result no matter who is elected.”

              Exactly this. I would go as far as to say that we are almost certainly going to get a similar result either way. The differences may even be negligible, may cancel each other out.

      • RandomHookup says:

        Because only the poor people are complaining that the tax burden is unfairly distributed. I’d venture to say it’s mostly the folks paying at a 20% effective rate who are complaining about the ones making 100x that paying at a 12% effective rate. Amazingly, the very poor don’t vote at that high a rate and have very little say in the political process.

        • AcctbyDay says:

          I’m strictly pointing out my problem with people who point to the rich and say “you don’t pay your fair share”, when they in fact (the people bitching), pay virtually no or a very small amount of tax.

          People who complain about being taxed that are in fact paying taxes, let them bitch. It’s their god given right to bitch about paying taxes because ya know. They are the *actual* TAXPAYERS.

        • frank64 says:

          You lowered the % a bit for the rich, I have seen 13% but never 12%, but more importantly there are very few rich who pay this rate. On average they pay 25% or so, while the middle class effective rate is around 14%. What has happened is a few rare examples have been sited as the norm to make the case. It is so often repeated that it is taken as true.

          • RandomHookup says:

            Perhaps I’m guilty of a bit of hyperbole, but what about Warren Buffett’s effective tax rate of 11% in 2010? I realize that we don’t hear about many other situations because, face it, we don’t get the chance to analyze many people’s taxes. If a venture capitalist is taxed at 15% on their earnings, it shouldn’t take too much to get that rate down to 10-12%.

            According to the Washington Post, the top 20% (starts at about 100k) pay 23% in federal taxes. Because investments are typically taxed at a lower rate and the richest make more money from investments that salary, the rate for the very richest is likely going to be lower than that.

            Reference: http://www.washingtonpost.com/wp-srv/special/politics/tax-reality-check/millionaire.html

      • Cider Eider says:

        Have nots get the returns? Damn it, then why have the Feds been asking me for more tax money every year while I was a student and unemployed? Better go ask for my free money.

      • trellis23 says:

        And yet, who’s fault is it that people make so little while working 40-60 hours a week, that they qualify to pay no taxes, because the government understands that they can’t pay taxes AND have a roof over their head AND eat. Hmmm…. ya, that would be the wealthy (unless they are wealthy just through stocks or inheritance and don’t work).

        If the pay differential hadn’t so drastically grown in the last 50 years, it wouldn’t be how it is with who pays taxes. But yes, minimum wage can’t be raised because corporations just can’t afford that, and will have to let people go. And right after they do that, the 10 executives will all get million dollar bonus at their yearly retreat in the bahamas.

        And yes, I have a decent paying jobs, and pay plenty of taxes, but I can see the world for what it is, and I don’t really feel bad for millionaires, that actually pay quite little in the grand scheme of things with all their loopholes. The reason their taxes make up so much of the budget is because they make so much, not a shocker, it’s common sense that it would work out that way. You think you can cut their taxes and raise taxes on $20g salaries, and have a budget that would even come close to paying basics, nevermind military?

      • pegasi says:

        I agree with you in some respects. the government can’t keep handing out the billions in “tax refunds” to people that are THOUSANDS in EXCESS of what was withheld. If you had 1200 withheld in taxes, then that’s the most you should be able to get back. You shouldn’t be able to get another 4500 on top of that back just because you couldn’t keep hatching kids you couldn’t afford, and the “system” gave you a “bonus” of “earned income credit”, “child tax credit” etc… which promptly got spent on a big screen tv, 22″ rims for the jalopy… etc…. everything else BUT spending money on the children!!

        Not to mention…. look at all the tax fraud to the tune of BILLIONS that’s going on in spades….

        SO>> lets put in some rules….
        1. you can’t get back more than you put in, or can prove was spent out of your pocket personally… mortgage credit… okay, you can prove you spent money on a mortgage… health care credits.. okay .. you got receipts to show you spent money on doctor visits and scripts… child care expenses… you got receipts to show you paid day care….. no receipt…. no credit.. that simple.

        2. No more than 2 tax returns can be mailed to or efiled by any address. if any more than that are filed, they will be rejected unless proof of address is included such as ID or bills addressed to that person with that mailing address are included to establish residency.

        3. Refunds due to prison inmates should be subject to seizure for the following reasons:
        – child support
        -victim restitution
        -cost of incarceration
        no one subject to incarceration for a time greater than 12 months who is due a tax return should receive it. the funds should be given on a priority basis to the above referenced causes. If the inmate doesn’t owe support to a child or restitution to a victim, then their refund should go towards paying their upkeep. statistics say it costs over $100/day to feed, house, provide medical care and to pay staff to take care of inmates, so they should offset those costs if they have funds due from the government. Same goes for any inmate who claims eligibility for any other federal program like SSI, SSD, Social Security, etc Inmates should not have access to funds from those programs for personal use… those funds should be withheld, as the government is already paying to care for the inmate.

    • TuxthePenguin says:

      I hate to break it to you, but roughly 50% of American taxpayers cannot get income tax breaks because they already pay 0% or less…

      Now, that said we need to radically simplify/revise our tax code so you don’t need to hire people like me to do your taxes.

      • AcctbyDay says:

        Earned income credit to name the first. You can be refunded the earned income credit even if you paid no tax.

        American Opportunity Credit. You can be refunded this even if you paid no tax.

        There is a long tax calculation for the child tax credit, a portion of this can be refundable if you paid no tax.

        You can pay no tax and get a refund over what you had withheld from your paycheck. This is exactly what I’m talking about. 50% of America is paying no income tax and in some cases they are being paid more money then they had withheld from their checks creating a negative tax rate.

        If you get paid money over what you had paid in and you pay no income tax you have a negative tax rate. The current tax system is already designed as Robin Hood, nobody realizes it.

      • dolemite says:

        There are absolutely no Americans that pay 0% tax. I guarantee this.

        • Bsamm09 says:

          Please elaborate. If you are single, have enough kids and income to max out the EIC you pay $0 Federal taxes, usually $0 state taxes and get EIC amount that will more than pay any sales tax and FICA/Medicare taxes you may have paid too even if 100% of your income was to purchase items that were sales tax-able.

          • dolemite says:

            Because every person pays state, local, social security, sales, etc. and/or property taxes. Even if you are 100% dependent on government assistance (which very few are), you will pay some form of taxation on your food, gas or *something*. Unless perhaps you are in a mental hospital (or perhaps prison), you most likely pay taxes on something. While we love to criticize welfare and social programs, that money does not evaporate. Those people pay local businesses, fuel taxes, etc. with it. In effect, it is “stimulating” the economy.

            • Bsamm09 says:

              There are plenty of income levels that EIC will pay enough to cover all employment taxes and have a lot left over if 100% of your income is taxed at a sales tax rate of 10% which is very hard to do. This amount left over will be more than enough to cover any and all taxes they would pay.

              If you make $12,750 and max out EIC and get a refund of $5,751 that will cover your $720.38 FICA/Medicare taxes you paid. Assume 15% sales tax on 100% of earnings for $1,912.50 and you are left with $3,118 to pay any and all other taxes you may have incurred for the year.

              Pretty easy to see how someone can pay $0 taxes.

        • Abradax says:

          You can’t guarantee that.
          Thanks to refundable tax credits, some people have a net negative tax liability even after you add in sales, local, and state taxes ontop of their income tax from their checks.

          • who? says:

            And ya know what? Those people with the negative tax liability? They’re poor enough that every penny goes right back out, for food, rent, clothing, and transportation, thereby stimulating the economy. The money that Mitt Romney doesn’t pay in taxes? It stays in his bank account, not stimulating anyone but himself.

      • AcctbyDay says:

        Recovery rebate credit, can be refunded if you pay no income taxes.

        Homebuyer credit, you could have been refunded the full 8,000 if you bought a house and had no taxable income.

        There are a few other credits that you can get if you taxable income is zero, effectively paying you money someone else paid in taxes. It is the ultimate robin hood effect.

        I’m not saying these credits and programs are bad, I’m just saying it’s driving me nuts watching people bitch about how the rich want tax breaks.

        They want breaks because they are the only people paying taxes.

  4. Torgonius wants an edit button says:

    And the sad part is, no matter if the bag of wind or the empty chair wins in a few weeks, it’s only going to get worse.

    • deathbecomesme says:

      Blasphemy! String him up!

    • TuxthePenguin says:

      The only thing I might offer as a slight rebuttal is we might get something of a boost if Romney wins – his evil, corporate overlords might think with him in office things will break their way and start expanding/hiring. /sarc

    • dolemite says:

      Why would it get worse? By just about every measure it is better now than it was 4 years ago. Is it “fixed” within 2-3 years? No, but one should not expect an economic disaster of that magnitude *could* be recovered from in only a few years. Most experts are stating 10-20. It would certainly help of a certain party of “no” would help pass some proposed legislation.

  5. MeowMaximus says:

    It sure would help if Obungler wasn’t intent on running the economy in to the ground, so he can create a socialist state. Ask yourself if you are better off now than you were 4 years ago. If you have half a brain you will vote the Dimocrats out of office.

    • crispyduck13 says:

      I just wanted you to know how clearly you come across in print, it’s masterful – you should teach a course.

    • LadyTL says:

      Well given the recession started in 2008 because of previous policy choices that Democrats have been fighting somewhat to get fixed whereas Republicans idea of a strategy is to dig the hole so deep we come out on the other side, I would say yes I am better off now than 4 years ago despite Republican efforts to make sure I wasn’t. But then again I’m not in the upper tax brackets.

      • Milquetoast says:

        Being fiscally responsible and spending less than we receive is just an evil ploy by the Republicans to “dig the hole deep,” right? Let’s spend wayyyyy more than we take in and see how it works. Oh, not so well? That’s ok, you’re still “better off” only because the guy you voted for is in office.

        • who? says:

          You know that the main reason that the deficit has grown so out of proportion is because of the Bush era tax cuts, right? The deficit was getting smaller when Clinton was president.

          • madmallard says:

            it couldn’t have anything to do with the spending at all… noooo waaaay.

            it couldn’t have anything to do with who was in congress, which during clinton’s terms it went down were republicans, and in bush’s last term and obama first half it was huge majority democrats.

            spending going up has nothing to do with it at all. its only natural that the government should spend more money EVERY YEAR without exception than it did the previous year since as long as we’ve been alive, even if all other economic systems shrink.

            • trellis23 says:

              You’re right, it has a lot to do with spending. Including the trillions (many times more than what we pay to military that used to do those same jobs) we have handed to shady private contractors to profit off of wars. Nevermind all the other corporations that we contract with that charge the government many times more than either hiring their own employees (when it comes to labor) or walking into a store and buying full retail price (when it comes to product). This is not an Obama issue alone. This is a government issue as a whole. All parties are part of this BS.

            • Kuri says:

              Did you forget about the rather expensive war that started about 7 years before the current president took office?

    • deathbecomesme says:

      I truly hope you are being sarcastic lol. What will a compulsive liar do to better the economy?

      http://www.patheos.com/blogs/slacktivist/2012/08/29/mitt-romney-tells-533-lies-in-30-weeks-steve-benen-documents-them/

    • dolemite says:

      “running the economy in to the ground”. I think you have Obama confused with Republicans. This is fact, not opinion.

    • triana says:

      I had no idea you read Consumerist, Mr. Romney.

    • Cider Eider says:

      I dunno, I think I’m doing OK. 4 years ago I was in law school so I’m automatically doing way better now what with that being done. Also, I’ve been baking a lot, learning a new language, catching up on some Doctor Who. A job that lasts longer than a few months would be nice, but all in all, can’t complain.

    • ARP3 says:

      Your satire skills are unparalleled.

  6. Abradax says:

    I laugh everytime I see that unemployment is 8.9 percent.

    Sure is, if you don’t count all the unemployed/underemployed people.

  7. NotEd says:

    Fed: Unemployment Wouldn’t Be So High If People Had More Darn Jobs.

  8. triana says:

    How can I have more confidence in the economy when my company keeps blaming it for the reason we keep getting 12 cent raises every year?

  9. quail20 says:

    Uh, it all begins with companies that are making huge profits to start hiring again.

    • YouDidWhatNow? says:

      OK, I’ll bite.

      Say Company X felt it necessary to fire 10% of it’s workforce in order to make ends meet. Since that time, they’ve discovered that they can get along just fine without that 10%, and in fact profits are up quite nicely.

      …so, why would they hire the 10% back…ever?

      • Torgonius wants an edit button says:

        Didn’t you know? Companies exist to benefit all the little people. They should hire them all to 6 or 7 figure incomes with company Ferraris and health insurance better than even Congress gets! Profit??? That’s EEEEVVVIIIIIILLLLLLLLLLLL!!!!!

      • Torchwood says:

        Because those who are left have been redlining for so long that they are ready to burn out or bolt when a better opportunity comes up?

  10. TheMansfieldMauler says:

    A large amount of private sector uncertainty has to do with Obamacare. You know, “we have to pass it to find out what’s in it.” Companies are holding on to their money in cash reserves instead of spending it on expansion, because they have no idea if they’ll be able to afford to service that expansion once it’s completed. The construction industry has almost ground to a halt because of this (except for some projects that were already funded, such as highway expansions).

  11. YouDidWhatNow? says:

    It’s a feedback loop.

    Consumers don’t buy stuff because they’re afraid to spend money/use credit.

    Corporations cut back on staff because consumers aren’t buying as much.

    Economy looks worse because unemployment is up.

    Consumers don’t buy stuff because they’re afraid to spend money/use credit

    …ad infinitum.

    • dolemite says:

      Yup. Someone has to break the cycle. I think consumers will, once they’ve paid down some debts and got some padding in the bank. Hopefully when that happens, corporations will start hiring and giving raises again, then the cycle can pick up steam.

  12. Budala says:

    I’m actually more uncertain about the fed bailing out everybody and printing money left and right. Simplified real estate finance says that Value equals Income over Rate. Now it’s tough for value to increase a lot if the rate is near zero and nobody has money to pay the higher income. Once the rates increase again the value has nowhere else to go but down.

    Folks if you have any money to invest I’d recommend commodities. The government can print dollar, but it can’t print gold, silver, corn, oil, platinum or wheat.

    • Coleoptera Girl says:

      Corn and wheat can be subsidized and I know corn is heavily subsidized. The government already has a large influence on corn prices, so you might want to mark that off your list.

  13. oldwiz65 says:

    Unemployment wouldn’t be so high if the feds stopped giving tax breaks to companies that outsource jobs overseas. When the feds offer you a tax break to get rid of 5 or 10,000 American jobs, most businesses just go ahead and get rid of the jobs.

    Lots of the jobs are simply gone for good, it won’t matter if the economy gets better; the jobs have gone overseas and are not coming back.

    • madmallard says:

      does that mean jobs that are insourced from other countries should go away? and i don’t mean Obama’s redefinition of ‘insourcing’ because it sounds catchier and better than ‘outsourcing.’ I mean a foreign company hires an american in america to do a job.

      its hard to find the statistics now because the internet is clogged with ‘obama’s new definition’ of insourcing, but we insouce ALOT of high-end jobs from other nations.

      • Coleoptera Girl says:

        I am genuinely curious… How much outsourcing to the USA (your insourcing) happens? I’m going to have to look it up, but I’d like to know if you already know.

      • RandomHookup says:

        I’m curious about that. Are these jobs that need to be done locally (e.g., local sales teams, local marketing)?

        There are some fields where it makes more economic sense to hire an American versus a Canadian, European or Japanese … most of those have to do with proximity to the job or cultural/language skills needed. I don’t see anyone setting up call centers to deal with foreign customers or creating a document scanning center for Indonesia because our labor is cheaper/better.

        I know a lot of people who work for foreign companies and some of the work could be done from overseas, but they usually are people who need to be based here to be effective.

  14. Torchwood says:

    Haven’t you heard? Having a decent paying job is the new status symbol. After all, companies have cut back on people and noticed increased profitability. Those who are left are enjoying more work, plus the fear of taking a day off for anything not resembling near-death or the plague. Paychecks are used to pay stuff off, and saving for stuff instead of putting it on credit.

  15. WraithSama says:

    For the record, this kind of article is just baiting political bickering, as evidenced above, but while there are many factors that affect things like unemployment, there are clear leading drivers.

    Bottom line: it’s consumers that fuel the economy and increase employment. You can cut their taxes all you like, but the “Job Creators” won’t expand and add new jobs unless the demand increases to require it. Otherwise all you’re doing is just increasing their profits. If consumer demand increases, then a company will be forced to expand so supply can meet it, and new jobs are created.

    This is why supply-side economics (also called “Reaganomics”) fails the test of basic reasoning, and I don’t understand why so many still believe in it. If you give all the money to the rich, how exactly will it ‘trickle down’ to everyone else? Sure, they will spend some of it on luxuries that will pay workers to build them. But how much of that will those workers see? The majority of that money will belong to the company, and a large chunk will go to the owner/executives. Largely, the bulk of the money goes from one rich guy to another rich guy, and I suppose whatever the workers get could be adequately described as a ‘trickle’. However, the non-rich outnumber the rich by orders of magnitude, and studies show that middle-class and poor people tend to spend a substantially larger percentage of their income, as the non-rich tend to be less concerned about increasing their net worth and enjoy whatever luxuries they can afford. As a result, the middle-class and poor are the drivers of the economy and create nearly all the demand in most sectors.

    Therefore, it would make economic sense to empower these people, and work toward their prosperity, to bolster the economy. After all, whether we simply give all the money to the rich by cutting their tax liability, or make the working class prosper who spend their money at businesses owned by the rich, the rich get theirs in the end either way.

  16. Harry Greek says:

    Give more tax incentives to the ‘job makers’,… but, they don’t want to create jobs, since the economy is down. And, the economy is down, because people aren’t employed, therefore, they don’t spend money.

    Next up, take away all social programs to make up for all the missed tax revenue from the jobless people,… jobless people the 1%ers are refusing to hire, because again – there isn’t anyone making any money out there to actually spend.

    Yup – sounds like Mitt Romney has been in the White House for a while now.

    Oh, and lets go a bit further; corporations start seizing land/homes of unemployed people, to make up for lower profits, as a result of offshore employees not buying as much as US employees. Because, you know, someone who is working a $22K job in India, should be able to have the buying economic effect of someone holding that same job at $45K – looks like no one really thought this through,.. or rather,…

    ,… corporations do NOT have ANY sustainable plans.

    Its all about what the CEO flavor of the quarter is doing to squeeze out more money/savings, in order for him/her to impress the stockholders/board and then move on to a bigger job and repeat. Do we really want this model in our government? The same model that has been hacking away at American jobs, skirting taxes and poisoning the public with such wonderful products like cigarettes, artificial sweeteners and toxic drywall??

  17. RandomHookup says:

    Isn’t uncertainty sort of a given for any business? Yes, economic uncertainty is higher now, but most smaller businesses (the kind that employ most folks) don’t have a huge penalty for hiring and then laying off staff. Sure, they will pay a potential higher unemployment insurance rate, but they aren’t providing severance and aren’t likely to be sued for letting someone go.

  18. SpeakR40Dead says:

    Even if the ‘statistical model’ says that without uncertainty, unemployment would be 2% it doesn’t change the fact that unemployment is between 8% to 9%. Reality still exists.

    It is mind boggling looking at the numbers as the current rate of unemployment was lower than before because people just gave up in looking for work. So is the uncertainty of ever finding a job first pushing up the unemployment rate until they quit (lowering the rate)?